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Full text of "Post-war economic policy and planning. Hearings before a subcommittee of the Special Committee on Post-war Economic Policy and Planning, United States Senate, Seventy-eight Congress, first session-Seventy-ninth Congress, first session pursuant to S. Res. 102, a reslution creating a Special Committee on Post-war Economic Policy and Planning"

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S. Res. 102 

(78th Congress) 



JANUARY 12, 1945 

Printed for the use of the Special Committee on Post-War 
Economic Policy and Planning 

■ ■_ I C 1 ' 1 

91183 WASHINGTON : 1945 


Sec. 22. This Act may be cited as the "Federal Urban Redevelopment Act 
of 1943." 

Amend the title so as to read: "A bill to provide financial assistance to the 
municipalities and urban areas of the United States for real property acquisition, 
in order to facilitate the development of urban areas and the redevelopment of 
blighted areas including slums in accordance with plans therefor, and for other 

Senator Taft. The committee will adjourn until 10:30 Monday 

(Whereupon, at 12:15 p. m., the committee adjourned until 10:30 
a. m., Monday, January 15, 1945.) 









S. Res. 102 

(78th Congress) 




PART 10 


JANUARY 15, 1945 

Printed for the use of the Special Committee on Post- War 
Economic Policy and Planning 

91183 WASHINGTON : 1945 



MAY 8 1945 



WALTER F. GEORGE, Georgia, Chairman 




SCOTT W. LUCAS, Illinois 

Meter Jacobstein, Director 

Subcommittee on Housing and Urban Development 

ROBERT A. TAFT, Ohio, Chairman 



Note. — There will appear in the final volume an index by subject matter 
covering the entire series of hearings. 


Statement of — p »*» 

Bates, Harrv C, chairman, housing committee, American Federation 

of Labor.. 1633 

Shishkin, Boris, economist, American Federation of Labor 1649 

Roeenman, Mrs. Dorothv, chairman, National Committee on Housing, 

Inc.. New York. X. Y 1659 

Thomas. R. J-, president, United Automobile, Aircraft, Agricultural 
Implement Workers of America (Congress of Industrial Organiza- 
tion^ ; chairman, Congress of Industrial Organizations housing 

committee 1672 

Johnson, Lee, executive vice president, Xational Public Housing 

Conference, Inc 1687 

Guste, William J., chairman, committee on legislation, Xational 

Public Housing Conference, Inc 1688 




United States Senate, 
Subcommittee on Housing and Urban 
Redevelopment of the Special Committee 
on Post-War Economic Policy and Planning, 

Washington, D. C. 

The subcommittee met, pursuant to adjournment, at 10:30 a. m., 
in room 301, Senate Office Building, Senator Robert A. Taft (chair- 
mail' presiding. 

Present: Senators Taft (chairman), Ellender, La Follette, Rad- 
elift'e, Wagner, and Buck. 

Senator Taft. The committee will come to order. Mr. Bates will 
lie the first witness. 


Mr. Bates. My name is Harry C. Bates. I represent the housing 
committee of the American Federation of Labor. I would like to 
address you on the subject of labor's post-war housing program. 

Senator Taft. Mr. Bates, you yourself are president of the Inter- 
national Bricklayers Union? 

Mr. Bates. Bricklayers and Masons International Union. 

The American Federation of Labor welcomes this opportunity to 
present its views to the Senate Subcommittee on Post-War Housing 
and Urban Redevelopment. On behalf of the 7,000,000 American 
wage earners we present the best judgment which we believe to be 
Representative of the great mass of American wage earners. 

American workers believe that the formulation of a sound national 
housing policy is of the foremost importance to the attainment of 
full employment and of productive stability after the war. The 
moment hostilities end this Nation will be faced with an extreme 
housing emergency horn of cumulative housing deficiencies of depres- 
sion and recovery and greatly intensified by wartime conditions. 
Labor welcomes the committee's active study of post-war housing 
and hopes the committee will help in guiding the course of action by 
the Federal Government toward a courageous and constructive 
solution of the difficult problems ahead. 

The current housing need is intensified by each month's duration 
of the war. It is a challenge for Congress to formulate a realistic 
housing program without allowing the coming surge of activity in 
housing construction to become subverted to the service of special 
interests and to become a speculative run-away boom destructive to 
the future stability and the welfare of the Nation. Labor trusts that 



Congress will not" falter in the discharge of its public responsibility 
and will contribute full measure of statesmanship to the development 
of a policy designed to harness the latent forces in our economy to 
the attainment of a dual objective — achievement in the years to come 
of stable growth in America's standard of living and elimination of 
mass unemployment. 

The task ahead for American enterprise and for labor is truly vast. 
The size as well as the complexity of this task calls for full cooperation 
on the part of private enterprise, labor, and the Government if America 
is to succeed in meeting this great challenge of the times. American 
labor, industry, business, and the general public alike have a vital 
stake in the production as well as the best use of the housing so ur- 
gently needed. It is in the common interest of all groups to see to it 
that the homes to be provided are well designed, soundly constructed, 
prperly located, and priced to be within the reach of the maximum 
number of families. We can and should make sure that all these con- 
ditions are met in order to maintain housing production at a steady 
flow and avoid wide and destructive fluctuations which persisted in 
the past. On our ability to maintain high levels of housing production 
depends our ability to keep full employment stable in the years ahead. 

Labor believes that this can be achieved through a comprehensive 
approach to the problem. Labor therefore calls for a comprehensive, 
integrated program designed to meet the accumulated housing needs 
of all income groups. Of special importance is the assurance that 
families of moderate and low incomes have access to good, decent 
homes in which to raise their children. 

At this time, after . period of virtual cessation of construction 
activity, we have before us a unique opportunity of reopening the 
entire field of residential construction. We have an -unprecedented 
chance to provide and plan wisely. In every town, in every city, 
and in the Nation as a whole, we have a choice to make. This choice 
is between development of post-war housing which is carefully geared 
to the shifts and realinements of economic opportunity, of employ- 
ment, and of incomes of wage earners derived from their jobs. . This 
choice means development of well-planned communities whose progress 
can go hand in hand with their economic growth. 

The other choice is to let things happen as they did in the past and 
to accept the inevitable consequences — haphazard neighborhoods sub- 
ject to economic instability, wide fluctuations in population, uncon- 
trolled real-estate speculation, a succession of inflation and collapse in 
values, with recurrent periods of widespread liquidation, bankruptcy, 
and destitution. 

Millions of American families have made their choice long ago. The 
choice was made for them by the bitter experience of foreclosure, evic- 
tion, loss of savings, and distress under pressure of inexorable forces 
beyond their control. Looking to the future, the American laborer 
demands orderly development of homes, neighborhoods, and com- 
munities, each inseparable from the other, under the guardianship, 
trusteeship, and leadership of the entire community. W T e are certain 
that the American people welcome and are prepared to insist on the 
exercise of true public responsibility on the part of every municipality, 
every State government, and on the part of the Federal Government 
to achieve this end. For it is a historic duty for everyone of us to 
make America a better place to live. That duty can be discharged 


only through concerted undertaking by the whole community of tho 
specific tasks of planning, development, and building of better cities, 
better neighborhoods, and better homes. 

The mainspring of such orderly development of our productive re- 
sources for better living lies in the capital, the enterprise, and labor 
with which America is rich. To make the development orderly it is 
necessary first, that there be a balanced teamwork of all the partici- 
pating groups anil, second, that the municipal, State, and Federal 
Governments maintain the checks and balances essential to guard 
the public interest. Labor is ready to accept its responsibility in this 
joint task and looks forward to an opportunity of discharging that 
responsibility through its proportionate share in the councils in which 
plans, policies, and procedures are formulated at the community level 
as w ell as nationally. 

Provision of good homes is a responsibility which rests primarily on 
the local community. What kind of a place the city, town, or village 
is to be is for the people of that city, town, or village to decide. At 
the same time, there is no longer any doubt that the rebuilding of 
America after the war is a task which local communities cannot under- 
take alone. They will need guidance and aid. 

The effort of any city to clean up its bad housing and to make it a 
better place to live is doomed to failure if shanty-towns, slums, and 
blight are permitted to spread just outside the city limits. Construc- 
tion standards must be made uniform, and rebuilding plans must be 
unified through a concerted effort of local governments of all jurisdic- 
tions in the area. City limits, municipal boundaries, or county lines 
must not become barriers to comprehensive and w r ell-planned rede- 
velopment of metropolitan areas, including all suburban sections sur- 
rounding the city proper. To effect cooperative arrangements among 
local governments is a responsibility in which State governments must 
not only share, but also lead. 

In the transition from war to peace the share of the responsibility 
of the Federal Government is of special strategic importance. Our 
studies, conducted during the past year, show that demobilization of 
war industries and of the armed forces is bound to result in mass 
shifts of population. These new migrations will profoundly affect a 
gnat many communities. Under the stress of new T dislocations, hun- 
dreds of communities, large and small, and a number of whole areas 
will become distress areas of the Nation. A concerted effort is im- 
peratively needed to prevent this distress and remedy these situations 
with the aid of the National Government. 

No housing plans can be sound unless they are intimately related 
to the employment plans of the entire country. Fact finding, plan- 
ning, and programming of housing after the war will not meet the 
essential post-war goals unless the Federal Government is fully 
equipped to provide factual information to the communities and to 
all groups concerned. The need is for information not dealing with 
housing alone, but related to all factors of employment and production 
essential for the formulation of an economically sound housing pro- 
gram. In the past, Congress wisely provided for Federal assistance 
in the form of mortgage insurance of the F. H. A., for relief to lending 
institutions and home buyers under the H. O. L. C. and aid to re- 
housing of slum dwellers under the U. S. H. A. Labor believes that 
these services, indispensable to the solution of the Nation's housing 


problem, should be strengthened and supplemented by further aids 
and services. 

We urge that provision be made for Federal grants to individual 
communities for local market surveys and project planning. Infor- 
mational tools should also be provided to local communities to enable 
them to share in the experience of others and to attain a high standard 
of performance. It is also extremely important that a large measure 
of positive financial aid be extended to local communities in the work 
of urban redevelopment. Help and guidance in planning such 
redevelopment must also be given. 

The Federal Government can also do much in assisting in the 
development of mutual home ownership and in assuring sound financ- 
ing and administration of mutual home ownership projects. The 
basic condition of all Federal assistance should be the requirement of 
full compliance with minimum standards to be prescribed as funda- 
mental to a sound national housing policy. 

To fulfill this responsibility of the Federal Government, we recom- 
mend the creation of a permanent statutory National Housing Board 
under which the activities of the several Federal housing agencies 
should be unified. We propose that the National Housing Board, 
to be made responsible for over-all policy, consist of five members: 
Its chairman, to act as the Administrator; one member to represent 
Federal agencies responsible for private housing; one member to 
represent the public housing agencies of the Government; one member 
to be drawn from private business; and one member to represent 
labor. We believe that labor representation should be assured in the 
policy and operating functions of the Board and of its constituent 

Another important consideration should prompt Congress to pro- 
vide without delay a statutory basis for a unified housing administra- 
tion. It is extremely important that the Nation's post-war housing 
program be conceived and executed as one comprehensive, unified 
program for the entire Nation. Our country's ability to avoid a 
major economic crisis in the years after the war, to escape the recur- 
rence of mass unemployment and of widespread business and economic 
distress, depends so heavily on the rapid and orderly development of 
a large-scale housing program that the creation of an aggressive and 
effective agency to guide and further such a program becomes a 
primary requirement of America's strategy of peace. 

Senator Taft. You prefer a board at the head rather than an 
individual, single administrator? 

Mr. Bates. That is right, a board at the head. At the present 
time the National Housing Agency functions by administrative order 
and I believe there should be a statutory enactment establishing a 

The idea of unified policy, a policy which would make sure that 
we attack the enormous housing need from all sides and with all 
available weapons, is fundamental to the effectiveness of our post- 
war housing program and essential to its success. There is an acute 
and widespread housing shortage throughout the land. The phys- 
ical need for shelter, for the provision of homes, is not a need con- 
fined to a particular section of the country, a particular class of people, 
or a particular income group. This need cuts clear across our entire 


community. It can only be met through a closely knit, interrelated 
set of positive measures. 

The post-war housing market must be looked upon as a universal 
housing market . 1 1 is a market in which families of all incomes must 
participate. Unless we mobilize every available instrumentality of 
enterprise and commerce and bring into fullest possible use every 
available resource of skill, of Labor and materials and, where necessary, 
of Government aid, within a comprehensive framework of a unified 
long-range plan, we will fail utterly in our entire peacetime endeavor 
to achieve full employment. Unless all interests concerned in hous- 
ing team up with the Government to carry out such a plan, we will 
likewise fail in our effort of post-war reconstruction and redevelopment. 


The American worker wants to be a home owner. The outright 
ownership of a home is the expressed desire of the great majority of 
our wage earners. Until the outbreak of the war the trend has been 
away from home ownership and toward tenancy. This w r as not a 
matter of preference on the part of workers, but the result of the bitter 
experience of a great many workers' families. Too many workers 
families went through the heartbreaking foreclosure of what was to 
have been their own home. Too many lost their entire savings in 
the futile effort to become home owners. Too many came to realize 
that without proper safeguards they cannot afford to undertake the 
burden of long-term home purchasing. 

The American Federation of Labor believes that home ownership 
should play a major role in housing post-war America if established on 
a sound basis for families able to assume the obligations and risks of 
home purchase. The feverish home-ownership movement after the 
First World War, which was built upon unsound appraisal methods, 
insecure second and third mortgages, short-term unamortized loans, 
and general illiquidity in mortgage investments, naturally brought 
many home owners, mortgage institutions, and banks to grief in the 
subsequent deflation. At least two-fifths of the number of homes 
built during that boom were either foreclosed or rescued by the Home 
Owners' Loan Corporation in the depression which followed. By 
June of 1933 foreclosures were occurring at the rate of 1,000 daily. 
The American Federation of Labor does not wish to see the home- 
ownership movement after this war destined for similar fate. 

In our cities and towns home ownership sharply declined in the 10 
years preceding the war. The tragedy of our housing market in the 
decide of the 1930's was that while more and more urban families 
chose to rent rather than buy, of the residential dwelling produced 
during that time two-thirds more were designed and built for sale 
than the existing demand for such housing. 

Special significance at laches to the fact that the families of wage 
earners participated in home ownership less than any other group. 
In 1939 "iily 30 percent of all urban families whose sole source of in- 
come was wages were either buying or owning their homes. Most 
wage earners in the lower-paid industries and those with wage incomes 
of less than 81,000 per year were tenants and were unable to afford the 
financial burden <>f home ownership. Even in the highest-paid occu- 
pations and in the highest family-wage income bracket of $5,000 a 

91183 — 45 — pt. 10 2 


year or more, only one-half of families were prepared to assume the 
risks of home buying and home ownership. 

The work done by the Federal Housing Administration before the 
war in putting home ownership on a sounder basis is encouraging. 
The F. H. A. record in reducing the number of foreclosures has been 
excellent. It is only a part of realism, however, to admit that the 
risks assumed by the Government under the F. H. A. plan have not 
yet met their real test. 

The F. IT. A. has never weathered a depression. It has never gone 
through an important decline in real-estate values nor a period of 
liquidation. Most of its success to date must be attributed to its 
short existence, to the rising price levels, and the supporting effect of 
the wartime inflation of the last few years. Unless effective safe- 
guards are established, homes bought under F. H. A. insurance in 
the post-war housing boom will have to weather a major deflation. 
We should make sure now, before it is too late, that the system of 
mortgage insurance is equipped to weather a storm of mass liquidation 
and that another collapse is averted which would lead to mass distress 
among home buyers. 

In this connection it is necessary to stress the relation of the 
F. H. A. mortgage insurance to the obligations and risks incurred 
by the home buyers themselves. Mortgage insurance underwrites 
the entire risk of the lender. While giving full protection to the 
lender, the mortgage guaranty gives no protection whatsoever to the 
home buyer. If, because of temporary unemployment or other 
economic hazard of the kind to which the wage earner's family is 
constantly exposed, there is even a brief default in payments, the 
buyer's savings invested in the property up to that time become a 
total loss along with the loss of his home. 

The American Federation of Labor believes that, before we reach 
the crisis, adequate provision should be made to protect the home 
owner. We propose that at this time consideration be given to the 
following changes in the Federal legislation applicable to the F. H. A.: 

(1) Easier terms should be supplied to the home-purchasing family. 
Mortgage interest payments constitute the largest single cost to the 
home buyer. The present interest rate on loans fully insured by the 
Federal Government results in a yield too high for risk-proof invest- 
ment. We ask that the rate of interest on F. H. A. insured mortgage 
obligations be limited to not more than 1 percent above the going 
Federal rate of interest. 

We also propose that an amortization period longer than the 
present 25-year limit be permitted and recommend that this limit be 
extended to 32 years. In this connection we suggest that considera- 
tion be given to the requirement of a fixed payment against the prin- 
cipal of the loan throughout the life of the mortgage to make possible 
a more rapid amortization during the early years of the mortgage. 

(2) There should be increased flexibility in the home-ownership 
arrangement to accommodate the families whose future needs cannot 
be predicted at the time of home purchase. The home buyer's 
investment should be protected in cases of default due to unemploy- 
ment or other causes. We recommend that provision be made for a 
grace period or moratorium on payments, extended under stringent 
safeguards up to 2 years, enabling the home buyer to make good the 
lapsed payments by lengthening the life of the mortgage propor- 


We ask that a provision be written into law protecting the homo 
buyer against deficiency judgments which may unfairly burden a 

family long after it was forced to abandon its home for reasons beyond 
its control. 

It would also he wise to provide for a prepayment formula so that 
larger payments made during good times could he used to tide the 
home buyer over subsequent difficulties. 

We ask that the interests of the home buyer be protected by 
assuring soundness of construction through compliance with firm 
minimum standards. We recommend the use of a system of certifi- 
cates of compliance under which any failure of the builder to comply 
with the minimum structural standards, which may he discovered 
within '2 years after delivery, be made subject to redress or penalties. 

Senator Tut. Is there effective inspection today? 

Mr. Bates. Well, the F. II. A. says so, but 1 do not agree that 
there is enough inspection. 

We believe it is of vital importance that proper w r age and em- 
ployment standards be maintained on all home construction. We 
urge that the present requirement of the law that not less than pre- 
vailing wagt s be paid on F. H. A. insured projects of $16,000 or more 
be extended to all home construction subject to the F. H. A. insurance. 
We ask that the 1 minimum standards of construction and the 
inspection procedures of the F. H. A. be reviewed and strengthened 
and that better standards of design and planning be required, includ- 
ing conformity to sound neighborhood plans. Neighbrohood and 
community planning relating housing to employment, shopping, 
recreational, and transportation facilities would go far toward 
guaranteeing a long and satisfactory life of properties underwritten 
by the Federal Government and prove to be a powerful force behind 
better city planning. Application of such standards would provide 
better living for home owners and help keep the F. H. A. insurance 
system actuarially sound. 

Senator Radcliffe. As to your suggestion in regard to the elimina- 
tion of deficiency judgments, is it your idea that would apply only to 
F. II. A. mortgages'.' 

Mr. Bates. I did not get the question, Senator. 

Senator Kadcliffe. You suggested a little while ago that the de- 
ficiency judgment should be eliminated, or there should be a provision 
that it can be eliminated and dispensed with. Have you in mind 
only I'". II. A. mortgages in that respect? 

Mr. Bates. Well, F. II. A. mortgages or any other mortgages that 
are guaranteed by the CJoverment. That would cover the mort- 
gages possibly in the G. I. bill for the returning soldiers. 

RENTAL housing 

Families who wanted to rent their homes have often been forced to 
become buyers. This was true during the last war, during the boom 
following that and in t lie 1930's. During the present war 
thousands of families, ill-equipped for home ownership, have been 
forced to buy homes. This bas been due chiefly to a grossly inade- 
quate supply of rental dwellings. Such rental housing as could be 
found has been for the mosl part poorly designed to supply the light, 
space, landscaping, and recreational facilities required by most 
families, especially those with children. Man}- families need the 


flexible life arrangements which rental housing can provide. Others 
do not want or cannot afford the burdens and responsibilities of owning 
a home. For these families a larger supply of rental housing should be 
available. To this end we recommend— 

(1) Responsible organizations should be encouraged to make large 
equity investments in rental housing projects. Such encouragement, 
however, should not take the form of permitting speculators to ini- 
tiate housing developments whose costs are completely covered by 
mortgage loans. Marginal investments in rental housing will not 
insure continuing ownership responsibility nor adequate manage- 
ment, both of which should be provided for in any formula worked out 
to encourage rental housing. 

(2) Insofar as possible rental housing developments should be large 
in size, of low density in land coverage, varied in apartment sizes and 
shapes, and well provided with playgrounds for children, recreational 
facilities for adults, shopping and transportation services and other 
community facilities. Through zoning and other forms of land-use 
control, inferior rental housing, likely to deteriorate into future slums, 
must be prevented. 


For the millions of families in the middle-income groups who are 
unable to afford to buy a home built by private enterprise for profit, or 
to assume the risk of individual home ownership, and who are not on 
such a low income level as to require subsidy through public housing, 
mutual home ownership provides a means of obtaining needed housing 
on a stable basis. The formula developed by the Federal Public 
Housing Authority for mutual home ownership has already been tried 
experimentally and met with gratifying success. The American 
Federation of Labor feels that every effort should be made to develop 
mutual home ownership on a sound basis. To this end we propose the 

(1) Mutual home ownership is especially suitable in the permanent 
war-housing projects now occupied by war workers. Where future 
employment stability of the present occupants is reasonably assured, 
such projects should be offered at reasonable prices to the tenants 
organized into mutual home-ownership corporations. Assistance and 
guidance in this development should be provided by the Federal 
Public Housing Authority whose operating and management experi- 
ence could contribute much to the successful development of inde- 
pendent and self-reliant mutual home-ownership enterprises. 

Senator Taft. Are you proposing mutual ownership of houses or 
just mutual ownership of buildings containing a number of apartments? 

Mr. Bates. Either a number of apartments or housing groups, 
such as are now under mutual home ownership. Mutual home owner- 
ship is being experimented with and has been placed into effect on 
three or four war-housing projects, one at South Bend and one at 
Dallas that I know of, by the Federal Public Housing Authority. 

Senator Taft. I had a general impression, where it had been tried 
before the war, at least, it was not a success. 

Mr. Bates. It may not be a success in every instance, but there is 
no reason why it should not be a success under the guidance of the 
Federal Public Housing Authority whose operational and management 


experience would contribute much to these mutual homo-ownership 

Senator Taft. I had the impression — it may be superficial — that 
where they had them tlu\v all got into a row with each other, nobody 
agreed od how the thing ought to be run, and that when you come to 
a thing as intimate as a home people wanted to run their own or deal 
directly with some one person. 

Mr. Bates. There may have been something of the kind, but that 
should not be an indictment of the whole project. 

Senator Ellender. What would be the advantage of mutual home 
ownership if the homes were built separately? 

Mr, Bates. They could be built by a corporation in which each 
home owner could participate We have projects now in areas that 
would last 35 to 40 years, which would have to be built under the 
Lanham Act, so why not now let the tenants of that housing project, 
who are sure of steady employment in that area, join together in the 
corporation and buy the homes from the Government? 

Senator Ellbnder. It is in those instances that you would advo- 
cate it*.' 

Mr. Bates. Yes. 

Senator Kllender. As far as new buildings were concerned, you 
would not care for it there, would you? 

Mr. Bates. I do not think that can be extensively put into effect, 
but only in the case of those groups that are just above the groups 
now covered by the United States Housing Act. The groups that do 
not own enough, or that are not in a position to go out and get their 
homes under present circumstances in such projects, they could, in 
that manner, under sound management, buy their own home and 
have a home to live in. 

Senator Taft. I could see the possibility of success in an apartment 
house of some kind, where you have a number of apartments, but I 
would rather question it where you have a whole project of individual 

Mr. Bates. That is something that has not been tried very exten- 
sively, but we are of the opinion that it could be worked out, and it 
would be the means of large groups of wage earners getting their 
own homes. 

Senator Kadcliffe. A little while ago you, I thought, very wisely 
■tressed the spirit of caution which w r ould restrain some people from 
rushing prematurely into home ownership except under certain condi- 
tions. In advocating what you have you do not in any way withdraw 
or modify your statement with regard to that? 

Mr. B \ i is. No. 

Senator Kadcliffe. The same feeling of restraint should prevail in 
this instance as you advocated before? 

Mr. Bates. Thai is right. 

(2) Loans for mutual-home-ownership projects, up to 100 percent 
of the cost, should be authorized by the National Housing Act under 
F. 11. A. insurance. 


In achieving a universally effective housing market an aggressive 
program of slum clearance and rehousing of low-income families is 
America's first line of defense against failure in post-war development 


and expansion of all housing and against continued decay of our cities. 
The chain is as strong as its weakest link. In the same way the total 
housing supply of a community and its total housing plan can only be 
as effective as the assurance of good housing in decent neighborhoods 
to the poorest families and children in that community. 

As a matter of a sound and tested policy in the broadest public in- 
terest, labor calls for resumption and expansion of the slum-clearance 
and rehousing program of the U. S. Housing Authority to provide 
decent homes to families of low income whom private enterprise cannot 
reach. We ask that early consideration be given by Congress to the 
appropriation of funds under the U. S. Housing Act sufficient to 
achieve an annual rate of construction of 500,000 dwelling units a year 
to be built under local programs of properly constituted local housing 
authorities. We urge initial appropriations to make possible construc- 
tion of not less than 250,000 dwelling units immediately following the 
cessation of hostilities. Congressional action is extremely urgent. 
An early authorization of adequate funds will enable local housing au- 
thorities to plan projects now so that construction may be initiated as 
soon as war conditions permit. 

We further recommend that the fullest possible use be made of the 
permanent war-housing projects for the housing of low-income fami- 
lies. We ask that the Lanham Act be amended without delay to per- 
mit the disposal of permanent war-housing projects to local housing 
.authorities to house low-income families. 

To perfect the slum -clearance and low-rent-housing program pro- 
vision should be made for greater reliance by the local housing author- 
ities on private financing instead of Federal borrowing. Local housing 
authorities have been notably successful in obtaining low-rate funds 
from the sale of their bonds. An extension of this phase of local 
authority financing would make virtually all of the needed capital 
funds available from private sources. 

We should like to stress that no program for large-scale construction 
of good housing and no plan for comprehensive urban redevelopment 
can succeed unless slum clearance and low-rent housing for low-income 
families with Federal aid is made the prime instrumentality for clean- 
ing up the areas of economic and physical distress in our cities. The 
U. S. H. A. plan, which has proven itself extremely sound, will not only 
enable the Nation to undertake a truly effective universal program, of 
housing under the prime leadership of private enterprise but will also 
pay large dividends and afford great economies in cutting down the 
enormous costs of economic backwardness, delinquency, and crime 
now borne by our communities and by the whole Nation. 

Senator Taft. You are proposing a somewhat larger program than 
I have heard expressed, perhaps; 500,000 is 5,000,000 in 10 years. 

Mr. Bates. That is a large program, but we never get what we ask 
for by any means, so we thought we would ask for a larger amount and 
maybe we would get half of that amount. 


Our cities from coast to coast have developed in unplanned and 
speculative spurts. The downtown areas have suffered from declining 
taxes due to the decentralization of industry and population to the 
outlying areas while becoming an ever-increasing burden to our cities. 


Blighted districts have developed which must be rehabilitated before 
they deteriorate still further. Shuns, both an economic burden and a 

social liability, will continue to spread if not checked. Development. 
OH the borders of our cities must be controlled or we will have further 
Bprawling and uneconomic decentralization. 

These threats to decent housing of our cities, to the economic devel- 
opment of our metropolitan areas, and to the fiscal position of our 
municipalities can he stopped only by a comprehensive program of 
planned reconstruction and redevelopment of our whole metropolitan 
areas. The only effective way to accomplish this is through the use 
of Federal assistance. The American Federation of Labor recom- 
mends a Long-term urban redevelopment program designed to replan 
and rebuild our cities and towns for sound and stable growth. 

Such a program should embrace the following: 

(1) Federal funds should be made available to local public agencies, 
preferably the local housing authorities to assist them in assembling 
the land in accordance with the local development plans. The Fed- 
eral Public Housing Authority should administer this program making 
use of the techniques and methods developed under the United States 
Housing Act . 

2 Legislation providing for this program should enable the acquisi- 
tion of any land needed in connection with metropolitan development 
in conjunction with a detailed and up-to-date master plan indicating 
land use ; residential, recreational, business, industrial, or a combination 
of these; and plans for public improvements in transportation, parks, 
and public utilities. Specific area land-use plans should include 
major street changes, density, and rent limits, and rehousing policies. 
The grant of Federal funds should be conditional to the fulfillment of 
these requirements. It is vital that controls to enforce standards be 
extended to outlying suburban areas to prevent growth of suburban 
slums at the expense of downtown areas. 

(3) The land acquired and improved should be made available for 
development by private enterprise, for use by the local housing author- 
ity in constructing low-rent projects, or for other public uses. Safe- 
guard- and control of land developed by private enterprise should be 
exercised and retained by a public agency in order to guarantee pro- 
tection of the public's interest in those developments. 

(4) Most important of all is to require as a condition to Federal aid 
that the local government take the responsibility for assuring decent 
housing at rentals within their means for any families evicted because 
of Ian. I redevelopment. 


Without continuous administrative coordination and long-range 
planning, the way toward the achievement of balanced, well-rounded 
communities with adequate housing and the amenities of life at the 
disposal of all will remain the haphazard groping it has been in the 
past. Such research and planning is not the function of a single, 
central group trying to master-plan America's future to suit its own 
whims and predilections or in response to special pressures. 

Every functional group on the local, State, or Federal level should 
take part in this joint task. The Federal Government is in a pecul- 
iarly favorable position to give Leadership in the work of research, 



coordination, and planning, and to make its findings available for dis- 
cussion and use. 

In the field of coordination, research, and planning we recommend 
the following steps: 

(1) The cooperative effort of the Federal housing agencies during 
the wartime emergency should be continued after the war and should 
be facilitated by making the National Housing Board we have recom- 
mended a permanent arm of the Federal Government, with certain 
organizational changes to insure adequate representation in policy 
decisions to the business interests concerned, to labor, and the operat- 
ing Federal agencies engaged in housing. 

(2) Federal grants should be made available to communities to 
assist in the preparation of long-term plans for orderly urban develop- 
ment and redevelopment. 

(3) Funds should be available to the National Housing Board to 
initiate intensive studies in urban problems and housing and to 
cooperate with other agencies and departments in research and 
planning in such fields as population trends, industrial location, land 
development, and regional planning. 

(4) The National Housing Board should have the staff and facili- 
ties to coordinate the various levels of planning market studies and 
other research in this field, so that local, metropolitan, State, regional, 
and Federal planning can move forward together. 

(5) The National Housing Board should be given prime responsi- 
bility in the task of long-term scheduling of public works directly 
related to housing and urban construction so that emergency spending 
in this field will not be hasty and haphazard but will fit into the long- 
range development of the United States. 


Provision of rural housing to low-income farm families presents a 
special and a vital problem in the housing rehabilitation of the 
country. We recommend that such rural housing of adequate stand- 
ards be provided with the aid of county housing authorities, many of 
which have been created for the purpose under the U. S. Housing 
Act, with adequate representation to farmers assured on such authori- 
ties. Fullest cooperation with the Department of Agriculture will 
be necessary in all policies and operations of the rural housing pro- 
gram. Demountable homes built during the war should be made 
available to farm families on equitable terms through such county 
housing authorities. 

This rural housing should be a part of farm rehabilitation and farm 
security plans. The program should assure full protection against 
inflated land values and should extend to farm families an option to 
purchase any property acquired under the program on rental basis. 


We have already urged prompt amendment of the Lanham Act to 
authorize local housing authorities to acquire permanent war housing 
to make them available for occupancy by low-income families. This 
recommendation is in line with the proposal submitted to Congress 
by the Director of War Mobilization and Reconversion. 


We have pointed out also that some permanent war housing 
projects could be made available to tenants under mutual home- 
ownership plans. Disposition of temporary war housing will present 
in many localities a more difficult problem. We urge a public policy 
to make certain that temporary war housing does not deteriorate 
into post-war slums. Temporary war housing should be removed 
as rapidly as possible and as soon as provision is made for suitable 
permanent accommodations lor families still occupying these tem- 
porary projects. Wherever possible 1 , suitable sites of temporary war 
housing projects should be utilized for the construction of permanent 
low-rent housing. 


Of special concern to labor is the provision of post-war housing to 
veterans. The Servicemen's Readjustment Act of 1944, generally 
known as the G. I. bill of rights, utterly fails to protect the interests 
i^ the veteran. The housing provisions of this law expose the veteran 
to speculative profiteering at his expense and place upon him an 
unreasonable and unfair burden of high interest charges by lenders 
whose loans are fully guaranteed by the Government against risk. 

The majority of veterans paying high interest charges and mainte- 
nance (•(><!> will not be able to maintain a home when they attempt 
to buy one. We urge that interest rates on the veterans' housing 
Loans be substantially lowered. There should be no second mortgages. 
No deficiency judgments should be permitted against veterans in the 
event that they lost their homes. There should be adequate grace 
period to tide over veterans in the event of default. 

In the event of the veteran's death, provision should be made to 
assure the security of the home to his family and to prevent speculative 
resale of the property by the mortgage lender. Standards should be 
established to provide for proper planning and design of veterans' 
homes and their location in an adequate neighborhood that will pro- 
tect them against early obsolescence and blight. 

The present law- exposes the veteran to the danger of the worst 
fleecing of any group in the community. Overvaluation possibilities 
alone can be disastrous to him. The provisions of this bill are likely 
to yield such an enormous volume of housing construction completely 
exempt from all standards, even the present inadequate standards of 
the J*\ II. A., that the entire post-war housing program in the Nation 
stands in grave jeopardy of deterioration. 

We ask that the Senate authorize a special study of housing for 
veterans with full consultation afforded to all veterans' organizations 
and to labor. 


We have a tremendous job on our hands. It's got to be done. To 
tret it done and to do it right calls for realism, for complete agreement 
regarding the pbjective, and for real teamwork on the part of all con- 
cerned. To have such teamwork we must have the rules of the game 
clearly defined and agreed to in advance. To enable, us to reach our 
goal there must be leadership and drive. It is up to Congress to 
provide that leader-hip and to give the Nation a comprehensive 
program for which it a<ks. 

91183 — 45— pt. 10 3 



To bo realistic in our effort we must be fully aware of the difficulties 
and limit at ions of the task. We must not be led astray by false prom- 
ises of miracles or by cheap quack remedies. The foremost among 
the realities facing us is that stable jobs and steady incomes for wage 
earners are the only source of a large-scale housing market. Unless 
wage incomes are stabilized at a much higher level than they ever 
were before the war, no formula and no device will enable us to bring 
good, privately built housing within the financial reach of the great 
mass of our wage earners. 

We must also be realistic about how the job can best be planned, 
how it can be done, and what kind of homes it will provide. The 
strategy of post-war housing must be bold in its scope but it cannot be 
divorced from practical experience. The planning it calls for is prac- 
tical planning. It must reckon in dollars and cents, including the 
dollars and cents in the worker's pay envelope. Armchair builders 
and parlor planners will not build post-war housing. What lasting 
advances we make in providing more and better homes will be brought 
about by the combined skill, experience, and ingenuity of American 
enterprise and given reality by those who have the skill and the 
know-how of design, development, and building. 

We must be realistic also in making sure that we provide the kind of 
housing that the people need and that the people themselves want. 
In meeting the demand of the people, full use should be made of all 
modern and real technical advances. We should recognize, however, 
the plain truth that the average American family does not want a 
dehydrated home and prefers to live in solidly built, safe, and durable 
dwellings, not in flimsy match boxes. 

There must be candid realism also in our approach to the housing 
costs. The biggest single cost of home ownership is the cost of financ- 
ing. Reduction in interest rates is the most important step to lower 
the cost of home ownership. Reduction in construction costs must 
be achieved but without sacrificing the minimum standards of health, 
safety, and durability. In the period immediately following the war, 
control of prices on building materials should be continued. The 
accumulated pressure of unsatisfied demand is far too great to avoid 
runaway building material prices unless they are held in check. 

We must be realists, finally, about the related responsibility of the 
local, State, and Federal Governments in the post-war rebuilding 
and redevelopment of our cities. Each must assume a full share of 
the responsibility or none will succeed. The job of local planning 
and the operating task of development and construction is the preroga- 
tive of the local community. But that job cannot be done unless the 
Federal Government assumes its full responsibility for financial aid 
commensurate to the critical need for better housing for all,' a need 
deeply aggravated by the war emergency. 

The Housing Committee of the American Federation of Labor has 
reviewed and revised its estimate of the housing need. Our estimate 
is based on the assumption that final victory will come in 1946. We 
estimate that in 1956, at the end of the first 10-year period following 
the war, the accumulated physical need for urban residential housing 
will total 15,600,000 dwelling units. 

This is a conservative estimate. We call for a 10-year program of 
housing construction reaching the average annual pace of 1,500,000 
units per year. Such a program would enable us to meet most of the 


minimum Deed. Its volume could be readily kept up in subsequent 
years. 'While we never before attained such a high annual volume of 
home building, we can attain it, if we decide to attain it and prepare 
to attain it. 

Full volume of residential construction on the scale indicated can 
he reached within 5 years following the war. Let us set that volume 
IS our goal. It should be our goal for full employment. The Ameri- 
can Federation of Labor believes this minimum program for meeting 
the accumulated housing need to be the least expensive, the most pro- 
ductive, and the most powerful generator of post-war employment. 

Senator Tapt. As to that 1,500,000, 500,000 would be public 
housing under your plan and 1,000,000 would be private housing? 

Mr. Bates. If we could get that. 

Senator Taft. Mr. Bates, I am interested in your criticism of the 
veterans' housing provisions. 

Mr. Bates. Yes. 

Senator Taft. Can you give us a little detail as to just how the act 
is ;it fault? 

Mr. Bails. I am not familiar with all the details, but the fact 
remains that the bill provides, as I remember, that the veteran can 
have :i $2,000 loan guaranteed by the Government. He will go to a 
lending institution, to a bank, and he can borrow 80 percent of the 
cos; of the house, say. $5,000; and if he gets a 4}£-percent F. H. A. 
mortgage loan of $5,000 the Government would also guarantee under 
the (i. 1. I>:11 a loan for the down payment of $1,250 on that purchase, 
and he will get that loan for 5 ! 2 percent. 

Senator Tapi. From the Government? 

Mr. Bates. From the bank. 

Senator Taft. You mean the whole $5,000, or does he get two loans? 

Mr. Bates. If he had to get the second loan he would have to pay 
an extra percent. The first loan would be guaranteed by the F. H. A. 

Senator Taft. Why should not he borrow under the F. H. A. pro- 
visions and have the Government help him out with the 10 percent, 
if necessary? 

Mr. Bates. 1 do not know why that w r as not done, but evidently 
the private lending institutions of the country were able to see to it 
Unit these loans should be made through them. Of course they do 
not stand a chance to lose a cent. 

One other problem in that connection should be given study, and 
that is the fact that if all the returning veterans after the war were 
granted loans to build homes and there were not a safeguard placed 
on the homes, we could expect, oh, 1 should say, 60 percent of them 
to he foreclosed by the lenders and placed back on the market for 
sale, and if there were no restrictions placed on the resale of those 
homes they would be resold at a price higher than the mortgage and 
the cost of the bouse originally. I think this committee 1 should give 
close study to that (i. I. hill of rights insofar as it affects housing 
and the soldier's interesl and his protection under the law. 

Senator Tapt. It may upset the whole program. I think we have 
got to give consideration to it in some way; at least, we ought to 

spread it out . 

Mr. Bates. I have outlined a program providing thai ;i good many 
homes should be built in the 10 years after the war, hut the fact 
remains unless there are some restrictions kept on the price of building 



materials, with all of the loans given to the veterans to build homes 
you would Lave a demand for materials so great that the prices would 
skyrocket, and onty those that had plenty of money would be able 
to buy the Deeded materials to build homes immediately. 

Senator Ellender. Would not the same thing apply to the cost 
of labor? 

Mr. Bates. No; there would be plenty of men coming back from 
the Army to do all the work that would be required on these homes. 
There arc over 1,500,000 American Federation of Labor members in 
the armed forces now, and the only reason we have a shortage in 
construction labor at the present time is because all the young men 
are in the Army. But they are going to come back, at least we hope 
a good percentage of them, and they may want jobs and there will 
have to be jobs for them. 

Senator Taft. You spoke, however, of the maintenance of the high 
wage scale. Does not that have a counterpart in the maintenance 
of a high cost for homes? Have you any suggestion as to how the 
high cost of homes may be kept down? 

Mr. Bates. Now, I want to ask that Mr. Shishkin be given per- 
mission to make a statement for a few minutes, and he will cover that 
phase of it. 

Senator Taft. I think, in connection with that, we might add the 
■question of whether a guaranteed annual wage would look toward a 
lower cost. I think it might be for the benefit of the committee to 
know what the effect of seasonal unemployment in the building indus- 
try is. 

Mr. Bates. I do not see, Senator, how you can place a guaranteed 
annual wage into the construction industry. We had given study 
and thought to that way back to the depression years. We work for 
contractors, we work by the day and by the hour, and the man we 
work for may not have a job for us tomorrow. 

The construction wage scale is established for building trades' me- 
chanics — the workers who may be laid off at a half hour's notice. 
The wage over a period of a year received by the construction worker 
is not high; it is a low w T age. The reason that this so-called Wage 
may appear high to some people is because of the fact that to the 
industry and everybody else it means that when you need the service 
of the construction worker he should come immediately at your beck 
and call, and whenever you finish with him you don't let him work 
there any further, you don't let him work to the end of the month, you 
don't even let him work to the end of the day; but if he gets through 
at 3 : 30 in the afternoon he gets his money and he goes home. 

When a builder, or an industrial plant, or anybody else builds a 
building and they make a loan for it they have to pay interest on the 
loan. The wages paid to building construction workers is far less 
than the cost of that particular construction. He wants the building 
completed immediately and without any delay, and therefore there 
must be an adequate supply of construction workers to meet the de- 
mand of those that call for those workers. That is one of the reasons 
why the so-called wage of the construction worker appears high to 
those who do not give a close study into the actual facts. 

Senator Radcliffe. Mr. Bates, it is my understanding, and it has 
been so suggested, that these G. I. loans should be made only in 
accordance with what might be considered sound business principles. 


]n other words, it must be a business proposition, and a workable one. 
Many of these returning veterans may bo in a situation where they 
cannot set up what you would consider a sound business proposition. 
11<<\\ would you take care of that situation'.' 

Mr. Bates. 1 haven't given that much thought, but there should 
be safeguards placed around these loans so that the veterans should 
not be able to secure these Loans just because somebody in the neigh- 
borhood told them they could get them, where he could get the loan 
and establish a home and then lose the home 5 or 6 months afterward 
and have the bank, or a financial institution that sold him the home 
turn around then and sell the home at a protit. I have not studied the 
bill sufficiently to suggest what specific safeguards and protection 
should We thrown around it, but there should be plenty of safeguards 
and protection thrown around the homes of the returning veterans. 

Senator Radclipfe. You believe that safeguards can be thrown 
around it and some kind of arrangement can be worked out where 
emergency cases can be nut. where these people can get homes but 
where they are not in a position to get them under sound business 

Mr. Bates. I believe so. 

Senator Taft. Thank you, Mr. Bates. We will next hear from 
Mr. Shishkin. 


Mr. Shishkin. My name is Boris Shishkin. I am the secretary of 
the housing committee of the American Federation of Labor. 

1 would like to supplement Mr. Bates' statement by very briefly 
presenting, first, :' few simple facts that have not been given general 
ideration and which we believe to be fundamental to the post-war 
h< using program. They are plain facts of life. They are the facts 
that every home builder, every real-estate agent, and every housing 
administrator should know. 

The first requirement of the average American worker is security in 
his employment. A worker's job is bis livelihood. The wages he 
earn- are almosl invariably the only source of support of the wage 
earner's entire family. The wage earned by productive work is 
decisive in detennining the American standard of living. For that 
wage is the measure of the \\ age earner's ability to provide for himself 
and his dependents the essent ials which include food, shelter, clothing, 
medical care, recreation, and savings. 

In the pasl the worker's job has never had long-term security. 
The loss of work and income has always been a major hazard for the 
w age earner. 1 [is wage has been even less secure. In most industries 
and occupation-, in mining, manufacturing and trade, there have been 
wide fluctuations of income. Every seasonal fluctuation in industry 
mean- a temporary lay-oil' without earnings, and every few years conic 
longer shut-down-, with uncertain duration of joblessness each time. 

In planning for the future, we cannot escape the plain economic 
Realities of t lie past . The average wage earner has never had economic 
security. Except in wartime, we have never had full employment. 
Full employment has become a glib phrase whose real meaning few- 
people have grasped. Yet, its meaning is of vital concern not only to 



the worker but also to every mortgage lender, every businessman and 
every tradesman. 

Full employment means not only jobs for all those who are willing 
and able to work, it also means jobs at a fair wage. Nor does full 
employment moan a job for every worker for a month or for 1 year or 
2 years or G years. Full employment should mean continuous pro- 
ductive employment at lair compensation over the entire productive 
life span of the wage earner. 

It is easy to forget today that only a few years ago the lives of most 
workers were overshadowed by full or partial unemployment. Only 
a few years ago the employment and personnel policies in our industry 
were policies born of the depression. As recently as 1939 and 1940 
committees on older workers were created in the Federal Government 
and in the several States to deal with the employment policies widely 
prevalent in many sections of industry where the services of a worker 
over 40 years' old were no longer required — regardless of his skill, 
ability, or productive capacity. 

The Federal Committee on Employment Problems of Older Workers 
reported on March 1939 that — ■ 

While employment improved after the age of 25, some time after the age of 40 
for men and after the age of 35 for women, a reversal in this downward employment 
trend sets in and thereafter employment prospects decrease. * * * Unem- 
ployment in Philadelphia was found to last almost four times as long among men 
between the ages of 40 and 44 as among those between the ages of 20 and 24. 
Yet it is precisely during the middle years of life that workers acquire the heaviest 
family responsibilities, and their lack of employment means both deprivation 
and added burdens for the young. 

I might add that the burden of home ownership is the major 
burden of those responsibilities that fall so heavily in that period of 

The New York Committee on Discrimination in Employment of 
the Middle Aged reported in March 1940: 

The man over 40, the middle-aged man looking for a job, is not one man; he is 
several millions. 

At the same time, the unemployment census of 1937 revealed that 
unemployment is most extensive in the age group of 20 to 24. This 
evidence, together with a large number of pay-roll reports studied, 
reveals that in many of our major industrial corporations the tenure 
of employment was confined to the age group between 25 and 40. 
Between the ages of 18 and 45, which generally can be conservatively 
taken to be the productive life span, this productive life span of the 
majority of the workers adds up to a total of 27 productive years. 
This life span is the prevailing one in the situations we have studied, 
,but it actually is much shorter. 

A wage earner who reached the age of 45 at the outbreak of this war 
had lived through not only the big depression but also two other 
depressions, all during his productive life span of 27 years. The length 
of time in which an average wage earner was without regular income 
due to depression unemployment, seasonal unemplo3^ment, illness, and 
other disability, amounts to approximately 40 percent of the total time. 
This means that during the productive life span of 27 years, the 
average wage earner w r as fully employed and had full wage income for 
only 16 years and was either totally unemployed or had only part-time 
employment in the aggregate of 1 1 years. 


To put it in another way. the average annual income of the average 
wage earner during the entire life span of his productive work is 
normally 30 to 40 percent less than his income would have been had 
be been billy employed every week in the year and every year of his 
entire 27-year productive life span. 

According to the Bureau of Labor Statistics of the United States 
Department of Labor, average annual per capita earnings of workers 
for a full-time year of 52 weeks, even in a nondepression year, 1939, 
would be: 

In the chemical industry $1, 331 

In the paper and allied products industry 2 1, 233 

In the food and kindred products industries 1, 270 

In the leather and leather products industry 995 

In the entire textile industry 876 

These figures, Mr. Chairman, are full-time annual earnings, assum- 
ing 52 weeks of work. In none of these industries did workers actually 
find employment for a consecutive, continuous 52 weeks. 

These figures represent the full income of the average worker in 
several of our major basic industries, including all wage payments, 
with overtime and bonus. Actually, of course, the average worker 
in any of these industries did not earn even this income. In a normal' 
peacetime year seasonal unemployment, temporary lay-offs or period 
in which he worked only part of the week would have meant up to 
3 or 4 months without income. 

In other words, the normal income expectation in this large and 
representative group of industrial wage earners would have ranged 
between $600 and $1,000 a year. Incomes w r ere somewhat higher in 
some of the heavier industries, but if you even take those, and take 
the average wage earners in all manufacturing and project their 
incomes, the very incomes that anybody talks about when they talk 
about a 25-year mortgage for home ownership, if you project that 
over 2.") years you find the average wage earner in the United States 
has not had an income over that period of 25 years averaging more 
than $1,000. 

These plain truths are at the root of this country's peacetime 
housing problem. They stand as warning marks of the limit of 
economic reality upon which a comprehensive housing program must 
be founded. 

They plainly show the course we should follow. Those who are 
running away from these realities and who try to persuade the Con- 
'_Tr-s and the public that a stable mass housing market can be created 
by merely cutting costs or by any other simple and single device are 
leading us out on dangerous, thin ice. 

In our plans for post-war housing \ V( . must not be led away from 
the real issue, and that issue is adequate income for the average 
worker. Until and unless that issue is met, large-scale construction 
of good housing commensurate with the Nation's need cannot and 
will not be achieved. 

In projecting any kind of comprehensive program for home building, 
developed by private enterprise and based on sound financing, we 
must first a — me full employment, which means ^ul) employment not 
only for a short time, not for a period of a month, not even for the 
whole year, but full employment which gives the worker a full oppor- 
tunity for the development of his skill and a full oppoitunity for the 



development of his productive capacity and his income capacity over 
the period of his entire productive life span. 

Senator Ellender. Have you the yearly income for carpenters, 
bricklayers, and electricians? 

Mr. Shishkin. I do not have the figures with me. The annual 
incomes for construction workers are available. I did not intend to 
cover that ground because I expect the testimony on the part of the 
spokesman for the Department of Labor will cover that. The figures 
are compiled by the Department of Labor. 

The annual incomes before the war in the building trades averaged 
considerably less than in our major heavy industries, including the 
automobile industry or the steel industry. The average annual in- 
come in building construction through 1939 ran on the average of 
less than $1,200 a year. There are constant interruptions in building 
work. There is always the question of transferring from one job to 
another. There is always the problem — although it has diminished 
now and it differs widely in different sections of the country — of 
interruption of work due to seasonal conditions apart entirely from 
the conditions in the industry itself, which has always been sporadic. 

Senator Radclifpe. Do these wage scales contemplate any period 
of unemployment? In fixing these wage scales, was it contemplated 
there would likely be a certain period of unemployment, and if so, 
do you think that is a sound method of operating? 

Mr. Shishkin. As Mr. Bates said, the wage scales take into con- 
sideration the fact that there is a considerable amount of unemploy- 
ment. This may be a good place to mention some of the implications 
of the problem that was raised with regard to the annual wage. 

There has been a great deal of effort put forth toward stabilizing 
construction employment. The annual wage income, whether it is 
in the manufacturing industry or construction, or any other employ- 
ment, has to be related to stable employment. There would have 
to be stabilization of work on an annual basis which would guarantee 
the annual wage. In the case of building, even in large-scale projects 
where attempts of that kind have been made, you will find there has 
to be a consecutive rotation of skills used in order to utilize labor 
most effectively and most economically. It would be possible theo- 
retically to have 1,000 units of housing and have one crew continu- 
ously employed in building those units, so one crew of foundation 
diggers would go from one unit to another and build all the founda- 
tions, but you can see from that what waste it would be to have the 
other groups stand idle while one group was given full employment. 
There is no large-scale housing projects that could give full yearly 
employment to each group of skilled workers, unless they were 
supported either on a Government pay roll during the necessary 
idleness or had something else to do in between times. 

As a matter of fact, whenever the economical builder needed to 
achieve a reduction in costs a premium has been underwritten by 
the builder to get the best available labor, to get the best skills so 
he could complete the building as rapidly as possible. 

Senator Taft. Is it not true that the labor cost per unit of most 
manufactured goods has tremendously decreased for the last 25 years, 
such as the manufacturing of automobiles, whereas the labor cost of 
housing has not decreased? That is the general impression. Is there 
any method by which the labor cost of a house can be decreased by 
technological improvement and organization? 


Mr. Shishkin. I think. Senator, there lias been a decrease in the 
labor share in the cost of home ownership, of home buying. The cost 
of home ownership cannot be divorced from costs other than the 

Construction costs. [f you take the final product into consideration, a 

lot of technological improvements have been achieved before and 

during the war, when one of the largest spurts in economical building 
was made. The economies that were achieved in the construction of 

the { . S. II. A. bousing projects, of which there is a complete record 
over a short period of years, indicate that marked progress was made. 

I feel sure that after the war, when our advances become known and 
translated into the operating experience of the industry, that a lot of 
these economies will come out and there will be a further reduction. 

Senator Taft. I notice Mr. Bates laid a good deal of emphasis on 
research, and so forth, as to everything except construction. All of 
the research projects that he proposed had to do with the marketing 
practices and various forms of study of housing planning, but he said 
nothing about research on material and labor costs. 

Mr. Shishkin. Well, Senator, is it for the Government to decide 
on the types of materials to be used? If the Federal Government 
undertook, on its own initiative, to set up industrial research for 
building construction it would have to follow along with industrial 
research for airplane construction, automobile construction, and other 

Senator Taft. It has already done it for airplanes. 

Mr. Shishkin. It has done that as the result of the war. 

Senator Taft. No; the National Advisory Committee for Aero- 
nautics started well before the war and has done an extraordinary 
job. Of course it has been developed greatly by the war. 

Mr. Shishkin. But the automobile industry had made a pretty 
good automobile before the war. 

Senator Taft. Without Government aid, that is correct. They 
were pretty well organized. The difficulty with the housing industry 
is that the units are so small that no one person is able to set up the 
kind of laboratory that the manufacturers have. 

Mr. Shishkin. I personally live near a housing project for 8,500 
families. That is not a small unit. 

Bator Taft. They may come to that. I suppose that is an in- 
surance company practice. 

Mr. Shishkin. That is right. 

Senator Radcliffe. I suppose prefabricated housing has resulted 
in some labor reductions. It just occurred to me that a prefabricated 
house might illustrate that reduction in some manner. 

Mr. Siiisukix. I would say that the question of cost in prefabri- 
cation has been discussed very widely and we have given it a great 
deal of thought and study. As you undoubtedly know our record, 
we have always supported all possible developments that can help 
in the reduction of cost, and there has been no labor opposition to 
any change due to these developments. There have been no strikes 
or stoppages because of the introduction of new methods of pro- 
fabrication, the record will show that. 

At the same time, as Mr. Rates said, we have got to be realistic, 
and the realism accessary in connection with prefabrication is this: 
Prefabrication is based on economies in labor, saving of labor, that 
is, the use of labor, and other economies that might be possible due 
to mass production. The greatest misconception of prefabrication is 

91183 — 45— pt. 10 4 



the idea that one huge plant can produce a million units. The pre- 
fabrication plant, in order to- be able to achieve those economies) 
would have to attain that volume, and there is no possibility of that 
ever being done in home construction. 

For example, a plant is established in the State of Vermont, let us 
say- — actually we have had the experience with one in New Hamp- 
shire- — but it finds that the only effective market it can serve is 
within a limited radius of perhaps 100 miles. Because of transporta- 
tion costs and other difficulties, the only economical production, to 
compete with standard methods of construction, would be to produce 
a much higher volume than the market within that radius could 

Well, in Vermont, within a 100-mile radius, there is not an over- 
whelming demand for housing, and since the production is forced 
below capacity, the costs become high. 

Senator Radcliffe. I suppose war conditions are responsible for 
some of that. Under normal times the transportation problem must 
be somewhat different. 

Mr. Shishkin. That is pre-war experience. 

Senator Radcliffe. That is pre-war experience? 

Mr. Shishkin. Yes. I would say this: During the war the greatest 
possible use, with Government support and financing on more fa- 
vorable terms than can ever be conceived in peacetime, was given to 

As to the experience of the Government I would not like to testify 
directly. I would like the committee to question Mr. Emmerich, the 
former Commissioner of the Federal Public Housing Authority, who 
was responsible for that program, and Mr. Klutznick, who is adminis- 
tering it now. 

It is the experience of the Government, under the highest degree of 
favorable financing and large-scale construction, that prefabrication 
up to this time has not been able to achieve the claims made for it. 
We have to recognize that around the country there is no place, 
except in the middle of the Rockies, where there is not a brickyard 
within a 50-mile radius, and that this existing industry has the 
productive capacity to serve usefully a major portion of the housing 
market. Technological progress has been made, but it cannot be 
made with a single dislocation of the existing productive resources. 

Senator Buck. Has the product itself been satisfactory, the pre- 
fabricated house? 

Mr. Shishkin. Beg pardon? 

Senator Buck. The ones that have been built — have they been 

Mr. Shishkin. My basis of experience is a little limited because 
I live in one. My personal experience has not been satisfactory. 
Maintenance costs are extremely high. Mr. C. F. Palmer, who was 
Defense Housing Coordinator here once, after a discussion of the 
problem with us had undertaken an experimental project at Indian 
Head, Md., near Washington, in which several hundred units were 
built experimentally by a wide range of prefabricators all over the 

Senator Taft. Was that one project? Are they all together? 

Mr. Shishkin. They are all in one project. 

Senator Taft. It would be interesting to go down and look at it. 


Mr. Shimikin. The claim was they could be built in a few weeks. 
It took a year and a half to build them. The claims on cost were never 
borne out, and there were unforeseen difficulties. A steel house 
presented a difficult problem of insulation. After you took care of the 
problem the cost went beyond the expected cost, so the reason for the 
existence of that steel house fell down. It is clear evidence of what 
has bnn attempted with the fullest Government cooperation, and it 
ought to be studied. 

Senator R LDCLIFFE. 1 assume the prefabricated house is still some- 
what in the experimental static. It may be, 1 don't know. 1 am not 
familiar with that situation. Experience may demonstrate methods 
of eliminating some of the difficulties to which you refer. 

Mr. Shishkin. A great deal of progress has been made. The only 
really important thing to guard against in that is that there is always 
a temptation on the part of the prcfabricator to cut on the cost in 
order to make a showing, at the expense of standards. 

That is the reason why so much of the prefabrication has been 
substandard, shoddy and flimsy construction, without adequate 
soundproofing, heating insulation, and assurance of durability. 

I do not want to take any more of the committee's time, except to 
cover two things. Mr. Bates has introduced an estimate of the hous- 
ing need by our housing committee, and I would like to say a word on 
that, if I may. 

The estimate covers a period of 10 years, between 1947 and 1956. 
It was assumed that the war would be over by 1946. We have revised 
our previous estimate and we find, in the main, that our previous ap- 
proach has proved sound. We find that the total need for replace- 
ments in our cities and towns is 9.5 million dwelling units. These 
ari' all urban units. About 9,600,000 are needed for additional hous- 
ing, to take care of the increased number of urban families, undoubling 
the doubled-up families, and so on. 

Senator Tapt. That is about 50 percent more in each case than 
Mr. Blandford's proposal, is that correct? 

-Mr. Shishkin. Mr. Blandford's estimate is a little over 12 million. 

Senator Taft. Six million in each class, as I remember it. 

Mr. Shishkin. That is right. This is an entirely different estimate. 
I must say, Mr. Chairman, that we take a very strong exception to 
Mr. Blandford's estimate because of the tremendously important 
implication of an estimate of this kind to future employment. Under- 
employment can result from under thinking. 

Senator Taft. I gather from Mr. Bates it would take 2 or 3 years 
to work up to this maximum. This 1,500,000 w T as a rather leveled-off 
figure. You thought you would probably take 2 or 3 years to get 
industry and everything else organized to do that, is that correct? 

Mr. Shishkin. That is correct. Let me say this: In our estimate,, 
we are presenting an estimate of physical need and only that. The 
N. II. A. staff apparently started with something like that and then 
got lost in the woods by mixing up the need with the demand, and also 
with programing. It is all in there. For example, you cannot have 
any accurate estimate of need by income classes for the next 10 or 15 
years. It just cannot be done, except as a matter of wildest prophecy. 
So, what we are presenting here is the physical need, the sheer physical 

The shortcomings of the estimate made by N. H. A. are particularly 
glaring with regard to filtering the buildings down from the higher 



income group to the lower income group, as if it were a slow, steady 
process, filtering hand-me-down houses from one income bracket to 
the next. That is not the way it works. It works spasmodically, in 
terrific periodic dislocations when, during the period of liquidation, 
all these units fall down, not one step, but a whole flight of steps, into 
a very much lower category. That is not, of course, the way it should 
work and we should not plan for it. 

No one should plan a housing program on a hand-me-down theory. 

In the physical need the N. H. A. arrived at an underestimate 
through an oversight on their part. They lost sight completely of 
the basic consideration, the consideration that has been borne closely 
in mind by the best students of the problem in the country that 
have been giving it close attention, and that is, if you talk about 
taking care of the housing need, you cannot count one substandard 
unit in a slum neighborhood. Where there is a block of 40 houses 
and 30 of those houses are completely blighted, dilapidated, and create 
the worst possible fire trap slum without any facilities, the remain- 
ing 10 units cannot be left out of account as suitable for future use. 
If anything is to be done through any kind of an adequate housing 
program, all of the 40 houses would have to go. 

If you take the census figure in 1940 of about 7,000,000 units that 
are substandard, that were substandard in 1940, and apply the 
principle that I have just suggested, you would have to add for the 
country as a whole, in all metropolitan areas and all urban areas, 
about another million units. That is substantially, in the technical 
approach to the physical need, to the replacement need, the basic 
deficiency of the N. H. A. estimate and we believe it to be very 

There are a number of other differences between the two estimates. 
The period of time is a little different. Of course the N. H. A. assumes 
that housing to replace slums ought to be built leisurely, that we 
ought to do it in 20 years. If we are to have full employment, if we 
are to have the steel industry and other supporting materials indus- 
tries fully employed, we can set up a pace of 1,500,000 units a year, 
on the average in the 10 years after the war and keep it up after- that. 
We should be able to bring up the volume of construction to 1,750,000 
units a year in a period of 5 years after the war. The annual volume 
from then on would, of course, be fluctuating somewhat to account 
for fluctuations in activities in other industries. 

I have a table here, Mr. Chairman, covering it in detail, with ex- 
planations of the detailed break-down of our estimate, which I would 
like to have inserted at the end of my testimony, if I may. 

Senator Taft. Surely. 

Mr. Shishkin. There is only one other point that I would like 
to touch on briefly, and that is the question of over-all cost. As Mr. 
Bates pointed out, the major cost of home ownership is the cost of 
financing. In addition, it must be recognized, in reviewing the 
discussion presented here on the reductions in the cost of building, 
that the immediate prospect, cannot be divorced from the experience 
of the past. 

The record shows, Mr. Chairman, that during the entire pre-war 
period the cost varied directly with the volume. That is, when there 
was a lot of building, when there was an increased demand, when there 
was increased prosperity when the retail sales increased and the na- 
tional income was high the prices of building materials were also up 


tecause the supply was not keeping up with demand. When there 
hi- b decline, building material prices went down, although they did 
tot respond to it as promptly. But we arc facing a period of a post- 
war boom. There is bound to be a price boom in building materials 
hat will mean a cost increase for housing. We are not going to 
iave reductions in the cost of housing unless measures are taken to 
ccomplish two things: First, to tool up for the coming increase in 
LOUSing construction, to make sure that we provide in advance stock 
liles 01 building materials to take care of the great demand, so that 
here is qo shortage of supply. There will not be a shortage in the 
upply of Labor, but there will be a shortage in the supply of materials. 

Senator Radcliffe. Do you think we can do that in any way with- 
in restricting our war program at this time? 

Mr. Shishkin. We can do a good deal during the interim between 
:Ow and the end of the war. And, second, we should extend price 
ontrol during the critical stage, during the period immediately follow- 
ng the war, bo as to prevent a response of prices to this great pressure 
hat is going to be upon us. 

Senator Taft. Would you continue both wage and price controls or 
nly the price controls? 

Mr. Shishkin. Senator, as far as wage controls are concerned, they 
my be put to only one effective use. We are likely to have, in the 
[•adjustment period, an oversupply of labor. If the industry is not 
ble to use all those workers, the only possible use for wage control is 
D keep the wages from going down, because the dowmward pressure 
n wages is going to be very great. 

Senator Taft. There is a tremendous move now to raise wages to 
ompensate for the decrease in take-home pay. 

Mr. Shishkin. That is true. There has been a constant decrease 

f income for quite a long time now. We have had a downward cycle 

f income already. Unless we cheek that in some way we are going 

I hack to where we were in 1939, with an income level which 

annol possibly support a post-war market. 

Senator Taft. Wages have gone up 25 and 30 percent. 

Mr. Shishkin. In his report to Congress Mr. Justice Byrnes said 
9.5 percent, and I do not think he is too conservative. 

Senator Taft. The wage rates have gone up about 50 percent from 
bout 67 to 100 cents an hour. 

Mr. Shishkin. The wage rates, that is, the actual rates of pay in 
lanufacturing, according to the War Labor Board, went up 19.5 
ercenl since January 1941. You are probably referring to the 

Senator Taft. No, no; I am referring to the wage rates. Wage 
ites have gone up more than L9 percent, I am sure, from the figures 
mi were given to us. Of course, there are three figures to he taken 
lto consideration there: The wage rate, average hourly earnings, 
ad the take-home pay. 

Mr. Shishkin. That is right. 

Senator Taft. The average hourly earnings have gone up 50 
ercent. Of course, that is partly due to overtime. 

Mr. Shishkin. Since the 1st of January 1941? 

Senator Taft. Yes. 

Mr. Shishkin. That is right, with overtime and upgrading, hourly 
Earnings advanced 10 percent more than wage rates. 



On the question that the Senator asked I want to introduce another 
table here which is very significant. It shows what has happened to 
the industry. A great deal has been said in this hearing about this 
great diversity and the great number of small enterprises in building 
construction. I would like to have this inserted also at the end of the 
testimony, showing what has happened to the contract construction 
business in terms of the number of firms operating in the industry 
during the war. 

The number of firms, large and small, was reduced from 202,100 
in 1939 to 158,100 in 1943, a decline of 85,700 firms, or a decline 
of 35 percent over a period of 4 years, as compared with a decline of 
only 15 percent in all industries and an increase of 1.2 percent in 

Senator Taft. Was that not because of the practically total elim- 
ination of the building of houses, except for the large-scale projects 
that were handled by large-scale contractors and the small contractors 
have had nothing whatever to do? Isn't that true? 

Mr. Shishkin. Yes; but in 1934 the volume of war housing con- 
struction was quite sizable and a great deal of it can be accounted 
for by the growth of individual enterprises that operate on a large scale. 

Senator Taft. And of course many contractors are engaged in 
other things than housing. I would expect the moment you start a 
general housing program you would have a tremendous increase again 
in the number of contractors that would build few houses per con- 

(The matter submitted by Mr. Shishkin is as follows:) 

Housing need — Accumulated physical requirements for urban housing in the United 
States, 1940-56 (in millions of dwelling units) 

(1) Substandard units, 1940 l 8. 2 

(2) Units becoming substandard, 1940-56 2 2. 9 

(3) Total substandard units accumulated by 1956 11.1 

(4) Less substandard units suitable for rehabilitation 3 1- 9 

(5) Total substandard units to be replaced ' 9. 2 

(6) Units destroyed by fire, flood and storm, 1940-56 4 _S 

(7) Total replacement need 9. 5 

(8) Increase in number of urban families (including migration) 7. 5 

(9) Undoubling of doubled up families 5 2. 1 

(10) Total need for additional housing 9. 6 

(11) Total need for replacement and addition, 1940-56 19. 1 

(12) Less wartime housing supply, 1940-46 6 3. 5 

(13) Total net need, 1947-56 15. 6 

Note.— The above estimate is a revision of the previous estimate of post-war housing need made by the 
housing committee of the American Federation of Labor in 1943. The present estimate assumes final 
victory in 194(1. 

1 According to 1940 Housing Census, adjusted for coverage, there were 7.09 million substandard urban 
units (in need of major repairs or without private baths). In addition, 1.13 million substandard units are 
estimated to be located in areas of concentrated slum and blight or in predominantly substandard blocks 
in areas of less deterioration. Of the total of s.22 million units which wore substandard in 1940, 1.08 million 
units may be rehabilitated before 1957 and 7.04 million must be completely replaced. 

2 Adjusted to eliminate duplication of units accounted for in line (1). Of the 2.91 million units becoming 
substandard in 1940 50, S.30,000 may be rehabilitated before 1957, and 2.0S units must be replaced. 

3 1.0S million of the units substandard in 1940 and .S.30,000 of the units becoming substandard by 1956. 

« The best estimates, based on actuarial experience, indicate loss of about 840,000 urban units due to these 
causes in lie pnind considered. We assume, however, that two-thirds of the units so destroyed will be 
substandard units, already accounted for. The remaining 280,000 units represent an additional replacement 

s Including families of returning servicemen. 

« Estimated number of units added, 1940 through 1940. excluding temporary units. The figure includes 
■ estimated 750,000 units of interim housing to be built in 1946. 



Estimated number of all operating business firms in contract construction compared 
with manufacturing and all industries in 1939 and 1943 




Net change, 
1941 -48,1 

decrease (— ) 

or increase 
(+) since 1941 

3, 316, 700 

202, 100 


l'i's, con 
158, 100 

-85, 700 


+ 1.2 

1 1941 was the peak year for the total number of operating businesses. 
Source: U. S. Department of Commerce. 

Senator Taft. Unless there are further questions, the committee 
will recess until 2:30. 

(Whereupon, at 12:15 p. m., a recess was taken until 2:30 p. m. 
of the same day.) 


(The subcommittee reconvened at 2:30 p. m., pursuant to recess.) 
Senator Taft. The committee will come to order. 
Mrs. Rosenman, please. 


Mrs. Rosenman. Senator, are you interested in having on file a 
copy of the members of the board of directors of the National Com- 
mit tec on 1 [ousing? 

Senator Taft. 1 think it would be very useful. You have a very 
good list, 1 remember. 

Mrs. Rosenman. Thank you. I think it shows the complexion of 
the group, and the widespread interest that it has. 

(The lisi til' officers and board of directors of the National Com- 
mittee on Housing, [nc, will be found on file with the subcommittee.) 

Mrs. Rosenman. The inquiries which this committee on housing 
and urban redevelopment has undertaken divide themselves into two 
categories. The one is concerned with the mechanism by which an 
over-all housing policy which encompasses the housing needs of all 
income levels may be administered. The other is concerned with 
the policy itself, and the instruments which will aid this Nation 
to attain a high goal of well-conceived homes, a sound building 
economy, and maximum employment in construction industries. 

Although the second subject is more stirring to the imagination, it 
is second iu importance at this time, because the best of plans may very 
well bog down if they are not well integrated and if they cannot be 
administered within ;i suitable framework. It is wise to set that 
framework. It is of primary importance to make certain that those 
functions of 8 government related to ho using are properly coord in:i led 
and that the machinery is ready to function in an efficienl manner 
when peace reaches this laud. 

The National Committee on Housing, Inc., is particularly qualified 
to testify to the need of one well-coordinated housing agency, for 



the National Committee on Housing came into being in 1941 because 
its incorporators believed that the Balkan-like attitude of the various 
interests concerned with housing was thwarting progress. From its 
inception, its general membership, the jnembers of its board of direc- 
tors and of its staff, have come from the crossroads of housing view- 
points. Its gamut of interest has reached those who now live in 
slums and must be rehoused, those of medium income who have 
difficulty in providing the kind of homes they wish for the money they 
can afford to spend, and those who have full purchasing power but are 
handicapped by obsolete community conditions over which their 
individual purchasing power has no direct control. We believe that 
the housing problems of all of these income levels have a common 
denominator of mutual interest, and that no one of them is untouched 
by the problems which ensnare the other. 

When there were 16 separate Federal agencies concerned with 
housing, each tried to rope off one or more segments of interest, and 
each treated those segments as separate entities. Now, any layman 
knows that a good doctor relates the cure of a specific ailment to the 
general condition of the patient, and that a good doctor considers the 
proper functioning of all of the human organs when he prescribes a 
cure. When there are serious affectations which are not his specialty, 
he consults with specialists in related fields. 

When there were 16 separate Federal agencies concerned with 
housing, there was very little consultation, but there was a great deal 
of duplication, and there was a great deal of back-fence bickering of a 
very unpleasant nature. 

The sixteen separate agencies were not equipped to tackle the great 
war housing job. They consumed much energy, which should have 
been directed to construct ve action, in treading upon each other's 
toes. Therefore, at the first public meeting of the National Com- 
mittee on Housing, Inc., then named the National Committee on the 
Housing Emergency, Inc., in June 1941, it recommended the coordi- 
nation of Federal housing programs. The printed recommendations 
set forth at that conference state: 


While some progress has been made toward correlation of the activities of the 
various housing agencies of the Federal Government, much confusion still exists. 
The committee believes that more than incidental adjustments are required and 
that, without abandoning or weakening existing machinery or methods for coordi- 
nation or in any way minimizing the value of the progress already made, an 
examination should be made of the operations of and the relationships among all 
the Federal agencies which have any responsibility for the planning, provision or 
financing of housing, looking toward whatever action may be necessary to bring 
about fully effective coordination and to assure proper correlation between 
planning and execution. 

The National Committee on the Housing Emergency recommends to the 
President that such an examination be made. 

Since February 1942, we have had a National Housing Agency with 
three constituent units. No one can deny the fact that efficiency 
increased, bickering decreased, and there has been a wholesome inter- 
change of ideas and a dovetailing of responsibilities. At most times 
the spirit of the Three Musketeers has been very apparent. In 
recent months that spirit has flickered from time to time. In my 
opinion it has flickered only because the war's end seemed to draw 


near, there was uncertainty about the continuance of the National 
Bousing Agency, and people with particular axea on their shoulders 
were turning B knife here and there in an attempt to incite hard feel- 
ings, l/ncei'tainty about the future tends to create unrest. 

The National Committee on Bousing, Inc., believes that it would 
he sheer folly to try to meet the very difficult problems which will bo 
presented in the years following the war, without the aid of a National 
Housing Agency with constituent agencies geared to face all needs. 

What are those problems? 

Senator T.vrr. Mrs. Rosenman, to go back to your first point, this 
morning there Was a suggestion that this agency should be headed 
l>\ .1 board o( live. Has your organization any views as between 
a board and an individual administrator? 

Mrs. Rosenman. I would rather make a personal statement on that, 
Senator, because we haven't considered it since 1941, wdien that con- 
sideration was made and rejected at that time. 

The feeling, as 1 remember it, was — and my feeling at present is — 
that a board is a very difficult administrative agency for administra- 
tive functioning: that it is good as an advisory organization, but it 
hasn't proven, either locally or federally, effective from an adminis- 
trative viewpoint. 

If you look back, they used to have boards of police, and boards of 
education, and boards of water supply, in many of our local communi- 
ties; and the tendency of government, the trend of government, has 
for a great many years been away from boards and toward adminis- 
trative agencies with one administrator and constituents working 
with him. 

- nator Ellender. What if the board would outline the policy, 
and let the Administrator carry that policy out? W T ould that make 
any difference? 

Mrs. Rosenman. I think a consulting advisory board is often very 
effective, but for administrative purposes I don't think it should be in 
charge. I think its function should be purely that of channeling in 
information and points of view. 

S Qator Taft. It is true that when you have a permanent board, 
on a full-time basis, it is very hard to keep them from attempting to 
do the administration. 

Mrs. Rosenman. Yes; and i' is very difficult to get any consensus 
of opinion and focus responsibility when you have a board. 

Senator 'Fait. In theory. I think it is all right to have them deter- 
mine policy, but in practice they never stop at policy. They go 
ahead and t rv to run t he show. 

Senator Ellender. And they end up by vying, one against the 
Other, for power. 

Mrs. Rosenman. Yes; ami you see, if you don't have power and 
yoii are in a quasi-administrative position, you do end up by bicker- 
ing, because you don't have the thing you are supposed to have. 

The first problem 13 the age-old one of finding a means of supplying 

adequate home- to income level- which have not in years gone by 

been able to purchase or icnt homes of acceptable standards. This 

problem is equally challenging to those who nuke a business of tnanu- 
l'act uring construction materials, to t hose who make a business of sell- 
ing land, to those who make a business of building homes, to those 
who make a business of lending mortgage money, and to those who 

91183 — 45— pt. 10 5 



are socially and civically aroused by the conditions under which mil- 
lions of citizens of a prosperous democracy must live. 

National statistics on this situation are well known. They cover 
so much territory that they become impersonal. But when you take 
any one city and analyze its pre-war incomes, its pre-war housing con- 
ditions, and its pre-war building production, you ca'n glean a more 
intimate knowledge of the many gaps which must be filled if living 
conditions are to be bettered after the war. 

For instance, let us make an analysis of the pre-war need for new 
homes in the St. Louis metropolitan area and then balance the need 
against the community's ability to purchase them. Such an analysis 
will reveal two startling facts: First, that in 1939 only 9 percent of 
the families of the St. Louis metropolitan area could afford the com- 
paratively moderate luxury of a $6,000 house if they lived on their 
wages and salaries without help from other sources. Second, that 
there was a shocking lack of new-house construction for people in the 
lower income brackets. The people who needed houses most were 
not being supplied. 

A definite relationship exists between a person's income and the 
house he can afford. Generally speaking, a family can afford to live 
in a house costing twice the annual family earnings. Thus a family 
with an annual income of $2,500 should be able to buy or rent a $5,000 
house. A family with an annual income of $1,750 should be able to 
afford a $3,500 house. What were the income figures for St. Louis in 

The Census Bureau reports that, of the 384,360 families in the St. 
Louis metropolitan area, 106,460 received less than $500 in 1939 in 
wages and salaries. Of these, 71,160 received no wage or salary. 
Obviously, without aid from outside income, none of these 106,460 
could afford to pay even $2,800, the cost of the lowest-priced house 
built to meet Federal Housing Administration requirements in that 
area. Lack of data on amount of outside income makes it impossible 
to break down this figure to show the exact numbers of families unable 
to afford a $2,800 home. 

Next, 60,180 families earned between $500 and $999 in the St. Louis 
metropolitan area in 1939. Unless they had outside income they also 
fell short of the $1,400 income which could afford the minimum $2,800 

Next, 66,180 families earned between $1,000 and $1,499 in St. Louis 
in 1939. They touched the threshold of the $2,800 home. 

Just a few more of these figures. 

Next, 54,040 families earned between $1,500 and $1,999. Many of 
them could cross the threshold of the $4,000 home. 

Next, 56,240 families earned between $2,000 and $2,999. Most of 
them could afford homes costing from $4,000 to $6,000. 

Finally, 35,200 families earned over $3,000. For them life has no 
housing problem except the problem shared by all citizens of obsolete 
urban communities who live amid the shambles and archaic street 
patterns of yesteryears. 

While the population of the St. Louis area was earning these low 
incomes, what were the builders building? They, under the stern 
necessity of building for profit, were confining their attention to 
customers in comfortable income brackets. The figures in the annual 
report of the Federal Housing Administration for the year 1939 show 


thai of the new homes built in 1939, 87 percent cost $4,000 and over. 
'Flu' simple figures show that more than 200,000 families had to 

scramble for the remaining 1 .'> percent of the new low-cost construction. 
Those who could not find new houses were forced to flow back into 
01 remain in the old homes— including the 142,129 substandard 
homes festering the St. Louis terrain. 

Senator Taft. Is it supposed to be worse than others, or average? 

Mrs. RoSENMAN. No; 1 think it is average. 

Senator Taft. It is a little older city. 

Mrs. RoSFNMAN. It is one of the older cities. 

Senator Taft. It is a little worse, probably. 

Mrs. Rosenman. 1 will say this much, that in the depression years, 
1 think it Buffered a little more heavily from a lack of interest than 
some of the areas, but it is a good cross-section city. 

Senator Taft. Can we get away from your first assumption that 
you can only buy a house equal to twice your annual income? 

Mrs. Rosenman. I don't think so. There are some people who 
claim that you can buy a house equal to 2% times your annual 

Senator Taft. If you paid 20 percent for rent, it would mean that 
you have to pay one-tenth of the value of the house every year for 
rent. A family with $2,500 could afford, by every standard, to pay 
$500 for rent, apparently — 20 percent — and I should think for $500, 
with the P. H. A. and financing, that you could buy better than a 
85,000 house. I don't know, I am just asking. 

Mrs. Rosexmax. I don't think so. But I would rather vou ask 
the F. II. A. that. 

Senator Taft. Can't you pay a little more than 20 percent in the 
lower-income groups? They do pay more. 

Mrs. Rosexmax. They do pay more, but it is very hard, because 
when you think of the lower-income groups they usually have the 
larger families, and when you think of clothing and food and the rest 
of the things, where they do pay more you find they are suffering, and 
their medical bills go up. 

You find in some of the studies that have been made in England 
that where families were paying more rent than they should, propor- 
tional ly, the families were suffering in other respects, and you found 
health problems and clothing problems. We found in some of the 
public housing projects, also, where they were taking in families who 
were on relief, and they didn't have a sufficient amount of money to 
cover the rent, and the whole thing, that there were malnutrition 
problems which were pretty bad. 

Senator Taft. What percentage do the public housing authorities 
rest on? 

Mrs. Rosenman. I think their figure would rest on one-fifth of your 

Senator Taft. My impression is that it went up as the salary went 
down, they took a little more than a fifth. 

Mrs. Rosenman. Well, I think they did because of the fact that 
the families couldn't find anything else 

Senator Taft. No; but 1 mean I thought they were willing, in the 
$1,000 family, to take up to $240, or something of the sort, for rent. 
I am not sure. 

Mrs. Rosexmax. I am not sure of that. 



Senator Taft. Of course, it makes quite a difference. If you can 
pay 24 percent instead of 20, and if you can multiply that by 12 
instead of 10, it upsets your figure, your whole figure basis. 

It would be bad enough anyway, I don't think you have to prove 
it, but I wondered about the soundness of the basic argument. " 

Mrs. Rosenman. Well, the two times your income figure is the one 
commonly used, but I think that the Home Loan Bank Board folks, 
some of them, feel that you could go as high as 2){ times your income. 

Senator Taft. But it is based on another figure, it is based on what 
percentage of your income you can pay, and what percent you have 
to pay to be an economic rent on a house costing a certain number of 
dollars. Those are the two figures that produce this other rough 
equation that you are talking about. 

Mrs. Rosenman. Well, I suppose that economists have also figured 
the usual expenditures of families as they are apportioned in those 
income groups, as they go along. I don't know the basis of the figures. 
I know merely that that one is most commonly accepted. 

Senator Taft. We seem to have some figures here showing 25 per- 
cent as the average expenditure for rent. It is probably too high. 

Mrs. Rosenman. That is quite different. That is particularly true 
in the lower-income levels. But there is the difference there between 
what is the prevalent custom because' of necessity, and what is the 
ideal situation. 

If St. Louis were the only sore spot, it could be treated with local 
medicine. But the maladies that beset housing in the St. Louis 
metropolitan area are typical of those from which every American 
community suffers. Restated briefly, these maladies are: Income 
insufficient to buy or rent adequate houses, and failure of the builder 
to provide homes for the greatest potential market. 

There is hope that after the war, more adequate wages and lower 
housing costs will ease this situation. Those hopes are dashed by the 
present rise in housing costs. 

There is no one solution to this first problem. It must be faced on 
many fronts. 

The private builder must be encouraged to build quantities of 
adequate low-cost housing'to reach ever lower costs. He must be 
aided through the development of new and improved construction 
materials, equipment, and methods. The National Committee on 
Housing recommends in principle the establishment of a Federal 
program of research and study as a service to the home-building in- 
dustry and the home purchases in order to encourage private research 
and to supplement private research by providing for the study of those 
things which private industry does not undertake. 

Senator Taft. Would you put that in the Housing Administration? 

Mrs. Rosenman. Yes. 

The private builder must also be aided by any sound financial 
innovations which may from time to time be devised. However, 
great care must be exercised to guard against well-packaged ideas 
which may raise the quantity of building but which may sow the 
seeds for future financial and social headaches. In making new 
policies, it must be remembered that there will be fluctuating business 
cycles in this country. 

The National Committee on Housing believes that a substantial 
number of families may be served by: 


(a) Large-scale housing operations by banks, insurance companies, 
mid other institutional investors, acting either singly or in groups. 
These operations would be undertaken on an investment rather than 
on :i specualtive basis, with funds made available at low rates of 
interesi . 

(b) 1 united tli^i<lt ml housing companies enjoying tin 1 benefits of 
power 1 1' en hunt domain and partial lax exemption and subject to 
the superv ision of appropriate official agenci* 3. 

(c) Housing constructed and managed on a cooperative or mutual 
o\\ aership basis. 

A Large number of fsmilies could be reached if the period of amor- 

tizing the mortgage were to be extended over a somwehat Longer 

period than is customary. However, the problem hero is to provide 

guards that will insure adequate maintenance of the property 

through* ut the life of the mortgage. 

Those at thi> very bottom rungs of the income scale cannot be 
reached by any type of sound construction financed by any of these 
methods, or by any other method suggested to date, which does not 
entail subsidy. The National Committee on Housing finds that 
publicly financed housing is necessary for this group. 

There are suggestions that Federal subsidy be given directly to 
tenants of low income as rent relief or directly to limited dividend 
private housing corporations, instead of to local housing authorities 
who own and manage the houses built under the present public 
housing program. 

Thousands of tenants, victims of the unbridged chasm between 
housing production costs and wage scales, would be revolted at the 
idea of applying for rent relief. There is a great difference between 
renting a house or an apartment known to have a public subsidy 
and taking a rent relief check to hand over to the landlord. One is 
in the class of farm aid, which carries no stigma because the cause 
behind t lit* need has been recognized as being beyond the farmer's 
individual responsibility. The other — in normal times — is in the 
class of a gratuity to those whom society considers weak or shiftless. 

Moreover, this type of housing program would be very expensive. 
Every single family with wages insufficient to buy or rent a sound 
home would ipso facto be a legitimate client of a relief agency. The 
staffs of the relief agencies would have to swell the minute the system 
was put into effect, and the governmental budget for rent relief would. 
reach astronomical figures, for there is no gradual evolution here. 
Each Low-wage family would instantly be entitled to a rent-relief 
check and become a potential customer for a better home. There 
are not enough better homes ready for this large market with rent- 
relief checks in hand. The demand would be far in excess of the 
supply, and it is not illogical to anticipate a renewed need for rent- 
control laws. The rent-relief suggestion is impractical socially, 
financially, and from the standpoint of the creation of an orderly 
market . 

Subsidy given directly to limited dividend private housing would 
not meet with the same objections which face rent relief. But there 
are others. To achieve rents comparable to those in publicly admin- 
istered houses, the yearly subsidies musl be greater; the cost to the 
taxpayer would be greater. Administrative difficulties would mount 



and administrative expenses would continue. Public subsidies cannot 
be handed over to private corporations without public supervision. 

Senator Taft. Why would the cost to the taxpayer be greater? 

Mrs. Rosenman. Because you would have to pay for the profit 
which the limited dividend company would make 

Senator Taft. No; you would just pay them a return on the money 
investment, just as you do the public housing. 

Mrs. Rosenman. The cost would be greater to the taxpayer — oh, 
I see; I am answering a different question. The cost would be greater 
to the taxpayer in that the administration, I think, would be more 

Senator Taft. I don't quite see why. 

Senator Ellender. On the other hand, on the question of the 
amount of return on the investment, the Government is borrowing 
money at 2 percent; whereas, the expected return to a private investor 
is from 4% to 5 percent. 

Mrs. Rosenman. Now you are bringing in another factor. If you 
are going to get your limited dividend money from, the Government, 
then you are going to get it at a cheaper rate of interest, but if you 
are going to get your money from your private financial organization, 
you are going to get the same rate of interest or a slightly lower rate of 

Now, the point I was trying to make first was that the tenant will 
have to make more, because he will have to pay what he would pay 
the publicly administered housing, plus the profit of whatever per- 
centage the corporation would make. 

Senator Taft. Oh, no; because he has got to pay, in his rent, any- 
way, the return on 100 percent financing by bonds. The only differ- 
ence, as I see it, is that the Government gets its money at 2 percent 
instead of the limited dividend corporation, which might get it at 5. 

On the other hand, by getting its money at 2 percent, it costs the 
taxpayer something, because the bonds are tax-exempt. So it costs 
the taxpayer some other way instead of a direct way. 

Mrs. Rosenman. I didn't think that the private individual was 
going to get the money from the Government. Then the Govern- 
ment would be going into the banking business. 

Senator Taft. However, it may not be possible. 

Mrs. Rosenman. The other point I wanted to make was that the 
amount of supervision which would be required to make certain that 
families of appropriate income were being housed, and that the 
selection of tenants would be made upon a fair basis, would be irk- 
some to private entrepreneurs, particularly since their income is to 
be restricted, and restricted income has not proven a particularly 
popular device with the builders of this country. I think that is the 
crux of the difficulty, that we have never been able to stimulate 
investment building among builders in this country. 

As you know, in Pittsburgh we had one such project, and to my 
knowledge there has never been another. In New York State, in 
1926 we felt that we would get a great deal of housing by encouraging 
a limited dividend corporation, and in those 19 years I think we have 
had 11 projects. 

Senator Taft. On the other hand, the whole rental housing efforts 
have been rather futile. The trouble, to a certain extent, is with 
that, rather than the subsidy question. 


Mrs. Rosenman. 'Flint is right; 1 am not discouraging investment 
bousing, I would very much like to encourage it, and I would hope 

that this committee would lay particular stress on it, because we 

do need it, and we do ueed a great deal of rental housing, built for 


But I am going to say that I do not think you will be able to en- 
courage investment housing when you have an additional hurdle to 
overcome, and that is when you are going to attach subsidy to it 
you are going to attach more public supervision, and we first have to 
wheedle and coax investment money into the housing field before we 
can think of giving them more hurdles to overcome. 

Senator Taft. On the other hand, you might be able to avoid 
vacancies to a larger extent, because you have a much greater class 
oi' people to whom you can rent your apartments. So possibly it 
might be more attractive in that way. 

Mrs. Rosenman. That has been true of every limited dividend 
project that 1 know of. There is always a waiting list on them. 
They are very attractive, but you don't find money going into them. 

I have but touched upon the highlights of the first post-war problem 
which is concerned with finding a means of supplying adequate homes 
to income levels which have not been able to purchase or rent homes 
of acceptable standards. It is apparent that those who arc charged 
with the responsibility of the investments in home ownership and 
rental housing have a definite interest in this subject, and that those 
who are charged with the responsibility of encouraging such invest- 
ments have a definite interest in this subject, and that those who 
administer public moneys for loans and giants have a definite interest 
in this subject. The approaches to solution must be devised in 
harmony and must be carried out with cooperation between the 

The second problem is not age-old. It is w T ar-born. It is concerned 
with the post-war provisions of homes for millions of people who 
cannot tor a while be certain of the location of their occupation and 
therefore cannol be certain of their permanence in a specific locality. 
Estimates of the number of people who have left their own locality 
to work or to accompany the members of their family to work in 
other localities, vary from 6J2 million to 15 million people. Over 11 
million men entered the armed services. Women, too, entered the 
armed Bervices. This means that there has been a tremendous up- 
heaval of population. It will not fit itself into place again without 

For some years after the war, this country is bound to have great 
migrations of its people. The war worker and the member of the 
armed forces will have to find his niche in peacetime industry, which 
will be adjusting itself for some years after the war to a peacetime 
economy, to the changes which will take place through technological 
developments, and to the changes which will take place in world 
commerce and in the commerce between the various regions of this 

In increasing the supply of home- during that period, the production 
of rental as well ,i< sale housing must be encouraged so that those 
who are not certain of their employment future may not be com- 
pelled to buy. New suggestions for transfer of equities from a home 



in the old place of employment to the home in the new place of employ- 
ment should be explored. This conception is basically sound, but 
for execution it requires financing mechanisms which we do not have 
today. A sound plan equitable to the small home owner, to the 
financing institution, and to large-scale developers who would have 
interests in many sections of the country, would be desirable if it 
can be attained.. It would also be desirable to develop the techniques 
of rental with an option to purchase. 

In this immediate post-war period — and, in fact, in all periods- 
it would be desirable to have the National Housing Agency supply to 
localities national and local data bearing on housing needs and trends, 
and to have the National Housing' Agency make available, on request 
by localities, such technical assistance as they may require in the 
preparation of market data and analyses. 

The third problem which must be faced is the quality of the homes. 
There are two forces which are readying themselves to drag down 
the quality of houses to be built for families of medium and lower 

The first of those forces is the increasing cost of the house. Koy 
Wenzlick & Co., which has kept track of the cost of building a standard 
6-room house in 75 cities, reports a median cost increase of 30.5 percent 
since 1939. The builder will naturally try to meet the market of 
low-cost demand by lopping off parts of the house, thereby producing 
less of a house and a house of inferior construction quality. 

The second of those forces is the presence of billions of dollars of 
savings in the vaults of financial institutions. Those dollars look for 
investment. The institutions which hold these dollars may compete 
with each other for outlets. In the competition for mortgages, some 
of them may not inquire too carefully about the standards of the 
houses upon which they take mortgages. 

These two forces are aided and abetted in many localities by a lack 
of local regulations which would prohibit substandard construction. 

Localities should be encouraged to make regulations which prohibit 
shoddy construction and financial institutions should be discouraged 
from making loans on shoddy construction. State and Federal 
supervisory agencies should stimulate increasingly higher standards 
of appraisal practices, home building, and site and subdivision plan- 
ning for the benefit of the mortgage lending institutions, the com- 
munity, and the home purchaser. 

The fourth problem is one of encouraging home maintenance so 
that future blight may be avoided. This subject has particular 
significance at this time when the difficulties accruing from past 
failure to maintain property cause so much consternation. The home 
owners of this Nation must be made aware of the dangers of failure 
to maintain property; the communities must be made aware of the 
problems they face by failure to require maintenance; the financial 
institutions must be made aware of the dangers they face by failure 
to require maintenance. 

Maintenance must not, however, be confused with rehabilitation. 
Maintenance keeps pace with destruction, while rehabilitation is ap- 
plied to those dwellings which have fallen behind in maintenance and 
where destruction is perceptible. Where maintenance has been too 
long delayed and the structure is too far outmoded in equipment and 
sanitary provisions, the expense of rehabilitation is often unwarranted. 


Money spent upon spotty rehabilitation- rehabilitation in neighbor- 
hoods where the majority of buildings are run-down — is usually money 
wasted, because the quality of the neighboring homes drags the 
rehabilitated property down. 

The whole question of rehabilitation requires (he collection of a 
mass of factual data before a gage <>\' value may he placed upon it — 
before anyone can talk authoritatively noon the number of adequate 
dwellings which may he acquired through it at a price which would 
meet public acceptance. 

Senator Tapt. 1 remember where, under a street railway mortgage, 
every 5 years. I think, tin 1 trustee' was required to inspect the property 
ami determine whether the maintenance had been kept up. You 
might introduce such a clause into every housing mortgage, I suppose, 
to require an inspection at certain specified intervals, and require that 
the maintenance be kepi up. 

Mrs. Kosk.nmax. Some such principle may be used. The custom of 
banking institutions, until the present — and when I say the "present" 
I am using the recent years — was never to go near the property, and 
never inquire as to the state of repairs of those properties, and it 
wasn't until the depression years, or until some such thing as a migra- 
tion of people came along, and they found all the properties were 
coming back on their hands, that they began to worry about the 
maintenance features. 

Also, in development. I think there are greater opportunities in sub- 
division developments for restrictive covenants and for maintenance 
corporations to be organized at that time. 

The fifth problem is that of urban redevelopment. While that 
problem entails more than rebuilding homes, it must be linked to 
housing considerations because the predominant interest is a housing 
interest. Any Federal or State legislation to provide aid for the acqui- 
sition of deteriorated areas should include definite provision for the 
adequate rehousing of displaced families. But the redevelopment of 
substandard urban areas must not be confused with a separate and 
distinct problem — the housing of families of low income. Many of 
the families who live in substandard areas have incomes which exceed 
the top limit set by local housing authorities. Many of the slums 
already cleared have sent families scurrying through their city in 
Bearch of something adequate supplied by private enterprise. Any 
large redevelopment program carried out throughout this country 
would displace millions of families who should be served by private 

Mixed in with most slum dwellings are little stores, warehouses, 
small lofts and factories, commercial buildings of many varieties. All 
of these must go; but perhaps they may find a place in the redevelop- 
ment plan. Some of the old neighborhoods may be more suitable for 
commercial or industrial purposes. Some industrial or commercial 
slums and most of them have housing scattered among them — may 
be more suitable for residential purposes. 

There i< need of ;i mechanism for clearing slums and redeveloping 
their sites. That mechanism involves the assembling of land by cor- 
porations or municipal agencies, by purchase, and by condemnation 
proceedings; the clearance of the areas; the replanning of the areas in 
conformity with a master plan for the municipality or region; the 



setting aside of land for streets, parks, schools, and other public pur- 
poses; and the redevelopment of the remainder for its most economic 
and social use — be it industrial, commercial or high- or low-rent 
housing — in accordance with the redevelopment plan. That mecha- 
nism will require financial implementation. 

The National Committee on Housing recognizes that one of the 
greatest obstacles in the path of executing redevelopment plans is the 
fact that in many cases the cost of acquiring the land and existing 
improvements will exceed the value of the land for redevelopment 
purposes after it is cleared, or the amount that would be received from 
the sale or lease of the land for such purposes. Some formula must be 
evolved to pay the difference between the cost of acquiring the land 
and the value for redevelopment. I cannot at this time give you the 
definite recommendations of the National Committee on Housing in 
respect to the method of meeting this difference. We are making some 
cost studies which should be helpful in making our determinations. 
We would like the privilege of submitting them to you when they are 
finished. I am hopeful that you will find them of value. 

There is a sixth major problem- — that of rural housing. Unfor- 
tunately, we are not prepared at this time with an analysis of its re- 
quirements. That is not because we find the problem less pressing, 
but because we find that there has not yet been sufficient consideration 
of the subject. We urge that consideration. We will send this 
committee any data which we develop on the subject. 

We are encouraged by the knowledge that you will give these prob- 
lems your earnest consideration, and that you will make recommenda- 
tions to Congress regarding them and regarding the nature of the 
permanent Federal administrative organization of the housing 

Senator Taft. Are there any questions of Mrs. Rosenman? 

Senator Buck. Does your committee derive any support from the 
National Government? 

Mrs. Rosenman. No; not at all. 

Senator Buck. It is all privately subscribed? 

Mrs. Rosenman. Yes. 

Senator Buck. The word ''National" misled me. 

Mrs. Rosenman. I am afraid that is misleading. We had a lot of 
trouble with the name. Every one of them had some difficulty, but 
we had that name before the National Housing Agency did. 

Senator Taft. Do you have local bodies, local committees in differ- 
ent places? 

Mrs. Rosenman. No. We have people on our board, and as 
members of our committee, from most every State of the Union, but 
we do not have any local groups who are constituent parts of our 
group. We operate through our field staff in various parts of the 
country as the needs may arise. 

Senator Taft. Have you some completed studies? 

Mrs. Rosenman. Of individual localities? 

Senator Taft. Yes. 

Mrs. Rosenman. We haven't any completed study. We have a 
study that is in process, in the Buffalo area. 

Senator Taft. We would be glad to have you furnish the committee 
with anything you have, when you have any studies to submit. 

Mrs. Rosenman. Yes. 


With tin* committee for Kentucky, we are cooperating in an 
analysis of the State of Kentucky's housing problem. 
Senator T a ft. Rural housing? 

Mrs. ROSENMAN. Rural and urban. 

Senator Ellender. What is the membership of the committee? 

Mrs. ROSENMAN. About 1,000. 

Senator El lender. Of individuals? 

Mrs. Rosenman. Some corporations and some individuals. 

Senator ELLENDER. How do you maintain your organization? 

Mrs. Rosenman. Through private subscription and through mem- 

Senator Ellender. From your members? 

Mrs. Rosenman. Yes. 

Senator Tut. Are there any other questions? 

Thank you very much, Mrs. Rosenman. 

Do you want to make a statement before we call another witness, 

Senator WAGNER. Yes. 

Mr. Chairman and gentlemen, I want to insert in the record some- 
thing that is concerned with a statement I inserted on January 9. 

The recent testimony from the housing officials showed that slums 
create evil conditions, and that housing provides employment. I 
myself, and other Senators interested in housing legislation, have 
been saying that for many years. 

Mr. Fahey and Mr. Ferguson reviewed here last week the program 
that the Banking and Currency Committee has been reviewing period- 
ically for many years. 

Until the housing people have specific legislation to present, I am 
doubtful whether further general talking will produce much action. 
1 am deeply concerned about housing legislation, of course. I spon- 
sored the public-housing law, and also the law to permit the same 
agency to do war housing. I also sponsored much of the other hous- 
ing legislation. 

There is need for more housing legislation, of course, but until 
there are specific legislative proposals, this hearing is just an investi- 
gation. 1 don't think housing needs any more investigation, I think 
it need- action. 

Whenever the housing officials may be ready with specific legisla- 
tive ideas, I would suggest that these ideals be taken up with the 
chairman of the legislative committees that handle housing, first of 
all, and with the staffs designated by them and reporting to them. 
That is the usual way of agencies to go about getting consideration 
for their legislation. 

As I said before, the Banking and Currency Committee and the 
Education and Labor Committee deal with housing legislation under 
the presenl organization of the Senate. The Post-War Committee 
is not authorized to deal with the permanent housing program of the 
Government, aside from those relating to the transition from war to 
peace, any more than the Post-War Committee has jurisdiction over 
social security or banking or agriculture, or any other activity that 
existed before the war and will continue after the war, of course. 

1 am glad that these hearings are demonstrating the interest in 
housing, but 1 urge that as rapidly as possible the housing people 
put together their legislative ideas, get in touch with the legislative 



-commit .toes, and discuss these ideas with them. Only by legislation 
can we get ready for the future. 

Thank you very much, Mr. Chairman. 

Senator Taft. Mr. R. J. Thomas, chairman of the C. I. O., housing 



Mr. Thomas. Mr. Chairman, I am appearing before you today as 
chairman of the housing committee of the Congress of Industrial 
Organizations, and as president of the United Automobile, Aircraft, 
Agricultural Implement Workers of America^ C. I. O. I am happy 
for the opportunity to express the views of the C. I. O. and my organi- 
zation on those matters relating to post-war housing which your 
committee is investigating. 

The Congress of Industrial Organizations, representing 6,000,000 
workers from the basic industries of our country, and approximately 
2,000,000 members now serving in the armed forces, at its last con- 
vention in Chicago, reaffirmed again our strong conviction that a 
post-war economy of full production and full employment can and 
must be attained in post-war America. Further, as a result of the 
mandate of November 7, our entire country is now dedicated to a 
post-war goal based on 60,000,000 jobs and an expanding economy. 

It is generally recognized that housing and community develop- 
ment must play a major role in achieving this objective of full employ- 
ment. An economy of abundance means increased production of the 
essentials of modern-day living, and full employment follows from such 
an economy. In fact, no over-all plan for full employment is complete 
or even possible without the inclusion of a large-scale housing and 
community development program, based on continuous operation of 
the building industry. 

During the war period we have come more and more to realize that 
the living environment of large masses of our people has become 
increasingly bad. The need for better houses and better living 
environment is such as to present a tremendous potential market 
demand. Even by pre-war standards of minimum livability, the 
very conservative figure submitted by the National Housing Agency 
before your committee last week showed a need of over 16,000,000 
units, including 7,000,000 that were already substandard in 1940, 
those which will become substandard in the next decade, and those 
that will be required to meet the need of additional families, par- 
ticularly those established by returning servicemen. This is a big 
job, and one that must be done by a comprehensive program. It 
means using every resource in this field to accomplish it — small 
builders, large builders, contractors of all kinds, public housing 
agencies, planning commissions, all trades and skills, capital, labor, 
and Government. 

I would like at this point to comment briefly on the picture of 
post-war housing need as presented by the National Housing Agency. 


Their estimates were made on the basis of pre-war standards of mini- 
mum Livability. Further, they arc based on a national income which, 
while acceptable to some segments of indusl ry, are considerably lower 
than the present high level of income, and in our opinion will be in- 
adequate to provide the 60,000,000 job goal. The N. II. A., 1 pre- 
sume, does not feel it is within its province to discuss the advisability 
of full employment. I understand they — the N. II. A. — stated that 
"some people may even debate whether we ought to try to get rela- 
tively full employment after the war." 

Now, as to the debate on whether or not we ought to even try to 
get relatively full employment after the war. In the light of our tre- 
mendous productive capacity and future potential, there can be only 
one reason to even debate the need for full production. Certainly 
there are some people in our Nation who want a large surplus labor 
force in order to keep wages depressed through a large reservoir of 
workers seeking jobs. However, no enlightened businessman can pos- 
sibly want or accept such a dangerous prospect for post-war America. 
Our tremendous productive capacity is probably the most important 
single factor for the future of our country in all of our history. For the 
first time it is so great that we are able to set a goal of decent jobs for 
all of our people and to look forward to a period of prosperity such as 
this country has never known. If we fear this tremendous power and 
capacity, then by our lack of vision we will be condemning ourselves 
in a few years to the worst depression the world has ever seen. Our 
alternative to this is higher wages, bigger business, and more profits. 
1 can't understand why anyone should be afraid of such a prospect. 

1 am not an economist, nor am I a prophet, but one does not need 
to be an economist or a prophet to have a rough idea of the chain of 
consequences that may be expected if we fail to make it possible for 
the vast number of people in this country to be at once stable producers 
and consumers. Not only is it a national economic necessity, but 
also, if 1 am any judge of evidence and conditions, the people of this 
country will no longer tolerate anything less than a national post-war 
policy of full production and full employment within the framework 
of a continually expanding economy and rising standard of living. 

Further, theN. II. A. bases its evidence upon the elimination of only 
pari of the substandard units over a 10-year period, allowing for use 
of hand-me-down housing by the lower income families, as a way to 
"serve the needs of lower income families without resorting to any 
construction for them." 

We object to this approach, because there is an implication in this 
statement that theN. II. A. is attempting to plan for as low a volume 
of construction as is possible to meet only the most critical and urgent 
oeeds. Such planning probably results from the habits of wartime 
planning where minimum civilian activity is imperative. 

In our opinion, this kind of an approach to the post-war housing 
problem puts the cart before the horse. Here in America our standard 
of living i> constantly rising ;is our industrial productivity increases. 
[t should be obvious to even the most casual observer thai thenal tonal 
productivity has been stepped up enormously through wartime addi- 
tions to the labor force, through wartime training programs which 
have provided new skills, through wartime construction programs 
which have created new factories and production facilities, through 
wartime research and development programs which have yielded a 




vast variety of new or improved materials, equipment, processes, and 
end products, through wartime pressures for mass production which 
have brought about a more efficient organization of plants and per- 
sonnel — to say nothing of the increases in know-how which promise 
much for still further advances in the future. 

Our post-war production goal in housing and community develop- 
ment must, therefore, be defined in terms which will make it possible 
to harness this new and ever-increasing productivity of the American 
worker to the number one task of providing everyone with constantly 
improving places in which to live, work, and enjoy the fruits of our 
boundless national resources. This steadily increasing productivity, 
as all enlightened American business and labor recognize, is the way 
that high wages can be maintained for the worker, fair profits assured 
for business and industry, and an ever-expanding economy of abun- 
dance made possible. This will be reflected in ever growing market 
demands for better housing, better health, better transportation, and 
greater improvements in all the facilities and services which make up 
community life. 

The N. H. A. calculates that only 12,600,000 of the 16,100,000 units 
conservatively established as the need for the next 10 years, can be 
"realistically" produced between now and 1955. However, the 
N. H. A. admits that 7,000,000 units had been declared substandard 
in 1940 and were in need of immediate replacement even then. Such 
planning condemns over 16,000,000 families, or approximately 
65,000,000 children and adults, to continue living in admittedly 
indecent and socially wasteful environment for terms ranging any- 
where from 2 to 15 or 20 years longer. None of these figures, it must 
be remembered, include our American farmers and their families, 
whose housing in most instances is even worse than that of the city 

Senator Wagner. Can I interrupt you just a second? 

I want to apologize, but I have explained to the chairman that I 
have a very important engagement that I have to go to, but I am 
going to read every word of your testimony. 

Mr. Thomas. Thank you, Senator. 

Senator Taft. Mr. Thomas, I don't remember the N. H. A. saying 
that "some people may even debate whether we ought to try to get 
relatively full employment after the war." They may have, but I 
don't think that was the effect of their statement. I think, before 
they come back and deny it, I think I ought to say that that wasn't 
the impression they gave me when I heard their statement. 

On the rural housing, as I understood it, they weren't prepared as 
yet to present anything on rural housing, so that their figures were not 
intended to include rural housing at all. 

Just in their defense, somewhat, I think I ought to say that. 

Mr. Thomas. Well, I am glad to hear that. 

Here again, the N. H. A. has been influenced by the traditionally 
low output of the building industry and has accepted pre-war stand- 
ards. Unfortunately, it is true that the building industry has not as 
yet utilized the scientific and technical advances which have enabled 
other industries to perform the American miracles of production. 
When we speak of the building industry, we include all those who 
design and build houses, who lend and insure money, who deal in 
land, who produce and distribute the necessary building materials 


ami equipment, as well as the private and Government agencies con- 
cerned with community development. However, the efforts of these 
groups have never been integrated into an efficient system of produc- 
tion. All who make up the building industry must get together now 
to plan a housing production goal which will permit the industry to 
make its maximum contribution. 

The first step in such an analysis is to estimate the likely number of 
jobs that can and should be provided through housing and com- 
inunitv construction in a post-war economv of 60,000,000 jobs. 
When' we say 60,000,000 jobs, we mean, of course, 00,000,000 jobs 
that will utilize' the full productive capacity of workers, factories, 
farms, mills, mines, schools, and other resources. We also mean 
full-time jobs based on a work day and week most desirable from the 
standpoint of the worker's productive capacity and well-being. 

What job quota, then, should be budgeted for the home building 
industry that will give a working basis for calculating the amount of 
houses that must be produced to sustain the home building industry's 
contribution toward the national goal of 60,000,000 jobs? 

In 1940, according to the Bureau of Labor Statistics, there were 
about 4"), 100, 000 civilian jobs. At the same time there were 2% 
million workers employed on public emergency projects, and about 
."..niiO.OOO persons seeking work. This adds up to a total labor force 
of 52,600,000. Of those workers reported to be employed, roughly 
2,000,000 were construction workers. Since a large portion of the 
public emergency work was in the construction field, it is reasonable 
to estimate that of the 2% million workers so employed, at least 1% 
million were skilled or semiskilled construction workers. In addition, 
certainly 1,000, 000 of the 5,000,000 seeking working could have been 
gainfully employed in the construction field. This means that in 
L940, the United States building industry had a potential labor force 
of at least 4Y 2 million construction workers. 

In figuring the number of construction workers that must be em- 
ployed after the war, we must consider the changes that have oc- 
curred in our total national employment since 1940. 

Currently, there are in this country 52% million workers gainfully 
employed, and another 1,000,000 who are in transition between jobs. 

At the same time, there are about 12,000,000 of our best workers 
in the armed forces. This adds up to a total labor force of 65% 
million workers. On this basis, and allowing for future increases in 
the Labor force through population growth, 60,000,000 civilian jobs is, 
in our opinion, a conservative figure. 

To attain this employment figure, we must first fill, through private 
employment if possible, approximately 15,000,000 more jobs than 
were filled in 1040. However, it must be remembered also that the 
employment figure of 45,100,000 reported in the 1940 census included 
part-time workers as well as full-time workers. Since our post-war 
objective must be to maintain full production and full-time employ- 
ment, an allowance of 5,000,000 jobs should be added to the 15,000,000 
jobs estimated to be the necessary increase over the 1940 level, in 
order to convert the part-time employment to a full-time basis. 
Thus, to achieve 60,000,000 jobs, we must plan on providing 20,000,000 
more jobs than were provided in 1940, to show an increase of 44 
percent . 



At this rate of increase, the building industry would have to provide 
2,000,000 more jobs in the post-war period than it did in 1940. This 
would give us a minimum job budget for that industry of 6K million 
construction workers. However, in all probability, the construction 
industry will have to show a greater rate of increase than the national 
average of all employment fields, inasmuch as construction is looked 
on as the greatest single avenue of post-war employment expansion. 

As the fields of war production, such as aviation, munitions, and 
shipbuilding, are cut back, their surplus labor forces can be qualified to 
turn to the urgent task of providing better homes and better com- 
munities. Returning veterans, particularly Seabees and those in 
other construction units of the armed services, will also quite logically 
expect to find job opportunities in post-war construction. 

While we recognize that the construction field may have to provide 
more than 6% million jobs to insure our total budget of 60,000,000 jobs, 
for the purpose of this analysis we are concerned only with what 
appears to be an absolute minimum job budget for all construction 
and for which we know sufficient skills and ability will be available. 

How many new homes along with new schools, shops, airports, 
roads, bridges, and other community structures can these 6% million 
workers produce annually? On the basis of past experience, and in 
view of the relative urgency of the need for new houses, we can assume 
that approximately one-third, or 2% million of the 6*4 million total 
available construction labor force, must be engaged specifically in 
residential construction. According to the Bureau of Labor Statistics, 
1,400 man-hours are required to build the typical title VI war house, 
and 1,800 on-site man-hours were required to build the average pre-war 
type 5-room American home. The average pre-war on-site worker 
was employed 33 hours per week and only 35 weeks per year, or a total 
of 1,150 hours annually. This yields a figure of 1% man-years for the 
construction of every dwelling unit. At this rate of employment of 33 
hours per week for 35 weeks per year, 2}{ million workers could 
produce 1 % million units annually. However, it should be emphasized 
that employment of 1,150 hours per year does not represent full 
employment for those so engaged. In the- light of our national debt 
alone, and the national income needed to meet that problem, an 
employment of less than an average of 1,440 hours a year for each 
worker engaged in the home-building industry will be inadequate. 
This basis of employment of 1,440 hours per year yields a figure of 
about \){ man-years required for the construction of an 1,800 man- 
hours house. At this rate of employment for the ho7ne-building 
industry's post war job budget of 2}{ million workers, slightly over 
1 }{ million homes could be produced each year. This goal for the con- 
struction of at least 1% million homes per year, in our opinion, must 
represent the minimum post-war volume goal of the home-building 

I have no doubt that there will be those who will think that the 
home-building industry, which has often produced only a half million 
houses a year and has never built a million houses in a year, cannot 
employ 2Y 4 million full-time workers, or build 1% million homes a 
year. There were many who could not imagine and who would not 
have believed, in 1940 and 1941, that we could and did since then 
train and transport the millions of service personnel now serving 
throughout the world, and at the same time supply them with the 


unprecedented quantity of ships, planes, tanks, trucks, guns, ammuni- 
tion, food, clothing, medical supplies, and an endless number of 
Other different and necessary items of production. We were then 
and we still are in a fight for survival. When this war is won, the 
problems that will confront us will he different from the problems of 

war, but I hey w ill he no less great and no less difficult to solve. They 

will he solved, however. Men, means, and measures must he and 

will be found to solve those problems and keep this country strong. 

We do not suggest that you accept our findings without question. 
However, whether it is expressed in terms of jobs provided, or in 
terms ^<( the home-building industry's share of the dollar volume of 
t lie* gross national product, essential to meet our post-war problems, 
we believe that your own analysis will reveal that the employment 
and production goals we are citing arc in reality conservative and 

This is not just a problem of housing, but in a broader sense is the 
problem oi enabling the whole building industry to make its maximum 
contribution to the level of national post-war employment essential 
to the continued satisfactory operation of our system of living. 

Any studies at all of the changes brought about by this war will 
reveal an almost unbelievable degree of stepped-up capacity in our 
production facilities. I want to emphasize that except in the con- 
struction field, and especially in the home-building industry, this 
process has taken place practically in all fields of production. Our 
analysis of the over-all problem indicates that the one major field for 
employment expansion lies in that of replacing the economically and 
socially obsolete structures of this country. We believe that ulti- 
mately as a nation we will not be engaged upon just a program of 
home building, but rather upon a planned program of rebuilding our 
cities, towns, and other living facilities. It is from this consideration 
that we believe that a full-time employment of 2% million workers in 
the home-building industry and an annual production of 1% million 
homo an- conservative goals. A national housing program of this 
volume of employment and production is one of our post-war housing 

oator Taft. Mr. Thomas, I think you ought at least mention 
the fact that besides these construction workers, the industry gives 
work to, 1 think, at least one worker off the job for every construction 

Mr. Thomas. I think the figure is greater than that. 

Senator Taft. Yes; I believe so. 

Mr. Thomas. Around four workers, I think. 

Senator Taft. I don't think we got up to that. I think it was 
something like 1 

Mr. Thomas. I am informed that for each million and a half 
worker-, there are 2,800,000 workers employed off the job, in mining, 
quarrying, distribution, and processing, and so forth. 

Senator Taft. 1 would be surprised if it came to as much as that, 
but in any event you didn'1 mention it as you went by, and I thought 
it w :i< wise to call attention to it. 

Mr. Thomas. Now. where can be found the new mass market to 
help sustain and make possible this production of i% million houses 
per year? I believe that an investigation of the family incomes will 
shed some light on that aspect of the problem. 



In the war year of 1942 there were 2,300,000 families — families, not 
persons — over 2,300,000 families — nearly 7 percent of all the families 
in this country, with annual incomes of less than $500. In the same 
year there were over 4,500,000 families, or nearly 14 percent, with 
incomes between $500 and $1,000 a year. At the same time there 
were nearly 5,000,000 families, or nearly 15 percent, with annual 
incomes between $1,000 and $1,500, and another 5,000,000 families 
with annual incomes of from $1,500 to $2,000. The significance of 
these figures is that in 1942, with incomes increased because of the 
war-production program, there were over 35 percent of American 
families with incomes of less than $1,500 per year. This group of 
35 percent of our families represents the most acute area of our 
national housing problem. And yet, during the pre-war year of 1939, 
the last year before the war of normal house-building activity, less 
than 4 percent of F. H. A. insured mortgages were made to borrowers 
with incomes of less than $1,500 per year. The 5,000,000 families 
immediately above this group, as far as economic status is concerned, 
having annual incomes in 1942 of from $1,500 to $2,000, and con- 
taining approximately 15 percent of all families within this country, 
also fall within the critical problem area. In other words, a little 
over half of all American families in the year 1942 had annual incomes 
of less than $2,000. If we are to solve the market phase of our 
housing problem, we must begin to think and act in terms of a housing 
program that will provide decent, safe, new living accommodations 
for slightly over half of our American families with incomes not over 
$2,000 per year. In no other way can high-volume production and 
high employment in the home-building industry be reached and 
sustained. A national housing program with these goals as essential 
elements is another one of our post-war housing objectives. 

According to the 1940 census, 28 percent of the total number of 
American families occupying dwellings other than farm houses were 
paying less than $15 per month, that is, as rent. Another 35 percent 
were paying between $15 and $30 per month, and another 16 percent 
were paying between $30 and $40 per month. Only the remaining 
21 percent were able to pay more than $40 per month. 

In order to reach and sustain high production and high employment, 
the home-building industry will necessarily have to reorganize its 
past attitudes and practices to serve lower-income groups than it has 
ever served before. In order to reach the mass pocketbook, the 
1 % million homes must be sold or rented at prices lower than the great 
majority of our families have been paying. Up to now most new 
rental and sales houses have been produced to meet the need of the 
upper 21 percent paying more than $40 a month, with the vast major- 
ity of people being forced to live in substandard hand-me-down 

This will require the conscious effort of the organized home builders 
toward a planned program of techniques for all those forming that 
organization, and all others making up the home-building industry. 

For example, it would be highly beneficial to the builder, the worker, 
and all others concerned to so reorganize the industry that employ- 
ment and production would become continuous the year round. By 
operating continuously, the builder would be able to introduce more 
efficient methods and techniques, which would reduce his cost, includ- 
ing overhead. Year-round employment for the worker would permit 


a guaranteed annual wage, which would increase his annual income 
and at tlic same time give him a sense of security which would inevi- 
tably increase his productivity and result in lower unit cost. All 
improvement and reductions in unit cost must be passed on to the 
consumer in the form of better houses at lower sales or rental prices. 

And costs must be reduced if the building industry is to compete 
successfully with other industries for its proper share of the consumer 
dollar. The dollar spent for housing must offer as much value as a 
dollar spent for autos, refrigerators, radios, movies, and so forth. At 
the present time it does not. It must prepare now to become a mass- 
production industry by adopting a more efficient organization of opera- 
tions ami through better utilization of the available manpower, equip- 
ment, and material resources. 

We believe also that ways and means should be devised whereby 
a reorganized and progressive home-building industry can be assisted 
by Government to provide socially desirable and economically sound 
living facilities for a far greater number of American families in the 
low er-income groups than has ever been possible in the past. 

We believe that public stimulus should be made available to pro- 
gressive private enterprise, to help it meet the Nation's post-war 
employment and housing needs. Such public aid to private enterprise 
must be conditioned, however, on the return of maximum public 
benefit in such a direction as helping to maintain full employment, 
rehousing families in the lower-income group, and contribution to the 
economic and social health and stability of our communities and our 
country. To insure the return of such public benefits from aided 
operations, definite controls must be retained by the Government. 

We have shown, on one hand, that we have the need and the man- 
power and, on the other hand, the productive capacity to meet the 
need. We have also shown that costs must be reduced considerably. 
But to get under way, we must devise new ways of financing new large- 
scale undertakings, either by large contractors, groups of small 
builders acting cooperatively, or by consumer cooperatives and labor 
groups. Federal aids must be devised to assist each of these groups 
to function most effectively. For instance, sufficient credit must be 
made available to builders to assure them of adequate construction at 
low cost, some assurance of long-term commitments beyond a single 
building season and some reduction in their marketing risks. Risk 
insurance should be considered for all phases of construction, beginning 
with marketing, operating phases, straight through to the point where 
the structure is removed to make room for more constructive use. 

Government insurance of mortgage risk should be liberalized and 
ex] a in lei I to protect the home owner during periods of unemployment. 
Special safeguards should be provided to guarantee the home owner a 
high quality of product. 

We believe also that standards in the planning and building of our 
homes must be brought up to date, and that the benefits that would 
be made available to the home building industry through a national 
housing research bureau are essential to the success of a national long- 
range program of housing. 

If we are to have progressively higher standards in community 
housing and development, we must carry out a coordinated program 
of research in design, planning, construction, land uses, financing, 
marketing, management, and community service. If the Govern- 



ment is to provide useful technical services to local communities and 
the building; industry, its agency should be empowered to initiate 
and carry out a comprehensive program of research. The aim of such 
research should always be to get better housing at less cost. 

Housing research in pre-war days was running around $150,000, 
and is now down to $50,000 a year. This is in sharp contrast to the 
research activities carried on in other fields of production. Who is 
to do this research? Contractors operate on too small a scale to carry 
on their own research alone. Manufacturers of building materials 
often maintain research laboratories, but are interested mainly in the 
development of their own products, which usually constitute only 
one part of the total materials used. No single manufacturer is inter- 
ested in the house as a whole, and none of them to date has been willing 
to spend much money on industrial research of a comprehensive 

Several Federal agencies have engaged in housing research from time 
to time, but only on a small scale. In other fields Federal agencies 
have conducted comprehensive programs of research. For example, 
the Department of Agriculture, through its Agricultural Research 
Administration, in its own laboratories has been spending between 
fifteen and eighteen million dollars a year. This is in addition to the 
six and seven million spent through different State experimental 
stations. Likewise, the National Advisory Committee for Aero- 
nautics spent between six and eight million before the war, and more 
recently between twenty-five and fourty million dollars a year. The 
program of research in the Department of Agriculture has made the 
American farmer the most productive farmer in the world. A similar 
research program in housing can make the American builder the most 
productive builder in the world. 

More efficient community utilities and services and more efficient 
land use will reduce the initial and operating costs to the community. 
This, in turn, will justify a reevaluation of our system of real-property 
taxation. Cooperation by all of us is needed to determine exactly 
what system of taxation will be most equitable for all concerned. • A 
system should be devised which will encourage the removal of obsolete 
structures, as well as create an incentive for the construction of better 
homes and communities. 

Improving design and construction and more desirable land use 
will also minimize the financial risks and justify lower interest rates. 
The N. H. A. in its analysis of housing costs points out that a 20- 
percent reduction in interest from 5 to 4 percent means a reduction of 
5.4 percent in the monthly payment. It seems reasonable to us that 
an even further reduction of interest rate could be achieved without 
removing the incentive for investment. This likewise is a question 
which can be answered satisfactorily only if all groups in the industry 
work together to strike a balance which will be in the national interest 
as well as in their own individual interest. 

Improved design, better quality of construction, and better com- 
munity lay-outs will combine to reduce the cost of operation and 
maintenance. Again referring to the N. H. A. analysis of housing 
costs, we find that a 20-percent reduction in maintenance costs from 
$100 to $80 per unit per year will yield a saving of 3.5 percent in the 
monthly payment. This figure does not cover possible savings in 
operating costs which would result from more efficient operations, such 


Be Bavings in fuel through insulation. Here again, there should be a 
pooling of know-how from nil segments of the industry. Lessons 
[earned in the operation of Large public and private housing projects 
can show how economies can be effected. Individual home owners 
and small builders can apply this experience advantageously if they 
pool their resources in joint operating enterprises. 

As we have pointed out, large-scale opera t ion is the immediate way to 
reduce the cost of construction. A recent N. H. A. analysis of housing 
cost shows thai a 20-percent reduction in the initial construction cost 
(from $5,000 to $4,000) means a saving of 16.4 percent in the monthly 
payment. With improved techniques it should be possible to achieve 
much greater savings. In addition to cutting construction costs, 
there are other ways that housing costs to the consumer can be re- 
duced. By building planned communities on low-cost land and oper- 
ating continuously on a large scale, it would be possible to cut monthly 
cost to a level heretofore considered unattainable, as well as to provide 
safe and healthy shelter for residents of slum houses. 

We believe, of course, also that urban and rural slums should and 
must be wiped out. The undermining economic and. social influences 
of these urban and rural slum conditions to our communities and to our 
Nation are very well known, and I trust that I need not point them out 
to the members of this committee. A vigorous program, of urban and 
rural slum clearance and redevelopment is another one of our post-war 

It is not enough in the post-war housing activities that we help to 
BUstain a high level of employment and produce a large number of 
houses. In fact, if such a program were not directed toward general 
improvement in another direction, the realization of such a large build- 
ing program might well increase some of our other serious problems. 
The plans of growth of our cities, or more correctly the lack of such 
plans, were crystallized in a manner that has made most of them far 
out of date with present developments and present living standards 
and requirements. Certainly if we set out to build a new city today, 
we would not build it as our cities are now built. This, in itself, dis- 
doses our own judgment of our cities. The general cost in private 
life as well as in business and government is so heavy in our cities that 
our local governments can hardly carry such costs. All activities in 
our post-war housing program must contribute to the economic and 
social stability of our communities. 

With slum populations rehoused in more desirable communities, it 
will then be possible to acquire at their new use values these slum 
and blighted areas for redevelopment on a sound social and economic 
basis. The problems of land acquisition, assembly and redevelop- 
ment, must be thoroughly studied in order to find new ways and means 
to reduce the cost of acquiring and clearing our blighted areas and to 
develop our communities. A careful study of the various specific 
proposal- offered before your committee will undoubtedly result in 
some equitable formula. We know of no area that needs attention as 
badly, since the housing problem cannot be solved without a broad 
urban and rural program. 

Although Federal assistance in some form will be required, local 
communit ies should be encouraged to set up local community develop- 
ment bodies which would have the power to acquire and develop 
land. In many communities, the local housing authority that has 





functioned admirably in the sphere of slum clearance and land acquisi- 
tion for subsidized public housing, can be broadened to include in its 
scope the operational activities made necessary by broad community 
plans. Where this is not practicable, new community development 
agencies should be encouraged. Local planning bodies that will 
work and cooperate closely with such community development 
agencies must likewise plan in terms of the total community and in 
terms of meeting the need of all groups who need housing. 

How much assistance from the Federal Government or what specific 
type of legislation would be needed to stimulate this type of activity, 
we are not in a position to state. However, in this field, too, research 
and investigation should be undertaken immediately. 

We do not foresee such improvements in economic conditions after 
the war as to cause us to believe that all family income will permit 
the purchase or rental of decent new housing supplied at a profit. We 
therefor believed that a large segment of our people whose incomes are 
so low that decent new living facilities cannot be provided for them at 
a profit to private enterprise must be housed in publicly subsidized 
new living quarters. Therefore, an adequate program of publicly 
subsidized housing is another form of our post-war housing objectives. 

Special financial aids should be provided to public agencies who 
undertake to build for the lowest income groups. At the present 
time no group in the private building industry has found it profitable 
to build for those families that fall into the lowest income group and 
who are unable to pay rentals averaging less than $15 per month. 

As we have already pointed out, 28 percent of American families 
in 1940, other than farm families, were paying less than $15 per month. 
The total amount of subsidized public housing provided by the Gov- 
ernment for this group before the war, since 1937, was approximately 
105,000 units. In view of this, we are puzzled at the continuous 
attack on the Government program by private building groups. 
Certainly it is difficult to understand why labor groups such as the 
C. I. O. are likewise subject to criticism for their support of public 
housing, when it is a well-known fact that the vast majority of our 
members are not eligible for occupancy, because of their higher in- 
comes. Our support for public housing is motivated by the fact that 
we believe that if our goal for post-war America is a good house for 
every family and we now have the resources to make such a goal 
possible, certainly we must continue to provide housing with whatever 
subsidy is needed to enable these lower income families to leave these 
degraded un-American slums. However, with a prospect of full 
employment and the continued increase in the standard of living, the 
number for whom private enterprise can build profitably will increase 
and publicly financed building correspondingly decrease. For the 
immediate post-war period, and allowing for time for the full mobiliza- 
tion of private resources, the number of families with exceedingly low 
incomes will be greater than will be serviced by a program of 200,000 
units for a 2-year period, such as requested by the National Public 
Housing Conference. This estimate is far too conservative, in our 
opinion. However, we do not want to engage in a debate as to the 
exact number of units that will be required. We only want to em- 
phasize that any total, over-all program must include Government 
provisions for the early rehousing of the lowest income families. 


In general, we support the suggested changes to the United States 
Bousing Act, which we have discussed with the National Public 
Housing Conference. We would like to see some additional changes 
made, particularly in those sections of the Act that speak of the pro- 
gram as a means to alleviate unemployment. Rather, all housing 
programs, including the low income housing, should be related to a 
period of full employment and production. 

We are also heartily in accord with any amendments to the United 
States Housing Act that will stimulate and encourage a low rent local 
housing program. We urge that the housing agencies, in cooperation 
with the Department of Agriculture, treat the matter of local housing 
with special emphasis. 

One other change we would like to see made is a provision added to 
this law (the United States Housing Act) as well as in the F. H. A. 
(mortgage insurance legislation (National Housing Act) which would 
prohibit the Federal Government from making or insuring loans in 
|hose instances where discriminatory restrictive covenants operate. 
There should he no place in our democracy for the use of Federal 
money by communities, groups, or public agencies practicing racial 
discrimination. We strongly believe that decent living facilities must 
he made available to all citizens without regard to race, color, or creed, 
and a national program to this end is one of our basic post-w/ar housing 
object i\ es. 

We feel that private operators in the whole building field and the 
public housing agencies should perfect plans as soon as possible that 
will use the const ruction of homes as an instrument to prevent unem- 
ployment during the reconversion period. It is possible that we will 
experience periods and areas of acute unemployment during this recon- 
version period. For such an eventuality, we strongly recommend that 
this committee use its influence to help insure that all necessary steps 
for the launching of a large-scale housing construction program, both 
private and public, to stimulate employment, be taken as soon as 
possible and held ready for use when and where needed. It is essential 
that this form of insurance be adequately provided as soon as the war 
urogram permits. 

Recently the C. I. O. urged the subcommittee of the Committee on 
Military Affairs of the United States Senate, considering mobilization 
and demobilization problems, that some policy in respect to resale 
should be set in order to provide against speculation in a possible in- 
Hationary post-war market. Such policy should also apply to the 
■isposal of war housing. We would caution against speed in dis- 
po>al and urge that all decisions be weighed in the light of the local 
need for housing and the availability of better housing for families 
who will need to be relocated. 

In disposing of permament war housing, present occupants should 
be given first preference. Some projects will be especially well suited 
for disposal to cooperative or labor groups. Before disposal, the 
amenities in planning and construction sacrificed in the interest of 
War need should be replaced and the housing made acceptable for 
long-term occupancy. Community facilities where inadequate or 
nonexistent should be provided in order to insure a future healthy 
community character to the project. All repairs and replacements 
should be project wide rather than on a unit basis. When perma- 
nent war-housing projects are disposed of to groups, these groups 



should hove an opportunity to lease with an option to buy, rather 
than be forced to make an outright purchase. Legislation should be 
drawn to permit the sale of permanent war projects to local housing 
authorities for the use of low-income families if it is in the interest of 
both the local community and the Federal Government. It is my 
understanding that under existing law this is prohibited except through 
a separate act of Congress dealing with each specific project. 

Temporary war housing which is built as emergency shelter should 
be removed as soon as the need for it no longer exists. It should not 
be permitted to remain as a substitute for the development of new 
and better housing. 

In certain communities, however, where a shortage of decent rental 
housing exists, and where the temporary housing is better than that 
which would otherwise be available for low-income families, every 
effort should be made to improve the temporary war housing and per- 
mit its use until better housing can be provided. It would be fantastic 
to insist on tearing clown publicly owned housing, bad as it is, where 
such action would force families into worse slum dwellings and add to 
the general overcrowding in the community. 

One word now about the housing provisions covered in the G. I. 

Housing for veterans should not be considered separate from the 
over-all housing problem. As it now stands, the act provides an initial 
assistance to veterans in establishing a home, but does not consider his 
ability to keep up his fixed charges. Further, the veteran must make 
up his mind in 2 years after his discharge from service to buy or build 
a home or lose the advantages of the provisions. 

This 2-year limit is inadvisable also because it will encourage infla- 
tionary prices if, let us say, 3,000,000 veterans, in addition to the pres- i 
ent civilians who want homes, all rush into a buying spree before a 
new building program gets well launched. We further feel the ap- 
praisal method set by the Veterans' Administration will encourage 
inflation at the veteran's expense. No standards of any kind have 
been prescribed by either law or regulation. 

There are many other things wrong with the law, but these particu- 
larly cry for correction. Veterans' housing must be part of an over- 
all program. The 2-year limitation should be extended to 10 years. 
Veterans' housing, like all other housing, should be part of a planned 
community program. An adequate loan fund should be set up to 
help veterans pay charges, should they suffer temporary default dur- 
ing the readjustment period. Speculation in veterans' housing should 
be banned, deficiency judgments prohibited. Administration should 
be under N. H. A.'s charge, and at least minimum F. H. A. standards 
of planning and construction should be laid down. Appraisers should 
be Government-employed. All these are minimum changes. 

As it stands now, it adds up to the encouragement of a program 
which will not be in the interest of the veteran nor the planned kind 
of community development we are advocating to rebuild our American 

I should like to call j^our special attention to the last of our recom- 
mendations to this committee. 

Housing, like food, is one of the essentials of our life. From the 
production as well as the consumption aspect, housing plays an in- 
creasingly important role in our national well-being. In fact, so per- 
manent and important in our lives is the manner in which the activities 


of housing and city building are carried out, that they have taken on 
greater national significance. 

In the light of the development of modern warfare, the arrangement 

o( cities has great military significance. Changes in warfare tech- 
niques have, through the ages, always tended to make obsolete the 
then existing cities and have brought about corresponding changes in 
tic building and rebuilding of cities. While we work and pray that 
we may never again be involved in war, it would be unwise to allow 
our cities to continue to be vulnerable to the devastation of war. 
On the contrary, the military branch of our Government should be 
consulted in the replanning and rebuilding of our cities. And our 
cities should he made a fact as well as a sign to discourage any further 
would-be disturbers of the peace from acts that would involve us in a 
future war. The cost of rebuilding our cities from this defense point 
of view, if it were successful in helping to keep us out of future wars, 
would be small indeed. 

Because of its influence upon the stabilization of national employ- 
ment and its influence upon the health and welfare of all our people, 
and from national defense considerations, so important has this matter 
of housing and community development become that we believe that 
a Federal Department of Housing and Community Development 
should be created to have the same relation in these aspects of our 
lives as the Department of Agriculture has to the provision of food 
and the maintenance of employment in the agricultural field. We 
believe that the creation of a Federal Department of Housing and 
Community Development, with its head a member of the President's 
Cabinet, ; - essential to the post-war economic and social health of 
our country, and is essential to rendering our cities less vulnerable to 
the devastation of modern warfare. 

Under tin 1 Leadership of our great President, and with the con- 
structive assistance and counsel of this committee, we are hopeful 
that a broad national post-war program of housing and community 
development will be evolved that will simultaneously make a sub- 
stantial contribution to our goal of 60,000,000 jobs, and insure that 
all of our citizens — regardless of race, color, creed, or economic status — 
can be sheltered and living in an environment in line with American 
Btandards of decency and human dignity. 

I want to thank you. Mr. Chairman and members of this committee, 
for the opportunity of presenting to you our views on this vital 

S oator Ellendee. Mr. Thomas, you spoke a while ago of econ- 
omies in building, and made some suggestions. I am wondering if 
you could suggest any way by which economies could be made in 
Ct to the cost of Labor in building these houses? 

Mr. Thomas. Yes; 1 think that some plan could be worked out to 
have continuous production in this industry — you see the fault, as I 
see it. is that in this industry, the "take home" wage per year of the 
-ruction worker, although the public has always been told that 
he ir-'ts a v.ry high wage, actually is pretty low. I feel that if we 
could have a big enough housing program so that the construction 
worker could be guaranteed an annual wage for the period covered, 
labor costs could tie lowered considerably. 

Senator Taft. While he got more money, probably, than he gets 



Mr. Thomas. He would no doubt get more money over the period 
of a year than he does now, beeause I think the average in that indus- 
try, in "take home" pay, over a year's time, is pretty low at the 

Senator Ellender. Well, would you have anything specific to give 
us today on the problem, or could you put something in the record 
later as to how that could be accomplished? 

Mr. Thomas. You see I am here speaking for the C. I. O. We have, 
practically no workers in the building industry in the C. I. O. Those 
workers are members of the American Federation of Labor, that is, the 
organized workers in the building industry. I think an annual wage 
is a problem that the American Federation of Labor should give a 
great amount of attention to. I don't like to tell them what I think 
they should do, but I do think that some progress must be made in 
that direction. 

Now I haven't said anything in this statement specifically about pre- 
fabricated housing, but I think from my experience in the automobile 
industry, perhaps one of the most highly mechanized industries in the 
country, that the housing industry also must become more mechanized 
in the future. 

I haven't said a lot about it because I don't feel that in the field of 
prefabrication there has been sufficient research and technological im- 
provement made yet to actually get out on a limb and say what we 
should do. But I feel certain that in the future that is going to come 
into being; there is no question about it in my mind because we are 
going to run up against a problem where technological improvements 
must be introduced in the industry, and that is the direction in which 
I can see it going. Perhaps not in building complete homes, but rather 
in building parts, and sections and in planning operations, so that 
seasonal factors can be taken out and more of the work could be done 
under the roof. For instance, when there is a deep snow or heavy 
rain, the whole industry shouldn't have to stop work. 

Senator Ellender. And the main problem that we have to meet 
in order to lower the cost for labor is concerned with seasonal employ- 

Mr. Thomas. Yes; through large scale operation. 

Senator Ellender. And make the work almost continuous? 

Mr. Thomas. That is right. I think that is the biggest thing that 
has to be done. And, of course, to do that you have got to plan large 
enough volumes to do it. 

Senator Ellender. I understand. 

Senator Taft. You say, I notice, that you think 200,000 units a 
year for public housing is too low? 

Mr. Thomas. Yes. 

Senator Taft. You don't suggest any figure, or do you suggest any 

Mr. Thomas. No; we are not at the moment suggesting any figure. 
The reason we think it is too low is this. The organization of which 
I am president has been pushing public housing for a great many 
years, and yet the people whose organization I represent, few of them, 
come within the public housing field. Their wages are too high and 
they don't get any public housing. 

Yet I feel there are other sections of the country, and even in 
Detroit where I come from, where there are people who receive such 


low wages that there is no way the building industry can meet their 
demand for housing at all, they just can't jj:t>t the figure low enough. 
1 don't blame private industry hut it is impossible to build homes for 
those people, ami 1 think it will require a great many more than 
200,000 to properly meet this demand or till up this necessity. 

Senator Taft. I notice you also criticize the present provisions of 
the veterans housing law, and feel that that should be revised or re- 

Mr. Thomas. Yes; I think it could be liberalized quite a bit more. 

Senator Tapt. We hail a criticism of it this morning. We will 
have Genera] 1 lines here tomorrow or the next day, I believe, and he 
may be able to make some further suggestions. 

Mr Thomas. As I said before, although the veteran is helped for 1 
year, we feel that he must be helped for a greater period than that, 
whet hei' it is by lowering the interest rates — and you can do that. 
Also the savings which 1 pointed out earlier could be made for all the 
people in the country, would help the veteran. 

The building industry has been, perhaps, the most chaotic industry 
in this country. Every little group is a separate segment of it. They 
never get together to work out an over-all plan. That must also be 
done for the veterans. A lot of them will get themselves a home, and 
after the first year is over, if they have no further protection, a lot of 
them will lose their homes. This would certainly help put the econ- 
omy of the country in a tail spin. 

Senator Taft. Are there any other questions of Mr. Thomas? If 
not. we want to thank you for your assistance to the committee, Mr. 

Mr. Thomas. Thank you, Mr. Chairman. 

Senator Taft. We will next hear from Mr. Johnson, accompanied 
by Mr. Guste, both of the National Public Housing Conference. 


Mr. Johnson. I am Lee Johnson, executive vice president of the 
National Public Housing Conference. 

Mr. Chairman, and members of the committee, acting on the 
cordial invitation of this committee to the National Public Housing 
( lonference, to appear today to present its views on post-war housing 
and the urban redevelopment program, the executive committee of 
our organization has asked Mr. William J. Guste, of New Orleans, 
to represent the conference. 

Since the inception of public housing Mr. Guste has been active 
in the program, serving as counsel to the New Orleans Housing 
Authority. Formerly he was vice chairman of the New Orleans 
Bousing Authority and signed the first public housing contract for a 
local community under the United States Housing Act. He is 
chairman, also, of the committee on legislation of the national Public 
Housing Conference, which has spent many months in the develop- 
ment of recommendations for ;i post-war public housing and urban 
redevelopment program. He has worked with representatives of 
local citizens' groups, and local housing authorities in all sections of 
the country, and in the opinion of the conference he is thoroughly 




qualified to present the views of a wide segment of the American 

I present Mr. Guste to the committee and I certainly shall not 
trespass further on his time. 

Senator Taft. May we ask exactly what the National Public 
Housing Conference is; is it a private organization? 

Mr. Johnson. It is a private organization, Senator, made up of 
individual members. Mr. Guste will dwell somewhat on that in the 
course of the development of his comments. 

Senator Buck. May I inquire, Mr. Johnson, if you have any 
support at all from the Government or Government employees? 

Mr. Johnson. We derive absolutely no support from any govern- 
mental agency, local, State, or national. We have members who are 
engaged in public housing, but such membership is purely on a 
personal basis and it has nothing whatever to do with their official 

Senator Buck. It is supported financially through membership? 

Mr. Johnson. Yes; and through private contributions. 

Senator Buck. It is not tied in, in any way, with the National 
Committee on Housing? 

Mr. Johnson. No, Senator, there is no connection whatever with 
that committee. 

Senator Buck. Thank you. 

Senator Taft. All right, Mr. Guste, you may proceed. 


Mr. Guste. Mr. Chairman and members of the committee, the 
National Public Housing Conference appreciates sincerely this oppor- 
tunity to present its views on post-war housing and urban redevelop- 
ment to this committee. 

Throughout the last 14 years the conference has been sponsoring 
better housing conditions, primarily through low-rent housing and 
slum clearance throughout the Nation. The organization is strictlv 
a citizens' group composed of members residing in nearly all of the 
48 States. The conference does not accept membership affiliation or 
funds of any character from any governmental group, national, State, 
or local. Its sponsorship is from interested citizens and citizen groups. 
The organization supported the enactment of the United States Hous- 
ing Act of 1937 and has watched closely the development of that first 
real experiment in slum clearance, both urban and rural. We feel 
strongly that experience has shown that the act was wisely drawn and 
on the whole has been well administered. Flaws have been discovered 
in the act that need correction. There have been mistakes in admin- 
istration, but on the whole an excellent job has been accomplished, 
and we may all plan for the future on the firm ground of experience, 
rather than in the uncertain fields of conjecture. 

In view of the so-called distinction between public housing and 
private housing, it is desirable to state what the National Public 
Housing Conference stands for. 

The N. P. H. C. is a citizens group, and to say that the conference 
has always stood for the public's interest in housing would tell the 


whole history more fully than to say that it stands for public housing — 
although of course it does. 

The National Public 1 lousing Conference, unlike the ordinary 
business group or trade association, speaks from the public point of 
view. It voices the interests of the whole public in better housing 
for the whole American people, as well ;is the interests of producers, 
workers, and consumers in fuller employment and greater prosperity 
which a large and stable home production will mean. Membership 
in the X. P. H. C. is open to anyone who wants to make manifest 
these beliefs, regardless of his occupation or his pecuniary interests. 

Historically, the National Public Housing Conference interested 
itself in slum clearance and low-rent housing projects built with 
public funds because that was the area of greatest public urgency 
and greatest social need. We believe that it is sound business, good 
government, and wise social policy to help those ihst who need help 
That is why. as an ogranization, our primary concentration 
of interest is upon the millions of families who live in urban and rural 
slums, and who therefore constitute a drag upon our entire national 
economy. If this be public housing, let us make the most of it. We 
think it is an expression of our concern with the public's interest in 
housing, which is something bigger than public housing. At the 
same time, the National Public Housing Conference has throughout 
n- history interested itself in other methods of providing housing for 
families of somewhat higher income who also need better housing 
than they now have. 

In the past the conference has sponsored legislative proposals for 
limited dividend housing and for cooperative housing. If we are not 
now proposing specific methods of helping private enterprise to do a 
better job after the war, and of helping it to serve the no-man's land 
<>f housing, it is not because we are not interested in these subjects 
which are indeed of public concern and therefore of concern to us. 
Our reason for not emphasizing such proposals now is simply that we 
believe there are many other organizations available to champion and 
advance this particular segment of housing. The public docs not 
presently need the help of this organization in that area. 

We want here to emphasize our twofold objective: First, to make 
sure that there is enough public housing to take care of those slum 
families who could not otherwise be served, and at the same time to 
make sure that public housing docs not invade any field or approach 
perilously near to any field that can be served in other ways; and, 
second, we want to make it equally clear that we have an interest in 
supporting cooperatively all sound and reasonable proposals which 
may enable private enterprise to reach lower into the income scale and 
to do a better job. That too, is a part of our responsibility as an or- 
ganization representing the whole public's interest in the w hole housing 

A large part of the active interest in the National Public Housing 
Conference i- shown by local housing authorities, which are definitely 
local public bodies organized under State law and responsible to com- 
munity governments, and through those governments to the people. 
Member- of local housing authorities are in most cases appointed by 
the mayor and Berve without pay. Throughout the Nation every type 
of business, profession, labor, and citizen interest i- represented on 
these authorities. It is for that group and other citizens' organiza- 
tions that we feel entitled to -peak. 



Local housing authorities before the war concentrated on slum clear- 
ance and low-rent public housing, because that was the area of greatest 
human urgency and greatest public concern. Local housing authori- 
ties still feel this to be the case, for the immediate post-war period. 
But being the only public bodies in American communities which deal 
generally and broadly with housing problems, local housing authorities 
feel that they represent the whole community in which they are located, 
insofar as housing functions may arise from time to time which, be- 
cause of their public importance and specific character, need to be per- 
formed by public bodies. The best example of this is the publicly 
financed war-housing program which was not public housing in the 
traditional sense, but which the local housing authorities undertook 
with vigor and success because this was a job to be done by a public 


In his recent testimony before this committee, Mr. Blandford, Ad- 
ministrator of N. H. A., said that communities after the war should 
make better surveys of their housing needs. In the opinion of the 
conference, this requires public action at the local level and therefore 
it should be done by local housing authorities. Likewise, the National 
Public Housing Conference and the local housing authorities are greatly 
interested in urban redevelopment programs. Our reason for this in- 
terest is that such programs are required if the whole public interest 
in housing is to be fully satisfied. Our reason is also that urban rede- 
velopment programs will require public action. We believe this public 
action toward urban redevelopment to be intimately related to housing 
action, and that whatever is done of this character at the local level 
should be done through the local housing authority. In short, the 
local housing authority is the official expression of the public's interest 
in housing. In our opinion it should comprise all local governmental 
action in the housing field at the local level. 

Senator Taft. When this urban redevelopment was presented last 
week, my recollection is that they separated it entirely; they en- 
visaged an entirely different authority undertaking the urban rede- 
velopment program. 

Mr. Guste. It would be the thought of the Public Housing Con- 
ference that any urban redevelopment should be guided by the local 
housing authority. 

The chairman has suggested certain principal subjects in which 
the committee has primary interests. I shall limit our comments to a 
few of these. 

Persons in every section of this country who lived through the chaos 
of the early days of war housing before the creation of the National 
Housing Agency, and who found themselves buffeted from office to 
office, never receiving satisfactory information, have reason to know 
that an over-all housing agency, with operating constituent units, has 
great merit. 

The magnitude of the housing job ahead of us, and the part that the 
Federal Government will be called upon to play in it is so great that 
these activities are deserving of a high place in top administration 
councils. We believe that all Government aid to housing, whether 
it be direct subsidies for low-rent housing, or Government insurance 
or aid for home loans, requires coordination. A top policy and coordi- 
nating office which leaves constituent units free to handle operations 
in their respective spheres, is good administration. Despite ' 



difficulties confronting it, the X. II. A. accomplished a creditable job 
in providing war bousing. Of course, there were mistakes, hut by 
and Large, homes weie provided in the right place, and on time to 
permit industry to recruit the manpower that accomplished the 
greatest industrial miracle of all time. 

We believe it is pertinent to point out here that the existence of 
local housing authorities, organized initially and primarily to this 
date except for war housing to do low-rent, slum-clearance housing, 
«;h a positive factor in meeting the pressure of the war job. Respond- 
ing to the Government's request, they pitched in immediately and 
assumed a great share of the war housing responsibility, planning, 
development, and management. Had they not been in existence, 
staffed by competent people, we honestly do not know how 7 the biggest 
housing job in history could have been accomplished on time. 

\\ ith reference to the disposition of war housing, we concur in the 
recommendations of Commissioner Klutznick. From the local com- 
munity point of view, permanent war housing built under the pro- 
visions of the Lanham Act constitutes the most difficult problem. 
In many cities there is an increasing public sentiment to have these 
houses disposed of to local housing authorities to be integrated into 
the low-rent housing program. Under existing law, this can only be 
done by separate acts of Congress granting specific authorization in 
each case. We definitely recommend that legislation be drawn to 
permit the sale of projects to local housing authorities if such a request 
is made by the local governing body as being in the best interest of the 
community, and if a finding is also made by the responsible national 
agency that such action is in the national interest. 

Senator Tapt. When you say "local governing body" do you mean 
the housing authority or the city? 

Mr. Guste. Well, the city should participate in it, but the local 
housing authority should be the general controlling group to recom- 
mend. But it should also be in accord with the local approval of the 
municipal government in control. 

Senator Taft. "Local governing body" sounds as if you meant the 

Mr. GUSTE. It would be the municipality in that instance. 

Senator Ellentder. Would local legislation be necessary? 

Mr. Guste. I don't think it would be necessary. The only thing 
that would be necessary would be an amendment to the Lanham Act. 

Senator Taft. And one other thing, probably, if it is to be used 
for low-rent houses. • 

Mr. (ii BTE. Well, probably so, but those funds would be furn'shed 

through regular appropriation under the United States Housing Act. 

Senator Taft. Except that they have run out and we would have 
to pass an act (noreasing them, 1 imagine. 

Sir. Guste. Thai is fundamentally necessary; that is a sine qua non. 

Senator ELLENDER. On the other hand these projects could be sold 
cheaply enough so as to probably do away with subsidies. 

Mr. JqjHNSQN. It could be a capital giant. Senator, instead of an 
annual subsidy as an effort to achieve Lower rents. 

Senator Ellender. Yes; that is what I had in mind. 

Senator Taft. You would have t<> Bell it to them for practically 
nothing in order to equal the subsidy that they would get under the 
Housing Act . 




Mr. JqHNSON. Yes, sir. 

Mr. Guste (continuing). There is a grave danger, and many com- 
munities recognize it, that if these permanent projects are thrown on 
the market they may have a serious effect on property values and 
depress the market for new construction in the medium- and high- 
income group, just at the time it is most seriously needed to help ob- 
tain full employment. 

It is entirely probable that many of the so-called family dwellings 
of demountable construction could and should be used on some other 
site, perhaps in another city or as farm housing. For the most part 
they are of sound construction and will have a definite use value for 
many years. Temporary war housing which was built for short life 
should be removed, at least from housing use, as quickly as practicable. 
It is costly to maintain, and if continued in housing use it has all of 
the factors that will degrade it rapidly into the slums of tomorrow. 
Realistically, we may anticipate strong pressures to have some of this 
housing kept for housing purposes. Such pressures should be met by 
universal governmental resistance, local, State, and National. This 
policy was established by Congress, and communities everywhere 
have relied on that directive being carried out. 


For the greater portion of the last year various committees of the 
National Public Housing Conference have been studying the basic 
questions of low-rent housing and urban redevelopment. The legis- 
lative committee of the conference was named last April to begin the 
preparation of a specific program which it may recommend to the 
Congress as representative of the thinking of large segments of the 
population which have an interest in rehabilitating our cities, by elim- 
inating slums and decayed areas and returning them to their proper 
use to be developed either by private industry or for public purposes. 

Our committee is composed of local citizens from each section of 
the country. The legislative committee has met several times in 
Washington where records of experience of the housing program are 
readily accessible and where it could consult with Federal officials in 
both the National Housing Agency and the Federal Public Housing 
Authority, who have had continuing experience with the program. 
Throughout our deliberations we have consulted continuously with 
representatives of labor organizations, and with more than 100 other 
organizations representing private industry, farm groups, social 
agencies, and citizens' groups interested in the general welfare. 
While a specific program has not yet been completed for presentation 
to the appropriate committees in Congress for consideration, we have 
arrived at several basic conclusions which will, we- believe, be of 
interest to this committee. 

By reexamining the urban low-rent housing program, and by draw- 
ing generously from the experience of many local housing authorities, 
it was our feeling that several imperfections in the existing law should 
be corrected as rapidly as possible. For example, it is of the utmost 
importance that private capital be brought into the program to 
finance the entire capital cost in substitution for Government loans in 
the development of projects. Some of the larger cities have already 
made great strides in that direction, reaching as high as 85 percent 


direct private financing. To do the complete job a few amendments 
are required. The most basic of these would authorize the F. P. II. A., 
in the case of a default by a Local authority, to acquire a project and 
operate it as Uw-rent housing under the requirements of the United 
States Housing Act. The F. P. H. A. upon such acquisition should 
be empowered to continue to pay the annual contributions required 
to maintain the low-rent character of the project. Such annual con- 
tributions are also pledged as security for the outstanding bonds of 
local housing authorities as required by the United States Housing 
Act. Under existing law, if the Federal Government acquires a 
project by default, annual contributions stop and the security behind 
the loan is jeopardized. Immediately upon curing the default the 

fMojeet under our proposal would be returned to the ownership of the 
ocal housing authority. 

Results of an amendment of this character are obvious. It assures 
the continued use of the project for low-rent purposes and insures the 
continuity of annual contributions which make possible the low rents 
required, and at the same time insures the security for the bonds. 
Many private investment houses have expressed genuine interest in 
lerfecting amendments of this character and indicate an untapped 
reservoir of private funds that would go into such investments at 
low interest rates. 

Senator Ellender. Mr. Guste, if the subsidies are paid yearly, 
how could the United States Housing Authority handle it to better 
Advantage than the local authority? 

Mr. Guste, It wouldn't be a question of the Federal Housing 
Authority handling it to better advantage. The local housing author- 
ity might, in certain instances, be guilty of default. In other words, 
there are certain protective clauses in the original act, the clause of 
^equivalent elimination", the clause assuring that these projects be 
used merely for the low-income group, and so forth, and those condi- 
tion- are set forth as conditions precedent in the contract. 

Should the local housing authority fail to comply with any of these 
conditions it would be in a state of default, and then the Federal 
Public Housing Authority could step in, discontinue the annual con- 
tribution-, and as a result the securities would be in jeopardy. 

Senator Ellender. Well, 1 appreciate that, but I am just wonder- 
ing bow the United States Housing Authority could work it to better 
advantage out of \Vashington, than the local authority could. It 
strike- me that if it were a failure under the local housing authority, 
you might argue that it would be the same with the United States 
lou-ing Authority. I can't see the advantage that would accrue. 

Mr. Guste. It would do this, Senator Ellender. The Federal 

Public Housing Authority, in such an instance of default, would 

u>- ume control of the housing project, and then it would see that a 

program catering to the low-income group was pursued. It would see 

hat the original conditions in the contract were complied with, so 

ur as equivalent eliminations were concerned, and so forth. 

Senator Ellender. Isn't that a burden now on the local authori- 

Mr. Guste. It is, Senator, but if the local authorities fail to fulfill 
that condition it seems no more than proper that its creditor should 
ia\c the right to obtain the project and operate it in compliance 
A'ith the original understanding of the law. 



Senator Ellender. It all comes back to this, then, that the United 
States Housing Authority could better handle it than the local housing 

Mr. Guste. No; it could not. This is an essentially local program 
and can only be handled best by the local authority in the local 
community. At the same time, there should always be that protec- 
tion vested in the Federal agency of the Federal Government to see 
that local authorities and local communities do administer this pro- 
gram consistent with the original intent of the law, and that on their 
failure to abide by the original intendment, then the Federal Govern- 
ment, through its agency, should have the right to take over and 
operate the local project. 

We can think of no single greater accomplishment in the public 
housing field than to have all capital financing come from private 
sources, eliminating the need for Congress to authorize large capital 

Senator Taft. I can think of one, and that would be to get rid of 
the subsidy. I don't think the financing matter is of such overwhelm- 
ing importance. It is a desirable end, I think, but I don't think the 
question of whether capital funds are advanced by the Federal Govern- 
ment or not, makes very much difference. After all it is the subsidy, 
it is the $2,000,000 that would pay the interest on over $100,000,000 
of Government bonds, which is the real substantive contribution of 
the Federal Government. 

Mr. Guste. I agree with you in that respect, Senator. At the same 
time, it would be a great accomplishment in the field of financing to 
be able to interest the private investor rather than have the Federal 
Government carrying the entire load and the entire interest, from the 
financial standpoint. 

Senator Taft. It doesn't make much difference whether the Federal 
Government has $100,000,000 outstanding in Federally guaranteed 
bonds, or whether they are contributing $2,000,000 a year in the way 
of subsidy. Whether you do it in the form of subsidy or in the form 
of interest on your bonds, doesn't make a great deal of difference, ex- 
cept that I realize that the subsidy form is more elastic and may be 
adjusted to the particular project. 

Mr. Guste. That is true, and it is an accomplishment to have a 
wider interest, so far as the American people are concerned, in the 
public housing movement. 

Senator Taft. Well, their interest is in the ownership of the 2-per- 
cent bonds; they don't take much interest, usually, in the project. 

Mr. Guste. That depends upon the investor. 

Senator Taft. They look to the Federal Government as guarantee- 
ing the income and let it go at that. 

Mr. Guste. As I say, that depends upon the investor. 

Our committee and our board of directors felt strongly also that as 
a result of the favorable experience of the local housing authorities, 
the period of amortization should be reduced from 60 to 45 years. 
Under these conditions it is believed that such a reduction is thor- 
oughly obtainable, and would result in a reduction of approximately 
25 percent in the total contributions payable by the Federal Govern- 
ment with respect to each project. 

Senator Taft. Referring to that for just a moment, of course, it 
reduces the number of years by 25 percent, but since the amortizatioi 



is greater, doesn't it make the deficit greater, so that the contributions 
are just the same in the end? 

Mr. Guste. The point there, Senator, is that from our experience 
we have learned that private investors would be willing to take tbese 
bonds at B lower interest rate than we could get the money from the 
Federal Government. That lias been our experience. Now, if we 
can reduce the rate of interest on our loans through this means of pri- 
vate investment, then we are in a position to shorten the time o/ 
amortization that will result and that really saves the Federal Govern- 
ment subsidy money. Maybe that is the answer to your original 

Senator Tapt. What saves the money is getting it at a lower rate 
of interest, not in reducing the number of years. 

Mr. Guste. That is true, but if we reduce the number of years that 
the subsidy will be involved, then we are reducing the amount of money 
that the Federal Government would have to put in. 

Senator Ellender. The fact that you can get cheaper money, 
would that not offset the subsidy paid by the Government 

Mr. Guste. Well, it wouldn't entirely offset it, as I say, but it would 
certainly reduce it. 

Senator Ellender. I don't mean offset it altogether, but would it 
not decrease it if you reduced the interest rate? 

Mr. Guste. The reduction in the rate of interest would permit us 
:>> reduce the period of time when we would need annual contributions 
from the Federal Government. 

Senator Ellender. And the yearly subsidy w r ould be about the 
same as is now paid? 

Mr. Guste. I think that would be correct; yes. You would be 
saving by a reduction in the period during which you would pay the 

Senator Ellender. But the annual subsidy would be about the 

Mr. Guste. If you retained the amount of time of the amortization, 
your annual subsidy would be reduced; if you reduce the time, you 
maintain your subsidy. 

Senator Ellender. Senator Taft thought that by reducing the 
time you would probably have to increase the yearly subsidy, but that 
wouldn't be necessary. 

Mr. Guste. That is balanced off by the fact that you have a lower 
interest rate on your bonds 

Senator Tapt interposing). It is the lower rate of interest on your 
bonds, nut the reduction from 60 to 45 years. You pay exactly the 
amortization in 45 years as you pay in 60 years, namely the cost of the 

Mr. GuSTE. I am talking about the annual contributions. 

Senator Taft. Your annual contributions are bigger unless you 
can get a reduction in the rate of interest. Ofrhand 1 would say that a 
45-year bond would be more salable than a 60-year bond ; and that you 
might get sonic reduction in the rate of interest simply by reducing 
the period of t he bond. 

Mr. ( rUSTE. That may be. 

Senator Taft. I don't know, but usually 60 years looks a little 



Mr. Guste. From our studies and inquiries it is the recommenda- 
tion of the conference that there should be a reduction from 60 to 45 

Throughout the experience of public housing there has been pro- 
longed discussion regarding what has become known as "equivalent 
elimination" of a substandard home for each new home that is built. 
In determining compliance with this condition, the conference feels 
strongly that cities and local housing authorities should be permitted 
to count all substandard dwellings that are eliminated subsequent to 
the initiation of a low-rent housing project, or those that are planned 
for elimination by demolition, condemnation, and effective closing, or 
the compulsory repair or improvement of unsafe or insanitary dwell- 
ings situated in the locality or metropolitan area. For example, 
subsequent to the initiation of a project, private industry, through a 
redevelopment program obtains land on which many substandard 
homes have been eliminated and families displaced, although it is in 
no way connected with a public-housing development. It is our 
opinion that these homes should be counted in connection with the 
equivalent elimination provisions of the act. It is possible also that 
other public programs such as highways, parks, and so forth, will 
require the elimination of substandard housing. It is our belief that 
these also should be credited as complying with the equivalent elimina- 
tion clause of the act since in each case a family living there will be 
displaced. Such an application of equivalent elimination would be 
thoroughly realistic, and at the same time would meet the objective 
of having a slum house eliminated for every family rehoused. 

City officials and local housing authorities have for many years been 
urging the desirability of an amendment to the United States Housing 
Act giving the administering agency power to make loans to local 
housing authorities for the advance planning of projects, to be repaid 
from the development cost of the project when it is approved and pro- 
ject funds are available. Such a loan would enable localities to make 
examinations, surveys, investigations, and architectural and engineer- 
ing plans and specifications which go beyond merely filing an applica- 
tion showing the need and general outlines of local programs. Such 
action would permit cities to be ready for post-war construction the 
moment it becomes a necessity to the national economy. Such real- 
istic planning would seem to us to make a great deal of sense, and we 
believe would result in better projects as to planning, construction, 
and adaptability to economical operation. 

In reviewing local authority experience we shall at the proper time 
wish to recommend other amendments of a technical nature, such as 
limiting cost requirements to a room rather than a unit basis. While 
under public housing the average apartment has contained slightly 
more than two bedrooms, present unit cost limitations have resulted 
in the construction of an overabundance of one-bedroom homes. The 
families which should be rehoused generally have several children and 
houses should be built to fit their needs. 

One phase of the urban low-rent housing program that has from the 
first been neglected in Federal legislation is the rehabilitation of old 
housing as an integral part of the program. That is another spoke in 
the wheel which we wish to recommend to you. Public housing has 
been widely criticized for providing only new housing and not rehabili- 
tating those areas where homes are beginning to fall into disrepair but 


where the neighborhood can si ill be Baved. It is said thai people of 
low income are given fine new homes, and people of slightly higher 
income who Eire able to feel by on their own resources are forced into 
inadequate second-hand bousing. 

All of ns who have had anything to do with city planning and large- 
Bcale housing know that Buch rehabilitation is not the complete 
answer to the housing problem, but it is one additional tool toward 
achieving the objective that we all seek. Some consideration was 
given under the United States Housing Act to several rehabilitation 
projects of that character, hut they failed of approval because the act 
did not provide an amount of subsidy which, when added to anticipated 
income of 'the reclaimed property, would meet all costs to amortize 
the debt during the anticipated life of the project. 

We on the local level have felt the need for a provision of this kind 
m the act, and we have urged such action for a long time. Such 
authority will, we are confident, be limited in its effectiveness, yet 
there are situations where it doubtless will meet the problem ade- 
quately and will reclaim existing neighborhoods. Most especially it 
will give local authorities an opportunity to find out if such rehabili- 
tation is practical. We urge that the committee consider the desir- 
ability of adding a provision of this kind. 

It is important to stress the fact, however, that the amortization 
period of a rehabilitation project must be no longer than 30 years, 
and that the annual contribution should be 1 percent of development 
o-m higher for projects of this character than for new construction. 
If such a plan is included in the over-all housing program you will 
find that local authorities will attempt diligently to make it work 
wherever practicable. 

An obvious question invariably asked of those interested in the 
housing program is: "What is the total need, and how do you recom- 
mend meeting it?" The statement of Mr. Blandford before this com- 
mittee last week was the most comprehensive analysis we have yet 
-ccii on the whole housing need, with all of its parts fitted together, 
for a l()-year period after the war. Mr. Blandford's estimate of 
about 12,600,000 homes needed over a 10-year period seems to us a 
good goal, although the actual need may be somewhat higher since, 
m our opinion, his estimating is conservative. Even more important 
is Mr. Blandford's analysis of need according to different income 
groups and different rent-paying capacities, which introduces a realism 
in t he post-war market for a big housing program, as against the empty 
boasts from some quarters about what they would accomplish if 
public housing is put out of business. Mr. Blandford's initial pre- 
sentation did not attempt to say what part of this need can and should 
be met by various devices. Doubtless he will have recommendations 
along that line at a later date. 

It is not too early, however, for the National Public Housing Con- 
ference to make a preliminary comment about public housing need, 
and the ability of existing machinery to meet it. Mr. Blandford's 
testimony indicates that about 360,000 new homes will be needed 
annually in each of the firsl 10 post-war years, at monthly rents under 
$20 a month. His testimony also indicates that private enterprise, 
on the basis of past performance and present prospects— and inci- 
dentally tin- was confirmed by the testimony of Commissioner Fergu- 
son of the F. H. A. — cannot get anywhere near building standard 



housing in any substantial quantities at a monthly rental of $20 a 
month or less. 

However, we in the conference, without any knowledge ol what 
Mr. Blandford might propose, have felt that initial requests must be 
as realistic as local experiences can dictate. They should be based on 
the most accurate assumption obtainable on the ability of local housing 
authorities to produce, rather than on over-all needs. We have 
thought in terms of annual contributions sufficient to support a pro- 
gram providing 200,000 new homes a year for a 2-year period as the 
beginning point for a post-war public housing program. That would 
require subsidy authorization of no more than $35,000,000 for the 
first year, with an authorization in like amount for the following year. 
That figure, we believe, is supportable and certainly is not the as- 
tronomical sum that has been credited to persons favoring a public 
housing program. It should be pointed out again that under the 
amendments proposed above no additional capital authorization will 
be required. 


We have indicated our belief that urban redevelopment and low- 
rent housing go hand in hand, and we wish to stress again that the 
only major urban redevelopment that has been accomplished in the 
Nation has taken place under the United States Housing Act. 

We are now talking and thinking in terms of a program that would 
clean up whole sections of our great cities where areas, primarily 
residential in character, have decayed to slums, carrying with them 
all of the blight, both human and structural, that slums impart, 

We envisage a program under which a local public agency with 
necessary financial aid from the Government would undertake to 
clean up the slums and make the land available for redevelopment to 
its most appropriate use. They would start with a survey of the slum 
areas in the city. For each slum area to be cleared, they would 
prepare a redevelopment plan which would be in accord with the 
over-all city plan and provide for the reuse of the land in the best 
interests of the city. The redevelopment plan for any slum area 
would, of course, have to be approved by the city government 
directly or through its planning commission. Upon approval of the 
plan, the local agency would acquire the area, using the power ol 
condemnation wherever unreasonable prices are demanded or titles 
cannot otherwise be cleared. If the redevelopment plan for the slum 
area contemplates changes in street layout or other work in prepara- 
tion for building, such site improvements would be carried out by 
the local agency. 

As to the land which is planned for private redevelopment, the 
local agency would negotiate with private business interests for the 
long-term lease or sale of the land at a fair value appropriate to the 
new use. All construction and development undertaken by private 
builders, and also that undertaken by public agencies, would be in 
accordance with the municipal redevelopment plan for the area. If 
some part of the area is planned for public housing, the land would 
be turned over for that purpose at a fair value for residential use — 
perhaps a normal percent of the development cost of the project. 
Where the land is to be used for park or other public purposes, the 
city would pay a fair price based on this use, and the development 


wiu'L could be undertaken by the appropriate city departments^ such 
;i- the department of parks, t he library board, the board of education, 
and so forth. 

Under tins plan families will be displaced. Therefore, immediately 
an urgent need arises to rehouse those families both temporarily and 
permanently at rents comparable to those they have been paying. 
Urban redevelopment cannot be accomplished without providing for 
the housing of these families. 

The National Public Housing Conference respectfully recommends 
in carrying forward a Large-scale slum redevelopment program, that 
it be done under the proven pattern and in the light of experience 
gained under the United States Housing Act. We further recom- 
mend that the V. I\ II. A. be given the responsibility for administering 
such an act. We recommend a formula of annual contributions to 
absorb the mark-down between acquisition costs of slum and blighted 
areas and their value in the new use to which thev will be put. 

Using a 60-year amortization period with adequate financing pro- 
visions to make local redevelopment bonds attractive to private 
investors, we believe that the capital cost of this program will also be 
financed through normal private channels. The actual cost to the 
Federal Government can be measured in annual contributions. For 
example, it is estimated that a maximum contribution authorization of 
125,000,000 would finance a $1,000,000,000 program. The amounts 
actually paid would undoubtedly be less than those authorized, as is 
the case under the low-rent housing program. 

Senator Taft. 1 like the idea, myself, of tying it up to housing, as 
compared to the more ambitious plans that are being presented both 
by tlie Bet t man-Hanson group and the real-estate boards, as I under- 
stand it. but I wonder whether it wouldn't be almost better to simply 
pay the difference in cost, finance it with Federal bonds, or a Federal 
loan, and then have it resold as quickly as possible, either to private 
people in to the city for parks, or to the Housing Authority itself for 
housing, and just have the Federal Government stand the loss, limited 
in some way, ;i^ ;i grant, to get rid of it. 

And would it be possible, or might it be possible, also, if you took cosl of slum clearance out of the subsidy, to reduce the amount 
of t he subsidy for low-rent housing? In other words, some part of the 
Subsidy for low -rent housing will undoubtedly pay the cost of slum 
elimination. Supposing you put that in the redevelopment program 
and separated it from the low -rent housing proposition, couldn't we 
reduce somewhat the authorized contributions for low-rent housing? 

Mr. Guste. If you immediately wrote off that difference between 
Cost and value in use, you would undoubtedly be able to reduce your 
subsidy, because then you would only have a reduced cost of develop- 
ment for your slum clearance program, your low-rent housing 
program — — 

Senator Taft (interposing). It seems to me that it confuses the 
is^iie to have this cosl of slum clearance included in the low-rent, 
housing proposition. They are connected but they are not financially 
the same. 

Mr. ( rUSTE. A- ;i unit ter of fact . Senator, the entire public-housing 
program has never gotten the proper credit for slum clearance which 
it has accomplished because there has always been an attempt to 
tharge it with this additional burden that it had to carry in the cost of 
slum clearance. 



Real slum clearance is costly, there is no doubt about it, because you 
have to take care of the removal of the dilapidated and obsolescent 
structure that is objectionable in the community, you have to remove 
it and stand that cost. Now that cost is not properly to be attributed 
to a low-rent housing program. It is a cost of slum clearance in itself 
and in slum clearance alone, and whether you had a redevelopment 
program engaged in by a public group or by a private group, it would 
be no more than good, common-sense accounting, to eliminate that 
cost of slum clearance in determining the cost of the low-rent housing 

Mr. Johnson. Which is precisely what we are recommending. 

Senator Taft. If you built at the rate of 200,000 public units a year, 
and 2,000,000 in 10 years, you are still way short of what is shown by 
the statistics to be the number of people needing low-rent housing. 

One criticism I have always had of the public-housing program is 
that it seemed to be purely an experiment. There was no way of 
knowing where it was aiming or how much it was going to cost in the 
end. I have never been much alarmed at the cost, but rather that it 
should deal with the whole program. I have always wanted to see 
what the cost of this whole project was. In other words— are we 
going to house 2 million families, and are the other people in that 
group going to be taken care of in some other way, or are we really 
aiming at taking care of 6,000,000 families? What is the goal, or 
can you state it at the present time? 

Mr. Guste. I doubt whether you could state that, Senator, because 
the goal is continually shifting. I don't believe that you should ever 
attempt to take care of the entire low-income group, or the group that 
needs proper standard housing. 

Senator Taft. Why should 2,000,000 families get these nice new 
apartments at a low rent, and 4,000,000 families in exactly the same 
income group be excluded from them? If the Government is going 
to do it for 2,000,000, why not for 6,000,000; why not for everybody 
in the same group? 

Mr. Guste. A public-housing program ought to be dynamic and 
not static. It ought not to be our desire to place people in public 
housing. It ought to be our desire and aim to take them- out of 
public housing. These are not poorhouses or institutions where" 
people should have habitation ; they are opportunities for the develop- 
ment of the individuals. Individuals can be and they are, through 
public housing, trained, they are inspired to better living, and as i 
matter of fact it is the greatest opportunity that we have in the 
country today to really build up a private market. 

The public houser, in his program, is engaging in a most effective 
piece of salesmanship for the private realtor. 

Today, if an automobile salesman wants to sell an automobile, the 
most effective argument he has is to put the wife in the automobile 
and let her drive it. The radio salesman, the Frigidaire salesman, 
the sewing-machine salesman, the freezing-unit salesman, all take the' 
wife and let her use those articles, and 

Senator Taft (interposing). I am sorry, but I don't see the parallel 
at all, because the justification for this housing is that they haven't 
got enough money to pay for it. There is no such question as to 
automobiles. Nobody is subsidizing anyone to buy automobiles 


and nobody is subsidizing anybody to buy these other things that 
you mention. 

This is a peculiar and special problem. Surely it improves people 
and it improves their ideas about what housing ought to be, but it 
doesn't increase their income, unless we do that outside of this 
program, in some other way. 

Senator Ki.i.kndiu. As 1 recall it we had quite a lot of testimony 
heir Lasl week to the efl'ect that many of the people who were helped 
by this housing were able to move on and obtain homes of their own. 

Senator Taft. Surely they gradually increase their income, many 
families i\o that, but others take their place, apparently, at least that 
is the history up to date, in the low-income group. 

If there are 6,000,000 families in this income group, where are the 
other 4.000.000 families going to live, and what are we going to do 
about them? 

Mr. Guste. Just one sentence more, Senator. We have had this 
Experience, that the people who go into public housing want to have 
the housing that they enjoy there, and they do become, naturally, 
ambitious, and they do increase their incomes, and as a result of that 
increase in income according to law they are removed from the pro- 
gram. Others arc then substituted and it is a continuous program of 
improving people and improving their income. Now in that way you 
don't have to take care of the whole group at once. 

Senator Taft. Do you mean that everybody gets a higher income 
by improving their ambition to get it? 

Mr. Guste. I think that is one way to increase income, by improv- 
ing amibition. That has been our experience. 

Senator Taft. Well, that is a thought, but it is a rather intangible 
method of taking care of five or six million substandard income 

Mr. Guste. But, Senator, it works, it is practical, and as I say, 
just using the analogy of the salesmen with these other articles, it is 
the best way to have a person interested in obtaining an article and 
using it and trying to have it. 

Senator Taft. My difficulty is that it seems to me that the justi- 
fied ion for this is the need of taking care of these families who can't 
pay this rent. We have had figures all day on the same thing. There 
Ire 3uch families. It seems to me that if that is the problem, we have 
got to meet that problem. We don't have to meet the problem of 
slum clearance which ought to be done because it gets rid of very 
substandard homes — but I do think that the public housing people 
have been scared to present the real program for fear that it looks 
like too much money. Now, I don't think they ought to be scared 
to do that. If that is what ought to be done, they ought to say so and 
we ought to consider the amount of money necessary, and if it is too 
much then we ought to find some other cheaper way to accomplish it. 

Mr. Guste. Frankly, Senator, as I have stated, I don't think that 
the entire problem should be met at once. It ought to be handled 
gradually because of this opportunity for people to come into public 
lousing, use it. ami then be removed from public housing. It would 
be needless to go ahead and construct a home for every person living 
in a substandard house, because if certain of these persons are put in 
public housing units, and have the opportunity to understand the 


advantages of proper living, they are going to try to get homes for 
themselves, and insist that the private builder supply those homes to 
them The public should not be carrying this burden unless it is 
absolutely necessary. It is the whole principle of Americanism that 
we should support private industry, and we rely upon private industry 
until it becomes absolutely necessary to resort to public relief or public 

"SiiSot'Tait. Well, if it is necessary for 2,000 000 families, I 
don't see why it isn't necessary for four or six million families 1 
don't understand that. I can't see why some people should be 
favored and others in exactly the same condition should be refused 
such Government assistance. . . 

Mr Guste. We share your feelings and your interest in tins entire 
group, Senator, but we feel we ought to approach it gradually instead 
of attempting to do the entire job at one time 

It would, of course, be necessary to establish an initial revolving 
fund for interim financing until urban redevelopment projects are 
ready for long-term financing. We have been thinking in terms oi 
such a fund, limited to an authorization of $500 000,000. We know 
from proven experience that financing of a public program under a 
plan of this kind is attractive to private investors. We know that 
competent local governmental machinery is ready to go to work it 
seems a waste to experiment with the unknown when proven methods 
to accomplish our purpose are at hand 

It is not our intent to recommend that all reclaimed lands be tied 
in with public housing. The program will be outlined according to a 
master plan, developed locally to meet local needs. Housing should 
be provided for those families displaced. For those of low income 
who cannot be served by private enterprise public housing will be 
required. Some redeveloped lands will undoubtedly be used or 
private housing, other for commercial enterprise, still others lor parks, 
schools, hospitals, or whatever the need may De True cooperation 
between public and private interests could readily be achieved through 
the plan we recommend. Each will operate within its well-defined 
sphere and each will supplement the other. One doesn t have to 
gaze into a crystal ball to know that such a plan will work for the 
benefit of all if it is sponsored and administered by reasonable people, 
and if the hysteria of zealots on the extremes of both public and private 
housing interests are not permitted to destroy the gams that are 
perfectly possible of accomplishment. 


In the opinion of the National Public Housing Conference no 
public housing program can be complete without provision being made 
to care for the families on farms with unbelievably low incomes and 
living in housing that makes some urban slums look almost livable. 
It is difficult to dramatize the rural shack. It does have air irom all 
four sides, but the environment is just as depressing as the tenement 
of the lower East Side. I believe that all of us recognize the fact that 
adequate rural housing is just as important as adequate urban housing. 
Rural families have the same right to decent living as their city cousms. 
We know also that the problem is more difficult to meet. 


The rural program under the United Stales Bousing Act has not 
proven to be the answer, although it lias served to demonstrate that 
the same formula as used in the city is not applicable to the country. 
On this phase of the program the Conference has not yet crystallized 
its recommendations. We have been consulting with farm groups 
and have discussed the problem informally with officials of the 
Department of Agriculture and the F. P. II. A. 

We have, however, reached some conclusions which may be of 
interest to the commit tee. 

First, it is our feeling that there must be a clear definition dis- 
tinguishing rural from urban public housing. 

Second, any plan that is adopted must provide for eventual home 
ownership of the rural home; and 

Third, a variable plan of payment, in line with accepted loan 
practices of the Department of Agriculture, must be perfected. It 
would enable the farm owner to pay more than the minimum required 
in favorable years, and to obtain a reduction in his payments in less 
favorable years. This follows the basic formula of the successful 
operations under the Hankhead-Jones Farm Tenant Act. 

Provision of rural housing; is intimately related with the farm 
economy, and there must be the closest working relationship between 
the Department of Agriculture and the housing agency. For example, 
it is essential that the Department certify that the farm involved can 
be reasonably expected to continue in farm use and that it does not 
consisl of submarginal land. There is no reason to believe that such 
working relationships cannot be achieved. 

It is our hope to be in a position in the very near future to make 
specific recommendations affecting rural housing. The problem is one 
of the most difficult and one of the most urgent that we face. We 
believe it part of our obligation to assist in every way we can to help 
find a workable, practical solution. 


Representing local housing interests, as it does, the National Public 
1 1 < n j - i 1 1 l: Conference might well conclude with a few general state- 
ments. We are not coming to Washington to favor the displacement 
of private for public operation. We believe that private enterprise 
should be given every opportunity and encouragement in its gigantic 
task. Where private enterprise cannot, operate, we propose, in public 
housing, to use private enterprise facilities in every way possible, such 
a- private contractors to build and private lenders to finance. We 
are here to counsel with you on the problem of a decent home for every 
American family. A problem confronts us now because we have 
heretofore neglected our cil izenship by failing to recognize this right, 
and by permitting slums to grow and cities to rot at their core, and 
farmer-; of low income to live in hovels. It is a problem primarily 
local in character but of vast national consequences. We propose 
complete cooperation between Federal, State, and local governments, 
with a maximum of responsibility placed on local government to see 
the job t hrough. 

The beginnings that have been made are very much on the credit 
side of OUT national ledger. The war housing program has served to 



illustrate dramatically how the several levels of government can and 
will cooperate to achieve great ends. We have, however, reached the 
place, and as victory draws nearer day by day, we are approaching the 
hour when the housing industry, public and private will be called 
upon to play a major role in conversion to peace and the maintenance 
of full employment. , . 

Without ringing emotional changes, and when we talk and plan 101 
the American home our conversation can run the gamut of emotions, 
I wish to say that it is just good business sense to have our plans ready 
now for execution when needed. We need a great urban redevelop- 
ment program. The home construction industry must be ready to 
shift into high gear with every reasonable aid, and a well thought- 
through public housing bill is a vital factor in the over-all housing and 
urban redevelopment plan. This war is not being fought so that our 
men and women may return to the slums. We cannot permit that 
While we look forward to the day when every American family will 
have sufficient earnings to secure decent shelter provided by private 
housing at a profit, that day is not now foreseeable. It is to bring 
that day nearer to the realization of our own generation that the 
National Public Housing Conference has studied, worked, and planned, 
and has appeared before your committee today— and for this oppor- 
tunity we are deeply grateful. f „iu 0f i 
Senator Taft. There are two questions that I asked when we talked 
to Mr. Klutznick, that I would like to have your ideas concerning 
One is the question as to whether this subsidy can be worked out 
in your opinion, in addition to the public housing program, by sub- 
sidies to a privately organized and regulated company? 

Mr Guste. I don't think so, Senator. It all depends, of course, 
upon the plan. I don't know what plan would be worked out but 
the plans that have come to our attention seem to be more costly in 
the first instance. Secondly, I personally do not believe that any 
subsidy should be given for the purposes of private profit. I believe 
that it is better to work through the public program, because it is 
cheaper in the long run. . 

In some of the plans, private developers would be assisted up to the 
point, we might say, where they would fully amortize their loans. 
At that point those properties, and projects, would belong, and the 
title to them would be vested in, the private holder 

To show just how the cost is reduced, it is just the opposite in the 
case of public housing, because even after these loans are entirely 
amortized, those projects do remain public projects I hey may be 
owned by the local housing authority but they are still public projects, 
publicly owned, pledged to the cause of low-rent housing, ior the low- 
income group, and they do not require at that point any subsidy irom 
the Federal Government. That is quite the contrary in the case ot 
the private subsidy. _ , , 

Senator Taft. Well, I don't quite see that. It seems to me the 
difference between your subsidy is simply between the amount neces- 
sary to pay on public bonds, and what is necessary to pay on pnvate 
capital, which is the difference between, say, 2 and 5 percent. What 
they use the 5 percent for, that is up to them. They can take nothing 
on their capital, I suppose, and pay off their bonds with it, it they 
want to. 


Hut you have to give a return on the property, and thai return lias 
to be more. Ori the other hand you don't have a lot of nontaxable 
bonds ou1 that the taxpayer does not get any return on. They have 
to pay in their income tax the income that they gel from that 5 percenl . 

Mr. Guste. Whatever the plan might be, Senator, 1 think if it were 
fully analyzed it would be found to he costlier than the public-housing 

Senator Taft. 1 can't Beewhy. 1 don't understand that. I can see 
why it might be more difficult to run it and perhaps control it satis- 
factorily, but 1 don't quite see why it would be more expensive, net 
to the taxpayer, when you got through. 

Senator ELLENDER. 1 think the charts and exhibits that were pre- 
sented here the other day show that the amount of contribution made 
by the tenant is much greater than the cost of maintenance, and paying 
those charges. Let's say that at the end of GO years this project is 
paid for in full and the bonds are retired, there would be no more 
need of subsidy and they could certainly maintain low rent with the 
amount that the tenants are now paying. 

Mr. ( rUSTE. 'That is right. 

Senator Taft. The other question I have is, whether you have a 
subsidy or rental income, it isn't desirable to have a subsidy for home 
owning in the same class. Here is a fellow that gets up to $1,500 a 
year, and you subsidize him, we will say, for his rental, by, say, $5 a 
month, or $60 a year. Now, if you gave him the equivalent of $60 
a year he might be able to own a home of his own. 

I wondered whether, in considering plans for subsidies for low income 
groups, they should be confined, necessarily, to rental housing, or 
whether there ought to be some supplemental plan, perhaps for a 
little higher group, to help them build their own homes, as well as the 
rental housing subsidy 

Mr. GusTE. "We have considered that in connection with rural 
housing, but we haven't considered it in connection with urban low 
lent housing because we haven't felt that it was a proper principle 
to be applied to urban housing. 

Senator Taft. It might take the form of a grant, rather than a 
subsidy. 1 have of ten thought that it would be easier in this veterans' 
business just to give them $500 to help build the house, than to loan 
them $2,000 that they are going to have to pay back. It would al- 
most be easier, and you might do something of the same sort in the 
ease of other low-rent housing. 

Mr. (ii STE. Well, Senator 

Senator Taft (interposing). Or we might try it out on the veterans 
first and see how it works. 

Mr. (h ste. We have found thai this system and machinery that we 
are using now for the urban program so successful, and found that it 
works bo smoothly, that we would rather see it maintained. 

Senator Taft. It works smoothly, but [have run into constant criti- 
cism of the publie-hou-ing program Largely because in the firsl place, 
there are not many people in low-rent housing since it lias been 
Btarted. It is jusl a drop in the bucket as far as the people in that 
low-rent housing category are concerned, who were formerly in slum 
housing. I don't know where the tenants came from but apparently 
many did not come from the slums. And people don't see the over-all 



plan They just see a public-housing project built, and people up to a. 
$3 000 income are allowed to live in it while other people can't get into 
it;' and I would think that it could be improved very materially to get 
much wider public acceptance. 

Mr. Guste. Unfortunately there was a mere scratching ot the 
surface in the initiation of this program. m 

Senator Taft. And this rental housing is one of the things. 1 have 
had cases brought to me where a fellow is living in his own home, com- 
parable in income and everything else to the fellow living in a housing 
project and although he has paid for the home he is probably paying 
in taxes alone more than the fellow in the housing project is paying in 

^ So I am suggesting that it ought to be graduated in some way so you 
don't have an especially favored group, and other people in the com- 
munity are complaining about it. 

Mr Guste We have never felt, Senator, that we should go above 
that low-income group, and we have always felt that the intermediate 
area, the so-called no-man's land, was really a challenge to private 

Sena S tor Taft. It is a challenge to private housing, but they are the 
same people. You might not need as big an income Here is a 
fellow and up to a certain amount of income he gets a lot, but it he 
steps over that line he is much worse off than the fellow ]ust below the 

"Mr. Guste. Yes; that will happen. In all governmental adminis- 
tration it is hard to draw the line. 

Senator Taft. If we are going to proceed with this policy ot the 
Government guaranteeing a floor under housing, we have got to main- 
tain the incentive. The fellow who earns more because he is a better 
man ought to be better off than the fellow who is getting Government 
help It seems to me it is our job to work these programs of assistance 
out in that way so that there is a constant incentive to improve and 
eet better housing. , . , 

Are there any further questions? If not, thank you very much, 
gentlemen, for your assistance. 

We will recess until tomorrow morning at 10:30 when Mayor 
LaGuardia will appear. We will possibly meet in the Finance Com- 
mittee Room, if that is available, in order to get away from the noise 
of that compressed air machine outside. Tn , ou 

(Whereupon, at 5:20 p. m., the hearing was recessed until iuesuay 
morning, January 16, 1945, at 10:30 a. m.) 



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