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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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Given By 









S. Res. 102 

(78th Congress) 




PART 11 


JANUARY 16, 1945 

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

■91183 WASHINGTON : 1945 




iMAY .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 — Pagre 
La Guardia, Hon. Fiorello H., mayor of the city of New York, N. Y_ 1707 
Pomeroy, Hugh R.. executive director, National Association of Hous- 
ing Officials 1720 

Marquette, Bleeker, representing National Committee of Housing 

Associations 1742 



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, pm^siiant to adjom-nment, at 10:30 a. m., 
in room 301, Senate Office Building, Senator Robert A. Taft (chair- 
man) presiding. 

Present: Senators Taft (chairman), RadcHffe, Ellender, and Buck. 
Senator Taft. The committee will come to order. We will hear 
from Mayor LaGuardia, New York City. 


Mr. LaGuardia. I understand, Mr. Chairman, that this is a hear- 
ing on the question of public housing and slum clearance. 

Senator Taft. That is the post-war aspect of the plan for the next 
10 years. 

Mr. LaGuardia. At this point of the hearing I would like permission 
to insert a prepared statement from the United States Conference of 
Mayors. That statement will represent the views generally of the 
mayors of American cities. 

Senator Taft. Does the statement cover both housing and urban 
redevelopm ent? 

Mr. LaGuardia. Yes, sir. 

Senator Taft. The statement may be inserted in the record. 

(The statem.ent referred to is as foUows:) 

Public Housing 
(Report submitted by the United States Conference of Mayors) 

Of all groups interested in housing and in the clearance and redevelopment of 
slum areas, the executives of American cities, speaking through the United States 
Conference of Mayors, are beyond question — except perhaps for the people who 
themselves live in slums — the most vitally concerned. To us, housing and slum 
clearance are not just questions of social reform, but concrete and practical matters 
of good municipal housekeeping. 

We are glad of the opportunity of appearing before this committee. We hope 
that a program of action is imminent. 

We want to make it clear that in the post-war period every possible attempt 
should be made to solve the housing problems of our people through the operation 
of private enterprise. 

Every legitimate assistance should be given private real-estate operators. 

It must be admitted, however, that after every attempt has been made, there 
will undoubtedly be a very substantial number of famihes who cannot afford even 



the lowest-cost houses of adequate standards produced by private enterprise. 
For these people the only answer is public housing. We agree that ideally there 
should be no families with incomes too low to permit them to pay for adequate 
housing and purchase the other goods and services necessary for a decent life. 
Until such time as our economic system provides such necessary income it is a 
clear function and duty of government to see that no family has to live and rear 
its children in surroundings which are a disgrace to what we refer to with pride as 
the American standard of living. 

The cities of the country have had a visible demonstration of the benefits 
which can be achieved under the low-rent puljlic housing program authorized by the 
United States Housing Act. This program has, within the limit of its resources, 
accomplished what it set out to do. It has taken famihes from the slums, and 
it has made decent housing available to those who would otherwise have to live 
out their lives in the slums. It has rigidly restricted admission to families of 
low income except in a relatively few cases of essential war workers who could 
not otherwise find accommodations. It has made this housing available to them 
at rents which they can afford without depleting the amounts which their meager 
budgets allow for the other necessities of life. 

Our only comi^laint with this program is that it has been too small — far too 
small in relation to the needs. We must have a vast extension of this program 
and we must have it immediately, both to rehouse our slum dwellers and to 
provide the large amounts of employment which it will provide in the post-war era. 

We have examined with interest the testimony .which has been presented to 
this committee by the Commissioner of the Federal Public Housing Authority 
in connection with this program. We have noted with satisfaction he emphasized 
that programs of low-rent housing and slum clearance are matters for purely 
local determination. We believe that the various localities should determine the 
extent and nature of the programs which they are to undertake. We believe 
that they can be trusted to plan such programs in the public interest. We 
believe that they will scrupulously avoid any competition with private enterprise 
in the field where it is able to operate, and will restrict themselves to necessary 
undertakings which cannot be carried forward by private enterprise. We believe 
that the role of the Federal Government should be restricted to that of giving 
financial aid and technical assistance for projects which it finds to be meritorious, 
well conceived, and financially sound within the conditions under which they 
are undertaken. 

We are in substantial agreement with and will support the changes and im- 
provements to the United States Housing Act which have been proposed. Of 
particular interest to the cities is the amendment which will enable localities to 
obtain all of their capital financing from private investors. On the basis of past 
experience we believe that it will be possible for them to obtain these funds in 
adequate volume and at very low rates of interest. We believe it is wise, both 
from the local and Federal points of view, that such capital financing be the pri- 
mary responsibility of the local authorities. 

We also believe that shortening the period of local contributions to 45 years 
is a step in advance, which will not only reduce the cost of the program to the 
Federal Government but wiU also put the cities in complete control of their 
projects at an earlier date. 

The most important amendment which we advocate is, of course, the provision 
of further authorizations for annual contributions in order to make possible a 
great enlargement of the low-rent program. Under the provisions suggested 
above no additional capital authorizations will be needed for the low-rent program. 

Finally, we believe it would be advantageous to the cities if all of the various 
housing activities of the Federal Government were kept together in one permanent 
housing agency. We believe that this agency should be based on strong constit- 
uent units such as the Federal Public Housing Authority, each charged with full 
operation of its respective program. The function of the over-all agency would 
be that of formulating general policy and reconciling differences, if any, between 
the constituents. 

We ask for early and favorable consideration bj' the Congress. Our cities 
must begin as soon as possible to make plans for their post-war projects of low- 
rent housing and slum clearance. Not only will these projects be of immeasur- 
able benefit to the communities themselves, but they will form a vast reservoir 
of work for men and women when they are released from the armed services or 
are no longer needed in war industries. At one and the same time we can provide 
jobs to tide the Nation over a difficult reconversion period and correct one of the 
principal dislocations in our national life. 


The stresses and severe dislocations which the war has wrought upon our cities 
makes the problems of housing and of slum clearance more acute than ever before. 
The cities of America are fully conscious of their responsibility to all of their 
citizens. They are conscious of the imperative need for a low-rent program with 
adequate funds, and for a broadened program of slum clearance which will enable 
us to clean up the slums of our cities within our own lifetimes and pass on to our 
children a heritage of adequate housing. 

We therefore respectfully urge this committee, concerned with those problems 
of our cities, to produce a bold plan for America and to recommend legislation 
which will make certain the right of every American family to a decent home. 

Mr. LaGuardia. From this point on I want to speak in 'my 
capacity as mayor of the city of New York. I beHeve I have the 
right to talk on piibhc housing. 

For the past 11 years we have demonstrated the feasibihty and 
nsefiihiess of low-cost, publicly owned, publicly operated housing. 
We now have 14 housing units in New York City in operation, with 
16,661 dwelling units housing 69,398 people. This was made possible 
because of the subsidies and grants from the Federal Government up 
to 4 years ago when the State of New York embarked on a housing 
program, and the last 3 or 4 were State projects. 

We now have in our post-war program, ready to go, already 
financed, 14 projects, amounting to $120,236,000. 

Senator Ellender. What do you mean by "already financed," 
Mr. Mayor? 

Mr. LaGuardia. I will come to that. We have the money for 
that from the State, the city, and one left over that is Federal. 

Senator Ellender. You mean your share of it? 

Mr. LaGuardia. No; the State and Federal share, too. We have 
one Federal project which has been authorized and plans completed, 
but which was stopped on account of the war. 

Senator Taft. You have not actually sold the bonds, I suppose, 
but you are ready to start selling them? 

Mr. LaGuardia. We are all ready to sell them. Some bonds we 
have already sold, because we have purchased the land. We got 
very low interest rates, too — down to 1.67. 

Senator Taft. Are those metropolitan housing authorities that 
issued those bonds? 

Mr. LaGuardia. New York City Housing Authority. 

Senator Buck. Guaranteed by the Government? 

Mr. LaGuardia. Well, that is a ticklish question. On the record 
I will say no, they stand on their own, but you and I have no mis- 
givings about it. I am pretty sure the purchasers of those bonds 
depend upon the credit of the city of New York on the interest rate, 
but they are perfectly good. 

Senator Taft. They depend also on the fact that the subsidy is 
going to make up the deficit for the Federal Government. I suppose 
some of them, especially the ones that are ready to go, are now mostly 
State subsidies. 

Mr. LaGuardia. State subsidies. 

Senator Buck. I am interested in the land that you say was pur- 
chased. Was that in a slum-clearance project? Will you get rid of a 
lot of poor-grade houses? 

Mr. LaGuardia. We will get rid of what we deem undesirable. 
But I want to say this: What we in New York deem undesirable now 
is considered pretty good in other sections of the country. 


Senator Taft. It is not the worst housing in New York City that 
you are eliminating, is it? 

Mr. LaGuardia. That is what we are doing. 

Senator Taft. You are? 

Mr. LaGuardia. As much as possible; yes. 

Senator Ellender. Mr. Mayor, one more question. You said that 
of the projects that you are now operating, three of them are State 

Mr. LaGuardia. Two I am sure of. 

Senator Ellender. Does the Federal Government contribute any 
subsidies on those projects, or are they entirely maintained by the 

Mr. LaGuardia. No; this is a Federal and municipal government 

Senator Ellender. I see. 

Mr. LaGuardia. The State is not in it at all. They are separated 

Senator Ellender. I see. 

Mr. LaGuardia. I will now take up some of the individual projects. 
As to the Amsterdam Houses, West Sixty-third Street, West Sixty- 
fourth Street, West End Avenue, and Amsterdam Avenue, the land is 
acquired and the plans are completed. There are 1,024 apartments 
at a cost of $7,091,000. 

The Lillian Wald development, Avenue D, East River Drive, East 
Sixth Street and East Houston Street, the land is acquired, the plans 
in preparation, with 1,805 apartments at a cost of $12,902,000. 

Senator Buck. In each instance there you will do away with a lot 
of undesirable homes? 

Mr. LaGuardia. Oh, yes. We have already cleared some of the 
actual houses. If you will remind me, I will give you our program 
on that. 

In the Brownsville project the land is acquired, the plans are in 
preparation. That is a project of 1,338 apartments at a cost of 

Senator Buck. Where is that? 

Mr. LaGuardia. Sutter Avenue, Dumont Avenue, Stone Avenue^ 
Rockaway Avenue. 

Morrisania, at Morris Avenue, East One Hundred and Forty-sixth 
Street, Third Avenue, and East One Hundred and Thirty-ninth Street, 
the plans are in preparation, the land is being acquired. That con- 
sists of 1,800 apartments at a cost of $10,849,000. 

The Abraham Lincoln Apartments, East One Hundred and Thirty 
second Street, East One Hundred and Thirty-fifth Street, Fifth Avenue, 
and Park Avenue, the land is being acquired and the plans are in 
preparation. That consists of 1 ,289 apartments at a cost of $8,836,000. 

The Marcy houses, Flushing Avenue, Marcy Avenue, Nostrand 
Avenue, and Myrtle Avenue, the land is acquired. That consists of 
1,728 apartments at a cost of $11,186,000. In that case the contract 
has been signed with the contractor. 

The Gowanus houses No. 1, Wycoff Street, Baltic Street, Bond 
Street, and Hoyt Street, consists of 572 apartments at a cost of 
$3,369,000. The plans have been completed in that case. 

James Weldon Johnson houses. East One Hundred and Fifteenth 
Street,' Third Avenue, East One Hundred and Twelfth Street and 


Park Avenue, the land is acquired and plans are in preparation. 
That consists of 1,320 apartments at a cost of $9,974,000. 

Gowanus houses No. 2, Baltic Street, Bond Street, Douglass 
Street, and Hoyt Street, the land is being acquired and plans in prepa- 
ration. That consists of 572 apartments at a cost of $3,369,000. 

The Governor Smith houses, Madison Street, Catherine Street, 
Catherine Slip, South Street, Pearl Street, and North Bowery, the 
contract is not yet signed with the State but ready to be signed. 
That consists of 1,924 apartments at a cost of $16,595,000. 

The Astoria houses. Twenty-seventh Avenue, Eighth Street, 
Astoria Boulevard, Vernon Boulevard, East River, and First Street, 
the contract is not yet executed by the State but executed by the 
city, it is just in the course of being signed. That consists of 1,100 
apartments at a cost of $7,644,000. 

St. Mary's, East One Hundred and Fifty-third Street, Morris Av- 
enue, East One Hundred and Fifty-sixth Street and Courtlandt Street, 
the contract is not yet signed but in the course of preparation. 
That consists of 1,200 apartments at a cost of $7,973,000. 

The Jacob Riis houses, Avenue D, East River Drive, East Sixth 
Street, and East Thirteenth Street, is a Federal project and was stopped 
because of the war. That consists of 1,354 apartments at a cost of 

The Elliott houses, West Twenty-fifth Street, West Twenty-seventh 
Street, Ninth Avenue to Tenth Avenue, the plans are completed and 
land acquired. That consists of 617 apartments at a cost of $3,860,000 

That comes to a total of $120,236,000. 

Senator Buck. Mr. Mayor, may I ask, will all these be adminis- 
tered by the Housing Authority? 

Mr. LaGuardia. Yes. 

Senator Buck. That is a board of how many? They are appointed 
by the mayor, I presume? 

Mr. LaGuardia. Yes, a board of five. 

Senator Buck. Appointed by the mayor? 

Mr. LaGuardia. Yes. These are all low-cost subsidized housing. 
Most of them actually replace old-law tenement houses. All of them 
replace them indirectly, because we took people from substandard 
houses. That is one of the requirements of eligibility. 

Senator Buck. Don't they fill up again if you don't tear them 

Mr. LaGuardia. Oh, no. At this moment, gentlemen, we have a 
housing shortage in New York City, and when we present those facts 
to show we have a housing shortage we are immediately confronted 
with the number of vacant apartments that we have. All of the 
vacant apartments are in these undesirable, no-heat, cold-water 
apartments and people will just not live in them, and you cannot 
blame them. So that where we can we take an area of substandard 
houses and demolish them and build in their places these new type, 
modern, sanitary, cheerful dwellings. 

Senator Buck. Do you have to make any provision for the tenant? 

Mr. LaGuardia. les, and it is rather difficult. Now, I am doing 
something which I really hate to do, but there is no choice. I am 
asking the legislature to give me tax exemption on the value of the 
improvement in rehabilitating some of these old-law tenement houses, 

91183 — 45 — pt. 11 2 


to take care of these people during the period of construction, and I 
think the legislature will grant that. There will be a limit on the 
rent, so as not to perpetuate these undesirable dwellings. 

Now, you ask about the actual clearances. The more congested 
an area of a city is the higher its land value, and the land value in 
some of these congested districts makes the building, the cost of low- 
cost subsidized housing, exceedingly difficult. 

Senator Taft. I note that your cost runs around $6,000 to $7,000 
a imit, in the figures that you gave us. 

Mr. LaGuardia. That is right. 

Senator Taft. That is a good deal higher than the average in the 

Mr. LaGuardia, That is right. That is because of land values, 
gentlemen. There is nothing we can do about that. You see, the 
difference in the cost, and the reason that private capital cannot do 
it is that in the old days they would take a plot of land and they 
would build over the entire plot, so that you had inside rooms and 
some rooms on a very small areaway and that, in a very short time, 
degenerates into a slum type of building. 

Now, we build on 27 to 30 percent of the area, and you have here 
zig-zag formations, so that there is a window in every room and sun- 
shine in every window. That makes it extremely costly when you 
are buying land by the square foot. But there is nothing we can do 
about that. That is a condition that we just have to meet. 

Senator Ellender, Mr. Mayor, have you ever given thought to 
condemning what you may call the slum area and use the land, say, 
for a park system or for other uses and acquire cheaper land farther 
out from the center of the city for erecting low-rent housing units? 

Mr. LaGuardia. There are two schools of thought in that. Our 
policy in New York City is a blending or a mixture of the two systems. 
That is exactly what we do. Where we go in for street widening and 
we go through an area of that kind we utilize the powers of excess con- 
demnation and playgound and park that land, and then take unused 
land for a new project. 

Now, we did that in Clason Point. We did it partially in Jamaica, 
but in Jamaica we took down pretty bad stuff. In Fort Greene, the 
largest project we had, we took down some very bad areas there. 

What I want to talk about, gentlemen, is to ask your consideration 
on three different types of dwellings, urban dwellings where the Gov- 
ernment may properly be of assistance. Everybody, I believe, 
recognizes that this country has accepted the policy of low-cost, 
subsidized housing, to make available to people of the lowest income 
groups a decent place in which to live. This has brought the stand- 
ards up so that people in my city, who are of the very lowest incomes, 
have much better homes than the next income group who have just a 
little too much to qualify for the low-cost houses and cannot afford to 
live in a modern apartment, and that is creating concern to all inter- 
ested in housing. 

Senator Taft. That is what I have been telling the housing people 
here all along in this hearing, Mr. Mayor. That group worries me. 

Mr. LaGuardia. Yes. But there is a very simple solution, I 
think. In the first place, gentlemen, you must know there is nothing 
mysterious about housing. It would seem to have a great many 
complications. I do not believe anyone of our generation claims 


originality. It was talked about for 30 years at least before any of us 
came on the scene. 

I first heard of it when I was in the Consular Service stationed 
abroad 40 years ago, when I read Jacob Riis' How the Other Half 
Lives. I was shocked. I was raised out in Arizona and I did not 
know city conditions there. I was not only shocked but ashamed 
that such conditions could exist in an American city. 

When I came back to New York City there were all sorts of com- 
mittees working on it, there was a great deal of agitation, but nothing 

I was rather surprised, when I started with this thing when I became 
mayor in 1934, that some of the most enthusiastic sponsors hesitated 
and said, "Oh, now, Mr. Mayor, you are too impulsive. You can't 
move that fast. We will require a "study of it; we will make another 
survey on it." 

There are just libraries of surveys and studies on housing. Euro- 
pean countries started it. Sweden, Germany, and Austria had pretty 
good housing projects long before we did. 

There are three groups of housing where I think some assistance 
will solve our housing problems in this country. The first group is the 
low-cost, subsidized project. That is now past the experimental 

Now, as to the second group — and I am giving New York figures, 
but they are comparative figures, of course — these rooms run from 
$5 to $7, but we need a group now that will run from $10 to $12 a 
room. That will take care of the next group. I do not believe that 
that group requires a subsidy other than if the Government cannot 
provide low-cost money. 

Senator Buck. Mr. Mayor, at $10 to $12 a room, what does that 
run a month per apartment or per home? 

Senator Taft. $40 to $50. 

Mr. LaGuardia. Yes, for four rooms or five rooms, $40 to $50. 
Now, if we can get money, gentlemen, at 2 percent on a 50-year 
amortization basis and the localities make their tax flexible so as to 
guarantee that 2 percent, we can lick that problem. I believe that 
2 percent money will be available, or should be available. 

Senator Taft. Don't you get better than 2-percent money now 
for the low-grade apartments? You just said you issued bonds 
at 1.76. 

Mr. LaGuardia. Yes, subsidized. 

Senator Taft. Subsidized? 

Mr. LaGuardia. Yes. There would not be any subsidy here. 
The only change would be — oh, the general unemployment situation, 
bad economic conditions, but if we cannot get that at 2 percent, 
because the municipalities cannot absorb much more tax-exempt 
property, we have to be realistic about that, the best we can do in 
this second class would be to freeze the present valuation of the land' 
and improvements with an agreement that if income increases over 
and above operation, amortization, depreciation, and interest, it 
would pay an additional amount, but it would go down to that floor, 
and that 2-percent money would provide a great deal of the housing 
needs in that group. 

Senator Taft. Of course that group, as far as the country at large 
is concerned, is a group where the problem is not so much a rental 


housing problem as a buying and selling problem. Of course, in 
New York you have a rather special condition, you could not expect 
that group probably to buy their own homes. 

Mr. LaGuardia. I have put that group in the third classification 
and there, I think, all we need is to increase your mortgage insurance 
under the — what is it, U. S. H. A.? 

Senator Taft. F. H. A. 

Mr. LaGuardia. Increase your mortgage insurance under F. H. A. 
to 90 percent. 

Senator Taft. Well, it is 90 percent now. 

Mr. LaGuardia. Well, that is temporary, is it not? That is for 

Senator Taft. No, it is 100 percent for emergencies, but title II is 
90 percent. 

Mr. LaGuardia. I am not sure about that. 

Senator Taft. It is an increase. They have not been using it. 

Mr. LaGuardia. Well, you could not get material now, anyway. 
I think 90-percent insurance will do the trick in most communities 
of the country. We have to be very careful to avoid jerry-building, 
to get proper design and proper construction, and also requirements 
as to spacing. We have sections in our city built of individual or 
two-family houses that just have all of the makings of slums of the 
future. They are just compact, one with the other, and rather 
cheaply constructed. I would give them 15 to 20 or 25 years' life 
and they will be slums. That should be avoided, both as to control 
and supervision of design and spacing. 

Senator Buck. Mr. Mayor, how can you hope to get 2 percent 
money on a 50-year loan when you can do very much better with 
Government bonds? 

Mr. LaGuardia. I think the time is coming when money, unaccom- 
panied b}^ ethics, risk, or labor will not be worth much more. 

Senator Taft. The Senator means the Government is paying 2}^ 
percent on the long-term bonds. 

Senator Buck. An investor in Government bonds can get a better 
return on those bonds than 2 percent. 

Mr. LaGuardia. I do not think the Government should pay 2}^ 
percent. We are pretty solvent yet. 

Senator Buck. You should leave off the last word. 

Senator Taft. Mr. Mayor, may I ask, supposing you were to leave 
out these other groups and just look at the low-income group, which 
I suppose in New York runs up to either $1,200 or $1,300; is that the 
limit on your present housing project? 

Mr. LaGuardia. There is no criterion now, Senator. We have a 
very confused condition now. 

Senator Taft. Yes. I mean there was a standard, I think, of 

Mr. LaGuardia. It was $1,300 and then larger families had some 
larger allowances. Maybe Mr. Jacobstein can answer that. 

What is the family income qualification for federally subsidized 
low-cost housing, Mr. Jacobstein? 

Mr. Jacobstein. I think there is a formula by which the income 
shall not exceed so many times. 

Mr. LaGuardia. Five times the rent. 


Senator Taft. The suggestion here, from the N. H. A. testimony, 
was $1,300 in New York and about $1,000 in most of the rest of 
the country. 

Mr. LaGuardia. We found that low. 

Senator Taft. Supposing you wanted to do all the housing you 
considered necessary for that group, how far would the public housing 
go in New York? You now are taldng care of 69,000 people and your 
new plans are about doubling that, I take it. That would be 140,000, 
roughly, and somewhere around 62,000 housing units. How big a 
program do you think that is going to grow into? Have you any 
plans for the next 10 years, say? 

Mr. LaGuardia. Well, I would say what we have on the boards 
now, the land acquired, and what the Housing Authority has planned 
in the event of Federal grants, I think we have at least an 8-year 
program there. 

Senator Taft. Do you think that pretty well meets the low-income 
problem, or the poor-housing problem, whatever you might call it? 

Mr. LaGuardia. No, sir; not according to our standards. 

Senator Taft. I think you are closer to it in New York than any- 
where else. I think you have made more progress in New York than 
any other community. 

Air. LaGuardia. 1 have demolished, since I have been mayor, 
69,000 units, and we have 44,000 more ready to go. We cannot 
move on it now, first because of labor and, second, we dare not reduce 
any more available space for dwellings. 

Senator Taft. You told us you had 14 projects planned and ready 
to go. I wondered if during the next 10 years you would have another 
14, or how many you might have. 

Mr. LaGuardia. They have more than 14 now under study, which 
they submitted in a survey to General Fleming's department. 

Senator Taft. In addition to those that are ready to go? 

Mr. LaGuardia. Yes. 

Senator Buck. How long do you think it would take to construct 
those when you get the green light? 

Mr. LaGuardia. Well, if I get the green light, I think from 3 to 4 
years. The Housing Authority figures 4 to 5 years, while at the other 
end of it we figure 3 to 4. That is considering all conditions. Money 
isn't everything. 

I want to say this, at the risk of being misunderstood or misrepre- 
sented in my views : Labor has a great deal to do with this. Before we 
start on a project we ought to know, because every penny is so care- 
fully estimated, just what the rates of pay will be for that entire proj- 
ect, with no changes during the construction and no jurisdictional 
strikes. If we have any jurisdictional strike, the contractor, the city, 
the Housing Authority, are just helpless. They are costly, gentlemen, 
and the contractor has to estimate on that risk. 

I think it was Williamsburg where we had a situation once, a quarrel 
between the sheet-metal workers, I think, and the carpenters, as to who 
would put the baseboard in, whether the carpenters or sheet-metal 
workers, and it just held it up for weeks and weeks and weeks. They 
cannot do that. 

We had difficulty with the plasterers on the Harlem River Houses. 
That plastering is going out, gentlemen. You see, we have to avail 


ourselves of every improvement in the art to keep down construction 
costs, and there are great improvements in the art that wiU keep down 
the cost. For instance, if we put a cement floor, a concrete floor in, we 
can use that same floor for the ceiling of the apartment below and all it 
requires is spraying, and yet you will have a jursidictional fight because 
you haven t got a plasterer there. 

Now, such things are costly. "We must get some understanding with 
the building trades so that they will look after their own family quarrels 
without interrupting construction and adding to the cost, and also we 
must get the full benefit of all improvements in the art. 

The Fort Greene houses wanted to bring in the electric refrigerators. 
Now, as you know, they are prefabricated. All the wiring was done 
by the electricians, and all you had to do was to put in the plug. We 
were not permitted to bring up the refrigerators with unskilled labor, 
and the trade had to bring them up and plug them in. 

As you know, I have given all my life to labor, I have burned all my 
bridges behind me, but such practice just does not make sense. Labor's 
best friends ought to speak out on it, and that is what I am doing now. 

There will be a great many improvements in construction and it will 
help us a great deal. It is going to require time to educate them. 

Some of the trades are going out of business, and there is nothing 
we can do about it. When I was a boy the whip industry in this 
country was a quite large industry, and now, with the automobile, 
that has just gone out of business. The same way with construction. 
You can remember the time when bricks were brought up by man- 
power, by the hod, but we do not do it now, we convey them up. In 
almost every part of construction there is great improvement, if we 
can only avail ourselves of that improvement. I intend to do it. 

I would urge the following considerations in the three classifications: 

(1) A continuance of the past program of subsidized housing for 
the lowest income group; (2) available low-interest money for the 
non-subsidized but limited rent group; and (3) facilitate funds for the 
construction of homes under the F. H. A. 

Now, gentlemen, I can tell you from actual experience that it really 
pays to have people live in decent homes. A great many people 
come to our town and they look at some of our old-type buildings and 
then look at one of our housing projects, with its landscaping, garden- 
ing space, and they marvel at the transformation. But there is a 
greater transformation than that. 

You take a family that is living in an old-type tenement house, a 
railroad apartment, no sanitary provisions, toilet facilities in the hall, 
a bedroom stuck in between the kitchen and the other rooms, that 
home is just dreary. The young mother is unkempt, harassed, may 
have a boiler on the stove for the wash, the kid getting into trouble 
in the kitchen — the whole atmosphere is oppressing. You move that 
same family into one of these apartments where there is light and you 
see a pretty little home. You see that same mother with a housedress 
that is nice and clean, a ribbon in her hair, decorations on the wall, 
not worried about the children, she knows there is a place to play, and 
there are facilities to do the family washing downstairs. It is a trans- 
formation of the human being. 

We have had no police trouble in any of these units. Oh, they do 
organize, they send word to me as to how to run the city, or things 
like that, but that is quite all right. There is really quite a change 


in the individual and in family life. We think it is worth while. I 
would not want to be mayor of a town that just didn't do anything 
about it. We have done something about it. 

We have had a great many headaches attached to it and maybe we 
made some mistakes, but we have learned a great deal. 

It is always a source of great satisfaction to me when I think what 
I did in connection with the Williamsburg houses. When we laid the 
cornerstone for the Williamsburg houses I put a copy of Jacob Riis' 
book in the box. That is where I got my first lesson. 

Senator Ellender. Mr. Mayor, that is very touching. Have you 
had any surveys made or do you know whether surveys have been 
.made of the cost to the city of maintaining slum areas in contrast to 
these new low-rent dwelling areas? 

Mr. LaGuardia. No. I think it is really too soon. We know that 
the same people, and the same number of people, residing in one of 
these houses do not require the policing that they would have required 
had they remained where they were. We also see a change in the 
health conditions, of course, but that is going to take time. 

If it had not been for the war, I believe that in 25 years we could 
have practically eliminated tuberculosis from the great cities, assum- 
ing, of course, that the Federal Government would expand its tubercu- 
losis program and give protection against the migration of persons 
infected with the disease. But we find that with good housing and 
nutrition and supervision people having a tendency to break the laws 
can be protected. 

We made quite a study, gentlemen — and this is interesting — our 
own health department did it. I think we have established that there 
is a hereditary tendency to tuberculosis. That was a very patient and 
tedious study, made of I don't know how many thousand sets of twins 
and followed each one of them that might have inherited tuberculosis, 
and we are convinced that there is a tendency toward that disease 
through heredity. We cannot do as efficient work now, we are just so 
short of personnel that we cannot do it, but of course we have the 
histories of the mothers and fathers where there is any history of 
tuberculosis in the family. 

So, to answer your question, I think it will require at least 20 years' 
experience with a substantial amount of such housing before it can be 
ascertained in dollars and cents as to what the saving is. 

Senator Taft. You said "except for the war." The war set back 
the program, of course. 

Mr. LaGuardia. Yes. 

Senator Taft. There is no reason why the progress should not be 
resumed after the war. 

Mr. LaGuardia. We would try to pick it up, unless we have eco- 
nomic disturbances. If we can go into the post-war with a normal 
situation I think we can make even greater strides, because a great 
deal has been learned in the meantime. 

Senator Taft. Mr. Mayor, just exactly what do the city and the 
State contribute to this subsidy for new housing, and in what way? 

Mr. LaGuardia. The Federal and the State are entirely separate. 

Senator Taft. Yes. 

Mr. LaGuardia. Now, in the case of the Federal, we contribute a 
great deal of tax money. 


Senator Taft. By making the projects tax-exempt, do you mean? 

Mr. LaGuardia. Exactly. 

Senator Taft. Do you know how that compares to the contribu- 
tion of the Federal Government? 

Mr. LaGuardia. Oh, the contribution of the Federal Government 
is greater. 

Senator Taft. Is greater than the tax exemption? 

Mr. LaGuardia. Much greater. We now get an allowance in 
lieu of taxes for services. 

Senator Taf't. That is 10 percent of the gross, or something of 
that kind? 

Mr. LaGuardia. Yes, sir. We take the bows, but without the 
Federal grant, none of it would have been possible. 

Senator Taft. When the State subsidizes, what do they give? 
Do they give the same amount of subsidy as the Federal Government? 

Mr. LaGuardia. Yes; they provide an outright subsidy to make 
up the difference in the carrying charges and rental revenue. 

Senator Taft. That amounts to about the same as the Federal 
subsidy, does it? 

Mr. LaGuardia. Yes; only it is easier to do business with the 
Federal Government. I get along better. 

Senator Taft. When the thing does go through, it is about the 
same thing? 

Mr. LaGuardia. Yes, sir. 

Senator Taft. So the State and Federal do not mix. You have 
some Federal-aid subsidized project and some State-aid subsidized 

Mr. LaGuardia. Yes; and some wholly city. 

Senator Taft. What are they? 

Mr. LaGuardia. There is where we have imposed an occupancy 
tax, and we have used all the revenue which was earmarked originally 
to pay the interest on bonds for houses that are neither State nor Fed- 
eral. The decision of the court of appeals requires us to put that 
into the general fund, but we are guided by that. 

Senator Taft. I see. How many projects do you have of that 

Mr. LaGuardia. We have three that were interrupted. 

Senator Taft. Do you think if the Federal Government goes along 
with their subsidy program the State will also continue to do some- 

Mr. LaGuardia. Yes. The State had originally $300,000,000. 
We used most of that up in New York City. I believe now they are 
contemplating another bond issue. 

Senator Taft. A State bond issue? 

Mr. LaGuardia. Yes. 

Senator Taft. Is New York the only State which does that; do 
you know? 

Mr. LaGuardia. I do not know about that. I really don't know. 

Senator Taft. I wondered if we could rely, for part of the program 
that should be carried out, on the States to do something of that 

Mr. LaGuardia. I do not want it only in New York City, Senator, 
I would like to see this all over the country, because I cannot absorb 
many more people there. 


Senator Taft. It is all over the country. 

Mr. LaGuardia. It is getting to be prett}^ tough now. I think it 
is a good investment for the Federal Government. After all, the city 
is the basis of one-half of the country, along with agriculture. It will 
not take many years to meet this program. Some sections of the 
country, although not urban, need it very badly. Some people live 
in the most insanitary conditions even though they are not in the city. 
You can get tuberculosis in a hovel or shack right in the open air if 
you have no sanitary conditions, no healthy living conditions. 

Senator Buck. Mr. Mayor, this $300,000,000 that you say the 
State has bonded itself; is that for capital expenditures? 

Mr. LaGuardia. Yes. May I give the exact figures on that? 

Senator Taft. We would like to have them; yes. 

Senator Radcliffe. Do you find any very great difficulties in 
making selection as to who should be the recipients of these beneficial 

Mr. LaGuardia. Well, the first screening is the eligibility qualificar 
tion, that is, the family income, the present dwelling of that family in 
a substandard home, and when all things are equal they go by seniority 
of applications. 

Senator Radcliffe. After the selection is made and after the 
tenants are installed, do you find on the whole a good cooperative 
attitude on the part of the tenants who enjoy these beneficial arrange- 

]VIr. LaGuardia. Yes; they are cooperative. They want their 
buildings kept in good condition, they want the maintenance and 
operation, they tell us where we get off. 

Senator Radcliffe. I suppose there are many classes of people 
with varying results. I wonder if there is not a general tendency on 
the part of these people to profit by the opportunity and to show their 

Mr. LaGuardia. They do. They do not like to leave. When the- 
family income goes up and they lose eligibility we have to tell them to. 
get out. They hate to do that, but you have to be very strict on that. 
We had that condition before the war, and that is a nfitural thing in 
our country. At the present time there are exceptions made because 
there is no place to move to, when all the incomes are i p. They do 
like to stay. Before you came in, Senator, I said those hemes we have 
now, the subsidized houses, are much better than the people in the 
next income group live in. 

Senator Buck. How frequently is their earning status checked? 

Mr. LaGuardia. Checked every 6 months. There is always infor- 
mation co.rning in on them. Some member of the family will write in. 

Senator Taft. Mr. Mayor, we are very m.uch obliged to you. If. 
the members of the cotnmittee com.e to New York sometime, would 
you be free to show us the character of the housing program that 
you have there? 

Mr. LaGuardia. Yes. Don't give us any advance notice so I w ould. 
not be able to give the Housing Authority any advance notice. I 
don't like these dress parades, but if you see that we are in town we- 
will get transportation for you and we will let you select the unit that 
you want to go to. I think that is the best test. 

We also want to show you what we have in preparation, and some- 
of the old stuff, some that we consider aio good. 

91183— 45— pt. 11 3 



Senator Buck. How long would it require? Would it require 2 

Mr. LaGuardia. I would take a couple of days on it. I think you 
would want to see some of the old type houses that we want to abolish. 
I think you ought to take at least three or four of these units and look 
at them generally, and then visit some of the homes, and if the group 
is veiy large I would suggest, when we visit these homes, that we 
break up into smaller groups. 

Senator Taft. There probably would not be more than two or three. 

(The following table was submitted by Mr. LaGuardia:) 

Completed low-cost public housing 





Manhattan — Avenue A and East 3rd St -. 











Macombs PL, West 151-153 Sts., Harlem River 

Leonard St., Bushwick Ave., Maurier St., Scheie.'! 

St. (Brooklyn). 
Dwiffht St., Clinton St., West 9th St., Lorraine St. 

Queens— Vernon Blvd., 21st St., 40th Ave., 4Ist Rd . 
Manhattan— (Federal portion) Henry St., Water 

St., Gouverner St., Jackson St. 
(New York portion) — Madison, Cherry, Jackson, 

Queens— 158 to 160 Sts., South Rd., 109 Ave .. .. 




Red Hook ..- 


10, 770 


Vladeck City - . 



East River Houses - 

Manhattan— 1st Ave., East River Dr., 102 to 105 

Brooklyn— Ralph Ave., Pacific St., Bergen Ave., 

Rochester Ave. 
Bronx— Story Ave., Seward Ave., Noble Ave., 

Metcalf Ave. 
Staten Island— Richmond Terrace, Wayne St.. 

Bway and North Burgher Ave. 
Brooklyn— Prince St., Carlton Ave., Myrtle Ave., 

Parte Ave. 
Brooklyn— North Elliott PI., Park Ave., North 

Portland Ave. 


Kingsborough Houses 


Clason Point Gardens 

Edwin Markham Houses 

Fort Greene Houses 

13, 040 



16, 661 

69, 398 

Note.— 10 projects are now under contract; 3 contracts about to be signed; others being planned. 

Senator Taft. The next witness is Mr. Hugh R. Pomeroy, the 
executive director of the National Association of Housing Officials. 


Senator Taft. You may proceed, Mr. Pomeroy. 

Mr. Pomeroy. Mt. Chairman and members of the commilteB, the 
National Association of Housing Officials appreciates this opportunity 
of being represented in an appearance before the committee, and of 
participating to that extent in the committee's search for a definition 
of valid national housing objectives and for sound methods of attain- 
ing those objectives. Our association is concerned in part with deter- 
mining broad objectives, but particularly with the problems of admin- 
istration attendant upon translating the objectives into reality. As 
its name indicates, the association is primarily an organization of 
officials — officials who are engaged in housing activities, both public 
and private, in local. State, and Federal governmental operations. 
Its membership also includes nonofficial citizens who are interested 
in the administrative aspects of housing, and consists in the aggregate 


of something over 2,000 individuals — who pay membership dues from 
their own pockets — together with about 200 local housing authorities, 
who receive the professional and informational services of the asso- 
ciation in return for agency dues. The association is not the recipi- 
ent of any governmental grants, and does not represent any govern- 
mental agency. 

The association's program covers four major fields of interest: (1) 
Housing policy, including such subjects as housing economics, cooper- 
ative activities of housing authorities and private housing interests, 
rural housing, and disposition of war housing; (2) planning, design, 
and construction of housing, including an evaluation of the design of 
large-scale public and private housing developments in terms of their 
livability, economy of operation, appearance, and so forth; (3) admin- 
istration and management, in which the association makes probably 
its greatest contribution, in seeking constantly to improve the efRciency 
and effectiveness of operating methods; and (4) intergovernmental 
relationships, such as Federal-local relations, the place of housing in 
the structure of local government, housing and welfare, housing and 
health, housing and planning — all primarily from the standpoint of 

The foregoing outline is not offered primarily to explain what the 
National Association of Housing OfRcials is — although the committee 
is certainly entitled to that explanation — but rather to indicate the 
nature of the interests of housing officials throughout the country, 
since the association does broadly represent their thinking. The 
association takes no part in legislative programs and oft'ers no recom- 
mendations as to legislation; rather, it is concerned with efficient 
administrative operation within such legislative framework as may 
be determined by appropriate authority. The association can, how- 
ever, offer observations based on experience, out of the wealth of its 
knowledge of housing activities throughout the country derived from 
its service as a clearing house of information, through regional coun- 
cils and local chapters, by means of active committee work, and as a 
result of extensive staff contacts. Thus, last year — 10 years after it 
first suggested an outline of housing policy — the association again 
summed up its thinking in a report entitled "Housing for the United 
States After the War." Copies of this report have heretofore been 
furnished for the members of this committee. 

It would not be a reasonable use of the committee's time for me to 
present, or to paraphrase, the recommendations of that report at 
length. Instead, I wish simply to use some of the more basic of the 
recommendations as the framework for discussing some of the questions 
that might arise as to methods. 

First of all, however, I wish to say a word on certain aspects of the 
Nation's war housing experience. In response to great neecl, and under 
conditions of great difficulty, private builders and public agencies 
alike have done a commendable job in providing housing required for 
effective war production. In my opinion, the result could not have 
been achieved except under the leadership of a coordinated national 
housing agency. Neither could it have been achieved without the 
services of local housing authorities, who turned aside from their great 
purpose of providing housing for low-income families who cannot get 
it in any other way, to do a patriotic job — for most of which the best 
measure of success, beyond its minimum adequacy, is the degree to 


which it is assured of no future but hquidation. Private builders,, 
hkewise, were called on to do that part of the job which could have a 
future — and they have done it well, under conditions which they 
certamly would not have chosen, and at the same time have thereby 
kept lubricated the operations of private housing production that 
must be so vastly stepped up after the war. 

The war housing production job has now been substantially com- 
pleted. The management of the war housing under all the strains 
of wartime is in good hands. In seeking to find the answers with 
respect to the Nation's housing needs after the war, we must certainly 
be prepared to deal with the Nation's supply of war-born housing in a 
way which will best serve those needs. The privately produced war 
housing— with possibly a few casualties — will continue as a part of 
the Nation's permanent private housing supply. The total of new 
and converted units of this housing is over a million. Less than a 
fifth as much is the total of public war housing of permanent types. 
Where this housing can serve low-income families, who can thereby 
be taken out of slum housing, we feel strongly that it should be made 
available to local housing authorities on suitable terms. Such use 
would also protect the local private housing market from the disrup- 
tive influence of a sudden accretion of competitive housing. If the 
housing cannot be used for noncompetitive low-rent purposes, it 
should, first, be offered to the occupants and finally to other pur- 

So much for the public war housing of permanent types. A much 
larger amount of public war housing is of temporary types, built to 
standards which are acceptable only in an emergency and which can- 
not be tolerated for part of the Nation's permanent housing supply. 
The temporary war housing must be eliminated as rapidly as possible 
after the war need is over — through possible use for nonhousing pur- 
poses, alteration for rural housing use, or demolition. Some small 
part of it may be suitable for economically sound alteration to a 
desirable standard for urban housing use. In any event, its indefinite 
use in its present form for housing purposes cannot be tolerated. 

The low-rent nonwar housing of local housing authorities has not 
been immune to the influence of war conditions. Tenant incomes 
have tended to rise. In such cases, the application of a scale of rents 
graded to income — but within an established ceiling, equivalent to 
private rents for comparable accommodations — has required tenants 
to pay in accordance with their enhanced ability to do so, thus reduc- 
ing the needed subsidy — not only Federal, but local as well, since 
many local housing authorities have voluntarily increased the pay- 
ments made in lieu of local taxes, on the basis of a percentage of 
shelter rents. Incidentally, our association took the lead in helping: 
to work out the more liberal policy which is now in effect with respect 
to payments in lieu of taxes. The incomes of some tenants have 
increased beyond any normally justifiable limit for occupancy of 
public housing, but evictions, which are consequent on such increases 
in normal times, have usually been unpossible because of complete 
lack of available accommodations elsewhere in the community. I 
speak from my own knowledge when I say that local housing authori- 
ties throughout the country are generally uneasy over such instances, 
as being out of line with the normal situation that should obtain with 
respect to public housing. This committee need have no doubt as to 


the desire of local housing authorities to get back as soon as possible 
to strict enforcement of upper income limits for continued occupancy 
of low-rent housing. 

Senator Taft. What do you think those limits should be? 

Mr. PoMEROY. They should be the income limit below which the 
family is unable to get decent housing in the private market, either 
new or second-hand housing, by rental or purchase. 

Senator Taft. That varies in different parts of the country? 

Mr. PoMFROY. It varies very greatly, sir; and it also varies with 
time and fluctuates with national income. 

Senator Taft. It seems to me in the legislation we will have to 
prescribe some standards, but we will have to do it, I suppose, in 
general terms. 

Mr. PoMEROY. That is now done in the United States Housing 
Act, which provides that public housing provided under the act is 
available only for families whose incomes are insufficient to cause 
private enterprise to provide them with decent houses in decent 

Senator Taft. That is so general that it is pretty difficult of in- 
terpretation into actual figures. 

Mr. PoMEROY. I think there will probably have to be reliance on 
administrative determination rather than any exact formula. Com- 
ing back to my reference to the desire of housing authorities to get 
income limits down: Local authority representatives at a number 
of recent regional and local meetings of members of our association 
have been discussing "transition back to low rents," and it happens 
that this week we are sending to the appropriate committees of our 
regional councils copies of a draft of what might be called a guide for 
the reduction of operating expenses in conformity to the expected 
reductions in income. 

With these few observations on war housing and the effect of war- 
time conditions on low-rent housing, I leave the story of war housing 
to the testimony of those whose capable direction of its production has 
made them more competent than I to tell you about it. I wish now 
to use our association's post-war report referred to above — Housing for 
the United States After the War— as the basis for a discussion of some 
of the questions relating to methods for the attainment of a desirable 
national housing objective. 

There is general agreement as to what that objective is. I heard 
it forcefully declared by the chairman of this committee at a regional 
meeting of our association in Richmond, Va., nearly 2 years ago. It is 
stated in our association's report as follows: 

The objective of a housing poHcy for the United States must be the provision 
of adequate houping for all the people. Adequate housing means housing of at 
least a minimum standard for every family, with housing above this minimum 
available to those who can afford it. Adequate housing also means more than 
sound structures. It means that satisfactory houses must be available in satis- 
factory neighborhoods. A satisfactory neighborhood is one of such scale, design, 
and relationship to the larger community of which it is a part, and having such 
facilities and providing such services, that it is convenient, attractive, healthful, 
and altogether a good place in which to live. 

_We, as a people, set this objective of adequate housing for all families, not 
primarily because it will provide employment — although it will help attain the 
goal of full employment at a high level of national income: nor simply because it 
will provide an outlet for investment of private savings— although it will help to 
utilize idle capital; nor merely because it is a means of proving our faith in what we 


are fighting for in the present war. We set such an objective because it is what 
our people want and know that they can have. Its desirabihty is not questioned. 
No thinking person now says that we must alwavs have shims, or that low- 
income families must always live in hovels, or that blighted neighborhoods are an 
inevitable part of our urban life. The argument is not as to the objective but as 
to its definition and as to the best way to attain it. 

In that quotation is found also a statement of the two inseparable 
essentials of good housing — a good house and a good neighborhood. 
Thus we need not only the techniques and financial methods for pro- 
ducing better houses at lower cost, but also those for eliminating slum 
neighborhoods, producing good neighborhoods, and maintaining good 

There is no need of attempting here to outline the scale of housing 
need of the Nation. The record before you is already replete with 
analyses of data from the census of housing and with estimates of the 
annual production of housing— of various ranges of cost, rental, and 
income groups to be served — that will be required to attain our na- 
tional objective within a reasonable time, suitably related to the factors 
of need, national income, and the Nation's productive capacity. We 
find ourselves impressed by the thoughtfulncss and the reasonableness 
of the estimates which have been presented to you by the Administra- 
tor of the National Housing Agency. 

I wish to suggest that whatever the rate of housing production may 
be, the provision of adequate housing for the people of the United 
States requires the doing of three major things: 

1. Making the best use of the housing supply. 

2. Facilitating the operations of private enterprise. 

3. Publicly providing housing for families who cannot be served by 
private enterprise. 

With respect to making the best use of the housing supply, I quote 
again from the association's report: 

To make the best use of the housing supply, adequate maintenance must be 
assured, whether for owner-occupied or rental housing, and maintenance reserves 
should be provided by owners. The success of large-scale rental developments 
depends on making the housing available to the part of the market for which it 
was intended, efficient operation from a business point of view, good physical 
maintenance, provision of well-operated community facilities, and skill and under- 
standing in the handling of tenant relations. 

Loss of values in prematurely obsolete dwellings is an unnecessary waste that 
can be minimized by proper design, construction, and standards of living space, 
making structures capable of modernization as needed. Residential structures 
should be permitted to remain in use beyond their properly amortized life only 
so long as their usefulness can be proved. Removal of dwellings as they become 
obsolete would clear the way for keeping neighborhoods in good condition by 
replacement in accordance with need. 

Private enterprise should endeavor to meet the needs of the market 
and should be given every reasonable aid to reach as far down the 
income scale as possible. Aga,in quoting: 

The achievement of a large volume of housing in the post-war years presupposes 
greater activity on the part of private initiative and private investment than ever 
before. To induce the necessary infusion of capital, the unusual hazards attend- 
ant upon investment in housing must be reduced. Tendencies toward neighbor- 
hood deterioration should be controlled. Variations in tax rates within the same 
metropolitan area should be equalized. High title costs and the uncertainties of 
foreclosure proceedings should be minimized. The system of local taxation should 
be modified to balance the disproportionate load on real estate. Building codes 
should be revised in the light of technical progress, and such codes, as well as 
zoning and subidivision regulations, should be made uniform for metropolitan 
areas. Adequate means of land assembly and of removing obsolete buildings 
from the market are needed. 


No reference to the need for expanding the field of private enterprise 
in housing would have a proper starting point without acknowledg- 
ing the monumental achievements of the Federal Housin'g Adminis- 
tration and of the agencies assembled in the Federal Home Loan Bank 
Administration. The operations of these agencies have markedly 
affected the relation of housing production to the market, the physical 
quality of new housing, and to some extent the relation of the location 
of new housing to community patterns. Probably the two greatest 
advances have been (1) the substitution of the amortized long-term 
mortgage for the short-term first mortgage, all too often supplemented 
by a second and even a third mortgage; and (2) the progress made in 
linking the financing of housing to proper neighborhood land use and 
good housing standards. 

The continuation and expansion of these beneficial operations, 
together with the other means suggested for facilitating the operations 
of private enterprise, should enable private suppliers of housing to 
serve families of lower income than heretofore. Sound — and pre- 
vailing — policies governing so-called public housing leave a substantial 
margin between the upper income limits served by it and the present 
lower limits served by private housing, with private enterprise having 
the right-of-way in this in-between area. Mutually owned housing 
developments offer good possibilities for helping occupy this now 
inadequately served area. 

Until that millenial day when every family will have an income at 
least sufficient for its minimum needs, there remains a segment of the 
population with family incomes so low that private enterprise can no 
longer operate as such, that is, at a profit, in the provision of decent 
housing for it. Sound public policy now recognizes the need for public 
subsidy as the only means whereby this part of the population can be 
supplied with decent housing. I believe that this committee needs no 
laboring of the considerations justifying this policy, nor any refutation 
of the now generally discredited idea that housing built for higher 
income groups and "handed down" to progressively lower income 
families can adequately serve the needs of families on down the income 
scale. Without any extended discussion of the obvious economic 
fallacy of this method, it need simply be pointed out that it has been in 
operation during our entire national history and that it has produced a 
substantial part of all our slum areas. 

The principle of public subsidy is at the heart of the low-rent 
housing programs conducted during recent years by local housing 
authorities in various parts of the country with the assistance of what 
is now tile Federal Public Housing Authority and with State aid for 
some of the developments in the State of New York. These pro- 
grams have been successful. They have cleared slums — the first 
effective slum clearance in our history except for an occasional private 
housing development built on a slum site — and, unlike the latter, they 
have replaced the slum housing with housing that could serve the 
former slum dwellers — in other words, with suitable housing at the 
rents that former slum dwellers could afford to pay. These public 
housing programs have taken families out of slum dwellings and have 
put them into decent housing, lifting them to a higher level of com- 
munity responsibility ; and they have eliminated slum dwellings — over 
90,000 of them, as against about 105,000 dwelling units of new public 
housing, up until war conditions made it necessary to defer further 


•elimination. The record of these pubhc-housing programs is a good 
one, and it is an improving one. The design of some of the pubhc 
housing developments is inspiring; that of many of them is dull — but, 
even so, the housing stands in striking contrast to that which it 
replaced, it is assured of proper maintenance, and it affords living 
conditions infinitely better than anything otherwise available to the 
families it serves. 

Beyond considering any improvements in basic procedures that 
will assure more efficient operation of the present public housing 
program — and several such improvement^ have been suggested to 
you in earlier testimony — your committee may well ask, admitting the 
need for public subsidy in order to provide decent housing for families 
who cannot be served by private enterprise at a profit, whether some 
other application of the subsidy would be more effective than that 
obtaining in the present program. This is a valid inquiry. Any use 
of public subsidy should be subject to continuing and searching 
examination as to its effectiveness and its efficiency. I believe that 
the following conditions should be satisfied in any use of public sub- 
sidy: 1, the subsidy should be clearly identifiable and measurable; 
2, it should go as directly as possible to the accomplishment of the 
desired purpose, complicated and obscure procedures in the applica- 
tion of subsidy should be avoided; too much of it can be used up just 
in lubricating the machinery; 3, it should be capable of accomplishing 
the desired purpose, and should be sufficient to do so; 4, it should 
achieve the maximum result for the amount used; and 5, the method 
should be flexible, so that the amount of subsidy can be adjusted to 
variations in the need. 

Senator Ellender. In your experience, have you found that the 
subsidy now paid by the Government does not conform with those 
five methods that you have indicated there? 

Mr. PoMEROY. I believe the subsidy now being paid by the Federal 
Government conforms fully to those conditions. 

Senator Taft. With the possible exception of the departure, since 
the war, into the high-income group. 

Mr. PoMEROY. Yes; that is true. 

Senator Ellender. That has been made flexible, though. Sub- 
sidies were reduced considerably. 

Senator Taft. I mean in the war they have more people in the 
high-income group, so it has gone to people who do not require it. 

Senator Ellender. As to those cases, do they obtain a rent sub- 

Mr. Pomeroy. Yes. * 

Senator Ellender. You said that the five suggestions you have 
made there have been carried out, as far as you know, in regard to all 
of the subsidies paid by the Federal Government. 

Mr. Pomeroy. I believe so, because the subsidies are identifiable, 
the}'' are measurable, they go directly toward a reduction in the rent, 
they thoroughly accomplish the desired purpose and do it as efficiently 
as can be done, and they are adjustable to need. 

Considerations of openness and directness have led some persons to 
suggest that public subsidy to enable low-income families to obtain 
decent housing should be applied in the form of "rent relief" paid to 
families by welfare agencies, thus applying the subsidy directly to the 


supplementation of the deficient incomes that create the need in the 
first place. It is argued that families receiving relief buy their 
groceries in the private market, and should also obtain their housing 
in the private market. The analogy might be valid if all the housing 
in the private market were maintained at standards comparable to 
those assuring the sanitation and quality of groceries. Unfortunately, 
such is not the case. Groceries are not permitted on the market in all 
the stages of deterioration that characterize the housing that is all that 
families obtaining relief could obtain in the private market. The only 
alternative in the housing market would be the imposition of standards 
requiring a degree of rehabilitation or replacement entirely beyond 
any possibility of financing on the uncertain security of relief pay- 
ment — plus a degree of continuing supervision that would make the 
controls established under O. P. A. appear like the gentle urgings of a 
Sunday school teacher. 

In order that the rent relief scheme might be examined by repre- 
sentative groups in the field of welfare, our association established a 
joint committee to analyze and report on the proposal. I am filing 
with you a copy of the report of this joint committee. The com- 
mittee's conclusions, as approved by the executive committee of the 
Family Welfare Association of America, the executive committee of 
the American Public Welfare Association, the executive committee of 
the American Association of Social Workers, the National Committee 
of Housing Associations, and the board of governors of the National 
Association of Housing Officials, were as follows: 

Objections to the substitution of the rent certificate plan for public 
housing include the following: 

(1) A large number of individuals would be added to the rolls of relief agencies, 
(a) Millions of persons who need improved housing, including many who are 

otherwise financially independent, would be forced to accept rent relief through 
welfare agencies in order to pay rents sufficient to obtain housing which meets a 
minimum standard as defined by the respective municipalities. 

(fc) There would be many complex difficulties in establishing and maintaining 
the eligibility requirements governing assistance in the form of rent certificates. 

(2) Local administration of the plan would be costly and complicated. 

(a) Recurrent inspection of dwellings scattered throughout the city, record- 
keeping, income checks, investigations for millions of famihes living in sub- 
standard housing would involve a vast expenditure of pubhc funds. 

(6) Local welfare agencies would be able to cope with the administrative 
problems of this plan only if provided with largely increased appropriations for 
additional staff and facilities. 

(c) Local welfare agencies would be forced to engage in the granting of relief 
in kind, a practice that is now being given up as unsound welfare policy. 

(3) The rent certificate plan would be more costly to the taxpayers than the 
existing public housing program. 

(a) The rentals of private housing meeting a minimum standard are about $15 
per month in excess of the unsubsidized rents of public housing. Therefore, the 
rent certificate plan of assistance would necessitate a very great increase in sub- 
sidy if the same standards are to be met. 

(6) Public subsidy to low-income families to enable them to obtain adequate 
housing would continue. The burden of an increased subsidy, however, would 
fall on the taxpayers who support local welfare agencies. There is question as to 
whether sufficient funds would be allocated to welfare agencies for such a program. 

(4) A needed new supply of low-rent housing would not be provided. 

(a) The present program of rent allotments by welfare agencies often results 
in the housing of welfare clients in slum housing. 

(b) The rent certificate plan would not provide the means for the construction 
of low-rent housing. 

91183— 45— pt. 11 4 


(c) Unless the supply of new low-rent housing is increased, progress cannot be 
made toward solving the problem of providing adequate housing for all families 
of low income. 

(5) Substandard housing would not be eliminated. 

(a) Even with the increased rents paid under the rent certificate plan, the 
improvement of blighted neighborhoods would not be assured, and there is no 
positive provision for the redevelopment of the slums. 

(b) Localities would need improved housing codes and methods of enforcement. 
The facts are that few localities have adequate housing codes and enforcement 
experience. It is unreasonable to expect -that the housing regulation activities 
of cities can suddenly be vastly improved and expanded. 

Senator Ellender. Mr. Pomeroy, do any of the investigations 
made by the committees you have mentioned show the difference in 
cost to the taxpayer between the present method and the rent certifi- 
cate plan? 

Mr. Pomeroy. It depends largely on the extent of the local check- 
up. I have seen some figures, not authenticated and analyzed, for 
New York City where the cost of check-up is a substantial item per 
family per year. Of course, many communities do not provide that 
kind of a check-up, with the result that the families that receive relief 
that goes to rent do not get decent housing for it. To maintain a 
decent standard of housing the cost would be very heavy. 

Senator Ellender, Will you be a little more specific? 

Mr. Pomeroy. I am sorry that I do not have the figures, Senator. 

Senator Taft. Mr. Pomeroy, I am not for the rent certificate plan, 
but I do not quite follow the last part of the argument, because 
presumably if everyone had enough income to pay an economic rent, 
say the economic system produced it, you would not have any Federal 
housing problem. If you had enough income available for rent you 
would gradually produce adequate housing. I do not see why the 
rent certificate, administered on a general scale, would not do the 
same. I can see where it would cost three times as much, because 
the present housing program does not reach one-tenth of the low- 
income group, so of course it will cost a lot more money. But I do 
not quite see, if you spend the money, why it would not in time 
produce housing. 

Mr. Pomeroy. That "if," Senator, is the determining question. 
Obviously, if the national income assured everyone a satisfactory 
family income we would not need any more public housing, and 
that day we hope will come sometime. Likewise if there were any 
possibility under a rent-relief scheme for assuring adequate funds and 
a continuity of those funds, it should be possible to get decent housing 
built, but there is no possibility of any such assurance. 

Senator Taft. I agree with you. I do not think it is a practical 
plan. The plan which you are dealing with perhaps next, the plan 
of a subsidy to private builders, new builders, conforming to stand- 
ards, supplementing the subsidy by Federal housing authorities, what 
do you think of that? 

Mr. Pomeroy. I shall offer some comments on that immediately 
following a word or two in conclusion on the rent-relief scheme. 

Quoting further from the joint committee report: 

Vigorous enforcement of adequate housing regulations would result almost 
immediately in a shortage of housing accommodations. In all areas where the 
percentage of vacancies of low-rental housing is low, excessive rents would pre- 
vail unless effective rent control were established; otherwise, public funds would 
be paid to the owners of substandard buildings, thus subsidizing and perpetuating 
poor housing and bligJited areas. 


In view of the foregoing, the Joint Committee on Housing and Welfare believes 
that the rent-certificate plan would fail to meet the need of low-income groups for 
good liousing. 

The advocates of direct rent relief have, however, put their finger 
on a point of considerable appeal and of some validity, and that is 
the desirability of making some use of existing older dwellings for the 
housing of low-income families. When the cost is reduced to an 
annual* basis, the feasibility of any workable plan for thus using older 
housing is apt to be illusory, but, insofar as it can be done in a 
financially sound manner — with the assurance of satisfactory housing 
in satisfactory neighborhoods, there is good reason for this using 
of older housing. To do so would require modification of the present 
program so far as the subsidy formula and the period of amortization 
are concerned. 

Senator Ellender. As I recall, Mr. Blandford made some sugges- 
tion along that line. In his estimate of 12,600,000 homes I under- 
stood a certain percentage of the homes would be leveled in order to 
clear slums and others could probably be repaired. I think he made 
an estimate that at least 33 percent of them might be in that category. 

Mr. PoMEROY. I do not recall what figures Mr. Blandford used. 

Senator Ellender. That is my recollection. 

Mr. PoMEROY. I feel that the use of rehabilitated old dwellings for 
housing low-income families would probably have to be pretty much 
limited to neighborhoods where the rehabilitation of some dwellings 
would bring about a salvation of the neighborhood, rather than in 
any neighborhood that inevitably was spiraling down in deteriora- 
tion and was not capable of providing decent neighborhood surround- 

Coming now to the question last raised by Senator Taft: 

Another valid question as to the application of public subsidy for 
housing for low-income families is as to whether it should not be made 
available to private enterprise to do the job now being done by housing 
authorities. Two considerations should be borne in mind initially in 
approaching this question. One is that there is no gulf separating 
"private enterprise" and "public liousing" in the provision of housing 
for low-income families. In the production and operation of so-called 
public housing, private enterprise performs, at a profit, all the opera- 
tions in which there is a profit. Private owners normally sell land at a 
fair return to a builder of housing; they do so to a housing authority, 
as a builder of housing, and with the aid of established real estate 
brokers, appraisers, land purchasers, and so forth. Private con- 
tractors construct at a profit, the housing that a producer of housing 
builds; they do so for a housing authority as a producer of housing. 
Private producers and distributors, through the normal channels of 
trade, provide, at a profit, the materials and supplies used in the con- 
struction and maintenance of housing; they do so for a housing 
authority as an agency engaged in the construction and maintenance 
of housing. The only point at which private enterprise does not 
operate in public housing is in the supplying of the accommodations 
to the tenant — and that is a point at which, by the very economics of 
the supplying of a product at much less than cost, there cannot possibly 
be any profit. 

Let us keep that point in mind, not as a conclusive answer, but as an 
important fact. Along with it, let us keep in mind that if private 


enterprise is subsidized so that it can supply at a profit that which, 
without subsidy, cannot be suppUed except at a substantial loss, then 
it is no longer private enterprise but, in effect, an agent of govern- 
ment — and certainly so if we consider all the controls necessary to 
assure the desired result from the use of the subsidy. 

There certainly can be no moral issue involved here. The question 
becomes simply one of getting the best result for the expenditure of 
the least amount of public funds. The obtaining af a satisfactory 
result would require an inordinate degree of governmental supervision 
and control — supervision of selection of tenants, policing of income 
limits by frequent check, frequeiit public auditing of accounts, meticu- 
lous standards of operation, and so forth — all the measures that are 
normal to public operation but would be exceedingly onerous and 
distasteful to private operation. Yet no less than this would represent 
a sound stewardship of public funds. 

Private enterprise has shown little interest in operating down near 
the marginal family income line, even with inducements, or within 
the framework of milder controls than would be required under a 
system of subsidy such as we are discussing. The nearest tiling to the 
suggestion is found in the limited dividend corporation laws, first 
adopted in the State of New York in 1926, and subsequently in 14 
other States. Even though some of these laws provide substantial 
inducements, such as partial tax exemption and even though the 
States in which such laws are in effect contain 59.5 percent of the 
urban population of the country, including the majority of the larger 
cities of the country, the years of experience have produced a total of 
probably not over 7,500 dwelling units in not over 20 developments 
in the entire United States. I do not have exact figures and there 
may be some variation in that, but it is roughly a measure of what can 
be accomplished. 

Even if we admitted the desirability of providing and operating the 
needed low-rent housing entirely through private enterprise, and even 
if private enterprise were interested in the proposition, the return on 
the money which private enterprise would legitimately want would 
greatly increase the annual subsidy which the Federal Government 
would have to pav. 

Now, I should like to make one comparison of figures on record and 
then give you another comparison based on probabilities. 

Commissioner Ferguson, of the Federal Housing Administration, in 
his very thorough testimony before this committee a few days ago, 
stated that $55 per dwelling unit per month is the average rental in 
the large-scale limited dividend program of the F. H. A. Commis- 
sioner Klutznick, of the Federal Public Housing Authority, in his 
likewise thorough testimony before the committee, stated that the 
economic rent of public housing without the benefit of any subsidies 
was $36.31 per month. There is nothing invidious in the comparison, 
and there are perfectly sound reasons for the difference — having to do 
with the relative cost of the money and relative risk. The F. H. A. 
units are probably of a higher standard of design, while the public 
housing units probably average more bedrooms in order to serve larger 
families. In any event, it is apparent that if we undertook to sub- 
sidize private housing produced under the current limited dividend 
pattern and reach the same rents as public housing reaches, the sub- 
sidy would have to be $18.69 per month, or about $224 a year higher 
in one case than in the other. 


Senator Taft, I disagree entirely. I do not think that is a legiti- 
mate conclusion to be drawn from those two reports. 

Mr. PoMEROY. I agree with you, Senator. I simply say if we met 
the present rental scale in large-scale private housing that would be 
the situation. 

Senator Taft. You are speaking of the F. H. A. average rent on 
projects designed for entirely different purposes. 

Mr. PoMEROY. That is right. 

Senator Taft. That is not to be compared to public housing or to 
what you would build if you were building for low-income groups. 
I do not see the comparison at all. 

Mr. PoMEROY. I agree with you as to the comparison of the two 
figures before us, but even so, it should be pointed out that the F. H. A. 
is not operating at the top of the scale by any means. Fifty-five 
dollars a month is not a top rent. But let me present the other com- 
parison that I mentioned — and I think that this is a valid one. 

It has been suggested that it might well be possible to interest 
larger corporations, such as the life-insurance companies, in the pro- 
vision of low-rent housing which they would build wholly with their 
own capital and on which they would ask no profit beyond a fixed 
return on the investment. 

To expect an insurance company to put its money into a rental- 
housing project, it must be offered a greater return than it can receive 
by merely purchasing and clipping coupons on a Government bond. 
Certain additional factors must be taken into account. That is why 
for instance the F. H. A. cannot be expected to provide interest rates 
comparable to those on Government bonds. There is the cost of 
financial management, there is the risk involved, there is the question 
of fluidity, as well as the cost of insurance. 

The present rate obtainable on longer-term Government bonds is 
about 2% percent. These are not tax-exempt. If we expect an 
insurance company to finance and undertake the construction of a 
rental-housing project and then operate that project, we must offer 
it more than this 2}^ percent rate it can get on a Government bond. 
How much more? 

The present F. H. A. regulations under section 207 for limited-divi- 
dend projects provides for a limitation on the dividends on stock 
representing the equity in such projects of 6 percent, with provision 
for as high as 8 percent. Nevertheless, as Commissioner 'Ferguson 
pointed out in his testimony before this committee, the F. H. A. has 
not been able to induce a large volume of such projects. Even where 
such projects have been started, he points out that one- third of them 
subsequently withdrew from this F. H. A. insurance operation 
with its limited-dividend feature. So, with the present 6 to 8 
percent permissible dividend on equity capital in limited-dividend 
projects, this type of project has not been attractive to private capital. 
Hence, it is apparent that a still lower return would be less attractive. 

Let us consider the question of the relative costs of providing sub- 
sidies to such limited-dividend corporations as compared with the 
present system of paying such subsidies to public-housing agencies. 
These public agencies operate without any profit, even of a limited 
character. They have undertaken the task of constructing and oper- 
ating projects without any return for their work in the discharge of 
these responsibilities. The members of the local housing authorities 


serve without compensation as a public service to their communities. 

It is true that the money which builds these public-housing projects 
is borrowed and must be repaid with interest. These authorities 
have been paying less than 2-percent interest in some cases, but to 
eliminate any factor of the value of tax exemption on other bonds, let 
us assume that the Government raises the money on its non-tax- 
exempt bonds at the current long-term rate of 2}^ percent. We then 
have a differential between this 2};2-percent rate and the 6 percent to 
8-percent rate on whatever capital an insurance company or other 
investor puts in as equity. Undoubtedly if the equity is increased 
the rate may be expected to go down. Even if we assume a 5-percent 
rate, there is still a considerable differential, which would add to costs 
and add to the subsidies the Federal Government would have to pay. 
It is no criticism of the private entrepreneur that he wishes a 5- 
to 8-percent return on his equity — that is to compensate him for 
the work involved in undertaking such an enterprise. But such a 
return and such compensation are avoided in dealing with a public- 
housing agency which operates without any profit and with the 
donated services of its board. It does not sound realistic to me to 
expect that private capital would be interested in a much lower 
return than it is now getting, considering the element of risk which 
it would have to take. It could certainly not have an open-end 
commitment from the Federal Government which would guarantee 
whatever the deficit might be, then there is the cost of operation, and 
the return also must represent whatever profit the investor gets. 

Senator Taft. I do not see why your argument does not prove that 
the Government ought to go in and take over every business and 
conduct it, because they can always do it cheaper because they can 
borrow money cheaper. Why does not that apply to every business? 

Mr. PoMEROY. What we are after here. Senator, is an operation 
that will provide a product at the lowest possible cost for families who 
are economically incapable of paying their way. Families that are 
economically capable of paying their way carry their fair share of the 
total load of the national economy. Those that are incapable of 
paying their own way need to have provided for them the things that 
are essential at the least possible cost to the taxpayers. 

Senator Radcliffe, Of course, they need other essentials besides 
housing. They need living expenses, which are just as urgent. 

Mr. PoMEROY. That is right. There are two classes of people who 
need help in getting housing: There are those families who find it 
necessary to have supplementation of their incomes for most of their 
living essentials — food, clothing, medical care — as well as housing. 
Now, economically above those there is a large group of people 
(whatever the cause may be; part of it is deficient national economy, 
part of it is found in disabilities affecting the whole house-production 
industry, such as not having been able to take full advantage of 
technological improvements), a group of people that are able to get 
everything out of their own resources except housing, that is, decent 
housing. They go into the private market and they get food that is 
of guaranteed quality, they get clothing that is satisfactory, they get 
various other things out of their own resources, but when it comes to 
housing, what they can afford to pay doesn't make it available to them 
in the private market — that is, decent housing, which puts housing 
in a different category from other minimum needs. 


Senator Radcliff. T do not want to ^sk 3'^ou to leave your program 
at this time, but just a moment ago you suggested that possibly some 
insurance companies might be interested or might be willing to go 
into some such arrangement as this by wliich they would be content 
with a small income, a relatively small income. What has been the 
history about that? Every now and then we hear of certain sugges- 
tions, or attempts made by various insurance companies along such 
housing lines. I think I recall reading the other day of one of the 
big New York companies, possibly the Metropolitan, that was going 
to develop housing in a certain area. 

Senator Taft. It has a big development across the river. 

Senator Radcliffe. Does that fit in with what you have in mind — 
is that a different type of construction — or does that operate in any 
way along the lines which you have suggested? 

Mr. PoMEROY. No; those developments of tlie Metropolitan are in 
the field of the provision of housing at economic rents, such as the 
one across the Potomac; there is a very delightful one in Los Angeles 
that T visited not long ago ; there is one in San Francisco that I saw 
under construction, and there is Parkchester in New York. 

Senator Radcliffe. That is no help primarily to the low-income 

Senator Taft. They have not gone into that field. 

Senator Radcliffe. I do not know whether there had been any 
serious efforts made to to that kind of thing. 

Mr. PoMEROY. There has been no provision. Senator, for any sub- 
sidy to enable those companies to get below an economic rent level. 

Senator Radcliffe. Are you suggesting that if the insurance com- 
panies do go into such operations that they be subsidized? 

Mr. PoMEROY. No; I do not favor such subsidies. 

wSenator Taft. My suggestion is that they might get private capital 
to do these things. Take in Cincinnati — we have the Model Homes 
Co. there — they had a limited dividend corporation for a long time. 
Of course, they have not reached the lowest-income groups probably 
but they might say, "Wliy should not we have the same benefit of 
subsidy to reach the low-income groups as the Metropolitan housing 
authority?" That is the argument that occurred to me. I am only 
trying to find ways in which we may limit the extension of Govern- 
ment ownership and operation beyond what is absolutely necessary; 
that is all. I made the suggestion the other day, and it has produced 
interesting comments. I am glad to have your views on it. 

Mr. PoMEROY. Thank j^ou. Senator. I think the measure of it 
must be an actual analysis of what the cost would be. 

Senator Taft. My suggestion is not to use it to replace public 
housing but that the subsidy field should perhaps be open also to 
private investment or semiprivate investment, limited dividend com- 

Mr. PoMEROY. T understand. 

Senator Taft. Do you know whether any of the large insurance 
companies are giving any serious thought to this idea? 

Mr. PoMEROY. I do not know whether they have any desire to 
obtain a subsidy to get down below the economic level. The Metro- 
politan Life Insurance Co. has shown a great deal of courage and fore- 
sight in taking advantage of such operating procedures and legisla- 
tion as it had available. The company is going in under one of the 


two limited-dividend laws in 'New York, in the clearance of a large 
slum area on the East Side for the building of what could be called a 
redevelopment project, but that again operates in the field of economic 

Senator Radcliffe. Yes. I so understand. 

Mr. PoMEROY. One of the most striking examples of limited divi- 
dend operations in New York is one of the two developments that was 
financed by R. F. C. loans; that is, Knickerbocker Village, in the lower 
East Side of New York. There the company was up against a terrific 
land cost that made it impossible to get very far down with the rents. 
I understand the land actually cost about $17 a square foot, including 
carrying charges during construction. This required, first, a heavy 
density coverage of the land. The rents were fixed at $12.50 per room 
per month. The top family income, the last time I had any figures, 
ran about $4,500. That, of course, does not represent slum dwellers 
in any language. 

1 will get on to the question of urban redevelopment later in my 
statement, including the thought that private enterprise should be 
aided to operate in redevelopment areas })y a reduction in land cost^ 
making it possible to reach farther down the income scale. I once 
heard Dr. John Merriam refer to a "/one of nebulosity," and that term 
probably describes the present "in between" area in housing. Our 
association strongly believes that there should be provided encourage- 
ment for private enterprise to operate in this area but does not believe 
that subsidy to private enterprise is the way to provide housing for 
low-income families. 

Senator Taft. Of course, it is encouraging if you can find ways to 
get the accumulated savings of a large number of people into an equity 

Mr. PoMEROY. That is right. 

Senator Taft. I think the insurance development is a very desir- 
able one. Wliether it can be extended down to the low-income groups 
I do not know. I asked the question here the other day. 

Mr. PoMEROY. I think that it was a very honest question and that 
it should bring about a valuable exploration of the subject. I will 
go along with you on any form of subsidy which satisfies the five 
qualifications that I previously outlined. I think that they are 

Senator Radcliffe. You think the element of subsidy is indis- 

Mr. PoMEROY. If families do not have incomes sufficient to obtain 
decent housing at a profit in the private market, there is no other way 
they can get it except through subsidy. They cannot get what they 
cannot afford. People do not live in slums because of sin, or a desire 
to be squalid — except, maybe, a fraction of a percent — but because 
they cannot afford to live any^vhere else. I have visited the slum 
areas in most of the cities of any size in the United States and I am 
quite sure that the families living in them are not there by choice. 

Senator Radcliffe. I do not want to get you too far away from 
your point, and maybe you will touch upon it later, but what is your 
impression in regard to what has been done in order to prevent the 
development of slums? We give much consideration to eliminating 
slums, and in a very general way we give some thought as to how to 
prevent a specific neighborhood from degenerating into slums. Do 
you intend to develop that later on? 


Mr. PoMEROY. I shall touch on it in connection with my discussion 
of urban redevelopment. 

Senator Ellender. But in respect to the question that we are 
discussing, have you or your associates sufficiently studied the cost 
to the Government should subsidies be paid to private corporations, 
rather than under the present method? 

Mr. Po/MEROY. May I give you a figure, based on a hasty analysis, 
that I would rather not put into the record because I am not prepared, 
on behalf of the association, to swear that it is precisely correct? 

Senator Ellender. Suppose you put it into the record as your own 
private opinion? 

Mr. PoMEROY. It is a private estimate. 

Senator Ellender. Just for what it might be worth. 

Mr. PoMEROY. In my opinion, at a 5-percent rate of return for the 
private capital invested, the difference, for a $4,500 dwelling unit, 
with the cost amortized over 45 years, would be $85 per year additional 
cost to the Federal Government — which would mount up very heavily 
in any sizable program. Now, I say please do not ask me to swear 
to the exactness of that figure, since it is based on a hasty computation, 
but I think that it is substantially correct. At 4% percent, if you could 
get down that far, it would be somewhat less, of course. At 6 percent 
it would run up to $123. 

Senator Ellender. Assuming that your figure is correct, how much 
more would that be than what it would cost the Government under 
the present set-up? 

Mr. Pomeroy. Well, the present average subsidy for low-rent 
housing has been running about $100 per family per year, so that at 
5 percent for private capital there would be an increase to $185, and 
at 6 percent to $223. Even at 4 percent — which I think would be 
impossibly low — the increase would be $49 to a total of $149. All 
these figures are based on a 45-year amortization of a dwelling unit 
costing $4,500. • 

Senator Taft. The chief practical difficulty I see in it is the diffi- 
culty of providing local tax exemption. Of course, we haven't gotten 
over that hurdle entirely with the Housing Authority; not in Ohio, at 

Senator Ellender. Then, I do not presume you could clear the 
slums as easily as it can be accomplished under the present set-up. 
That is another thing that you must fit into the picture. 

Mr. Pomeroy. I think probably that private enterprise in slum- 
clearance operations would have to be geared with the urban redevelop- 
ment type of clearance of slum areas, where the land could be made 
available at use value rather than the value that private enterprise 
would have to pay for it in the open market, like the $17 per square 
foot for Knickerbocker Village. 

Senator Ellender. Of course, the other point that was made by 
Mr. Guste yesterday was that, assuming that the project would be 
paid out in 45 to 60 years, such a project would still belong to the 
insurance company or any private corporation that would manage it, 
whereas under present methods it is still public property of a quasi 
nature and 

Mr. Pomeroy. You are anticipating me. Senator. 

Senator Ellender. Oh, I am sorry. 


Mr. PoMEROY. And I did not have the opportunity of hearing 
Mr. Giiste, either. 

Senator Ellender. I am sorry. 

Mr. PoMEROY. That is certainly all right. Here is my own state- 
ment on it: 

I think we would all agree that where public subsidies are involved, 
we should endeavor to do the job of rehousing low-income families at 
the lowest cost. In my opinion, this is achieved under the present 
system of annual contributions to local housing authorities. 

There would seem to be no valid reason for saddling the Federal 
Government with an additional burden, which, in the aggregate, 
would reach heavy proportions in any housing program making any 
substantial progress in solving the problem of housing low-income 
families. Under the proposal that private enterprise be subsidized, 
private enterprise itself, in its inevitable obligation to Government, 
would in reality cease to be a private enterprise. From the stand- 
point of the community, housing produced under such a scheme 
would, at the end of the period of amortization^ — or at any earlier 
time of the discharge of the debt^ — pass out from under any control of 
occupancy and cease to serve a low-rent function, thus requiring addi- 
tional new construction to serve low-income families. Contrasted 
with this, public housing at the end of the period of amortization of 
the debt remains in public hands, free and clear, able to continue to 
serve a low-rent function with little or no subsidy. Maybe it could 
even start to pay full taxes. Finally, under the subsidy to private 
operation, there would inevitably be less attention to the tenant rela- 
tions" that, in public housing, make such a fruitful contribution to 
better citizenship. This is no place to discuss the extent to which 
various community services should or should not be provided as a 
part of public housing developments. Under any answer to that 
question, however, there is still a landlord-tenant relationship in 
public housing that powerfully contributes to a continuaUy increasing 
attitude of community responsibility and greater economic self- 
reliance on the part of tenants, looking toward their "graduation," 
as housing authorities sometimes put it, to good private housing and, 
if feasible, to home ownership. It is not likely that subsidized private 
operation could be expected to have either the patience or the skill 
for this type of landlord-tenant relations. 

In terms of cost and results alike, the general pattern of providing 
housing for low-income families through the instrumentality of local 
housing authorities has proved itself to be sound, productive, and 

Another question that has been asked is: Why should we build 
for some low-income families unless we are going to build for all of 
them? Of course, we can't build for all of them at once, but I think 
it is fair to expect that we should have a program which does contem- 
plate doing the whole job in time. 

But what is the whole job? Is it something that officials in Wash- 
ington can determine? Is it something that we can determine by 
looking at the census figures showing the volume of housing which 
is in need of major repair, lacking in indoor toilets or plumbing, or 
otherwise deficient according to certain standards which we fix? 

In my opinion, the size of the job to be done and the need to be met 
cannot be determined in this way. This is a local program, to be 


initiated, built, and managed by local authorities. Each community 
should determine the size and rate of the program which will best 
meet its needs. In each community the local authority, in consulta- 
tion with private builders and realtors, should determine how far 
down the family income scale private enterprise can reach. The 
public program should stay out of this area and leave a gap for the 
expansion of private enterprise. However, there should be a program 
of further Federal aids and inventives to induce private enterprise 
to fill this gap, so that as a matter of equity the needs of this group 
will be met. If each community is to determine the area to be left 
to private enterprise, we cannot make any sound estimates of need 
and demand based on some Nation-wide assumptions of what private 
enterprise can do. 

A similar observation can be made as to the standards to be applied 
in determining what housing is substandard and should be replaced. 
Some of the smaller communities or some sections of the country 
may determine that certain housing is not substandard according to 
its views, even though similar housing in other large cities or in other 
sections of the country is regarded as substandard. This is a ques- 
tion for local determination, and we cannot make any sound estimates 
of need and demand based on some Nation-wide assumptions of 
what is standard housing. 

Likewise, as to the rate of meeting whatever need is locally deter- 
mined, some communities may wish to meet their needs in 5 years, 
others in 10, still others in 15 or 20 years. 

In view of the fact that the housing program is a local program 
which should be based on local determinations, I believe that the 
size of the national program should represent the total of all these 
local programs. 

I think that the Federal Government discharges its responsibility 
when it makes subsidy available to the local communities who want 
it and in the amounts that they determine are needed. We should 
not assume that the Nation-wide program will correspond to a total 
number of substandard housing units as shown by the census: 

First, because the determinations of need and meeting the need 
should be a local and not a Federal responsibility. As I have already 
stated, the local programs should be based on local determinations 
as to the field to be met by private enterprise, as to the standards for 
determining w^hat housing is unfit, as to the rate of carrying out the 
public housing program. 

Second, because there may not be a local demand which parallels 
the need, For example, while 39 States now have low rent housing 
legislation, 9 States with 9 percent of the population haven't yet 
passed housing authority laws, although I think that some of them 
will probably do so in the near future. While most of the urban, 
population now has local housing authorities in its respective areas, 
there are important cities which have not yet set up housing au- 

Third, there are families living in substandard housing who pay a 
rent which should enable private enterprise to provide them with 
decent housing. Commissioner Klutznick pointed out that the rents 
charged as admission to low-rent housing varied from about $18 to 
$22 between 1939 and 1944, which includes about $5 for utilities. 
This represents a shelter rent of from $13 to $17 on the average. 


Families in substandard housing who are paying substantially higher 
rents than this are part of the group which private enterprise, with 
added incentives and aids, should meet. 

Fourth, we should build on a basis that some of our goals for 
America will be achieved, including full employment and somewhat 
higher incomes. We can assume that there will always be low-income 
families. I hope we don't have to assume that they will stay in the 
same proportion as in 1940. We should allow for an achievement of 
reasonable goals and in a 10-year program we should urge localities 
to build for somewhat less than the total need based on 1940 incomes. 
If incomes generally do go up and if in addition the projects give 
tenants greater ambition, we will not have overbuilt. If during or 
after 10 years, we find that there is an unmet demand and that in- 
comes have not increased, we can raise our sights and build more. 
All the while, I think our policy must be to build to meet the need 
and demand, as locally determined. The only question is as to the 
extent of the need 10 years hence. It is probably better to be con- 
servative in estimating public housing needs, so as to avoid any pos- 
sibility of building more than will be needed. 

I should like to come now from these generalized aspects of housmg 
down to the problem of housing in place, in the community. What- 
ever the aggregate national housing need may be, and whatever for- 
mulas may be devised to meet it, houses are not built on a theoretical 
national level nor in a physical framework of a formula. They are 
built on the ground, in the neighborhoods of the cities and towns and 
rural communities of the nation. They must fit into sound physical 
community patterns and they must serve local needs. So well recog- 
nized has the need for effective community planning become that 
but to mention it is to call to mind the overwhelming validity of that 

Good planning will present sound land use plans. The effectuation 
of sound land use plans will frequently call for programs of extensive 
urban redevelopment. We have heard declared the importance of 
halting the flight to the suburbs and of restoring values to the decaying 
cores of cities. I should like to talk a little realistically about the 
whole subject of urban redevelopment. In the first place, there is no 
magic formula whereby the vast cost of rebuilding cities can auto- 
m.atically be translated into profits and surpluses. In the second 
place, the terrifically complicated problems attendant upon extensive 
urban rebuilding — even assuming complete willingness to proceed and 
the availability of huge sums to do the job — will mean that there is no 
waving of a post-war wand that will get the job done quicldy. Now, 
what I want to say is this: I am concerned with the families — the men, 
the women, the children, the babies — who are living by the hundreds 
of thousands and the m.ultiplied millions in the slums and dilapidated 
neighborhoods of American cities and towns and rural communities — 
and I don't want them to have to wait for decent housing until we 
have developed brand new techniques and formulas, and have found 
great reservoirs of money to rebuild the cities of America wholesale. 
Some day our pictures of alabaster cities gleaming undimmed by 
human tears may find reality — but on the long march to that day I 
want to see some of the actual misery and degradation and indignity 
and the terrible cost of our slum.s cleaned up. 


Granting the desirability of Federal aid to local public works as a 
valuable contribution to a sound national economy and to the attain- 
ment of full employment, I find no deep urge that can justify me in 
saying that the Federal Government should assume the major part of 
the obligation of rebuilding the industrial areas and the business dis- 
tricts and the transportation systems of American cities. But I can 
find a valid national interest in the conditions under which the people 
of the Nation must live, and it is my view that urban redevelopment 
should begin with a program of slum clearance and neighborhood 
rebuilding that will have for its primary purpose the enabling of pri- 
vate developers, and public housing agencies, as necessary, to provide 
decent homes in decent neighborhoods for American families. 

The wiping out of areas of bad housing will frequently leave land 
that should be used for a variety of purposes, rather than housing 
alone, and we must turn to good city planning for a guide as to what 
these uses should be, as well as for the general physical pattern accord- 
ing to which redevelopment should take place. We must also be as 
sure as we reasonably can be that in the process of redevelopment we 
are providing protection against a repetition of the conditions that 
required the redevelopm.ent in the first place. That can be accom- 
plished in part by the proper design and lay out of the neighborhood. 
Whether the land in a redevelopment area be sold or leased, there 
should be provision for its recapture — after a reasonable initial period 
that will leave investment undisturbed in the event of unanticipated 
conditions warranting redesign of the area. We might wipe out a slum 
area, redesign it, and erect buildings that are to be amortized over 45 
to 50 years or more, all according to sound plans, but how can we 
anticipate everything that might take place in the dynamics of the 
■city's development? The community needs to retain for itself the 
right to return the land to an amorphous condition, so far as its urban 
design is concerned, so as to be able to impress a new pattern of de- 
velopment on it if necessary. Furthermore, so closely interrelated are 
the component parts of any pattern of urban land use, and so con- 
tagious is deterioration of buildings, that there should be entailed on 
the land the obligation for financially sound measures for the proper 
physical maintenance of buildings, and for their ultimate removal. 

Land in a redevelopment area should be made available for use — 
whether by sale or lease — at a value determined by the use. That 
value will frequently be less than the cost of acquisition, thus requiring 
subsidy to make up the difference. Needed public housing, no less 
than private housing, should have the benefit of such write-down in 
value, rather than, as now, having to carry the double subsidy of both 
writing down land cost and m.aking up for the deficient incomes of low- 
income families. The subsidy should be provided on an annual con- 
tribution basis, and thus be adjustable to variations in need reflecting 
variations in return from the land. Capital subsidies are not capable 
of this flexibility. Neither are manipulations in the interest rate on 
loans — which would have the further disadvantage of concealment and 
some elements of subterfuge — we note the close relationship between 
this type of operation and the procedure under the United States 
Housing Act ; and we suggest the availability of local housing authori- 
ties, which are responsible local units of government, locally controlled, 
and dealing with closely similar operations, as local agencies for de- 


From the maturing of the experience of local housing authorities, 
and out of their increasing recognition of the total housing problems 
of their respective localities, is appearing a bright hope for better 
housing for American families. Around the council table in many- 
communities throughout the land — an ever-increasing number of 
them — are meeting representative citizens for the purpose of reaching 
understandings as to local housing problems and of devising means of 
solution. The housing problem of a locality cannot be broken down 
and separated into insulated compartments. Whatever responsi- 
bihties various local agencies and interests may have in the field of 
housing, they are all dealing with various aspects of the same broad 
problem — that of providing decent housing for all families — and the 
results of their activities are physically, economically, and socially 
interrelated. It is here, in the local community, that housing is built; 
it is on the local scene that the various housing activities of the Federal 
Government must focalize. Inevitably, Federal activities in housing 
must be administratively coordinated for a good job to be done. 
Whatever detailed form a permanent national housing agency may 
take, it would be unthinkable for the coordinated agency without 
which the war housing job could not have been done to disintegrate 
post-war into the 16 agencies which were gathered into the National 
Housing Agency as a war measure — or into any considerable number 
of them — or into the groupings that now make up the three constituent 
agencies of the N. H. A. The variety of agencies that, working sepa- 
rately, could not have done the wartime housing job at all, cannot, 
working separately, do the peacetime job well. After subtracting all 
the activities that the war emergency has made necessary, there 
remain functions running through the whole national housing problem 
that call for a coordinated national housing agency as the means of 
expressing the complex of interests that the Federal Government has 
in aiding in the great job of providing decent housing for the entire 

Senator Radcliffe. Mr. Pomeroy, may I ask you one question? 

Mr. Pomeroy. Yes, sir. 

Senator Radcliffe. As I recall it, you stated that efforts should-be 
made to prevent the recurrence of slums. Do you feel in any place 
or places efforts, on a comprehensive scale which have been satisfac- 
tory, have been made in that direction? In other words, do you know 
of any place where that problem is being studied, and not only studied 
but is being handled with any considerable degree of satisfaction? 

Mr. Pomeroy. I do not. I could recount for you very serious 
studies being made of the problem in city after city throughout the 
United States, largely through city planning commissions, very fre- 
quently through housing authorities, and excellently in many places 
through housing authorities and city planning commissions collabo- 
rating. Cleveland is an example of such studies ; Chicago is another, 
and Cincinnati has given long study to the problem. 

Senator Radcliffe. What do you consider the most serious obstacle 
to the carrying out of such a program? 

Mr. Pomeroy. I suspect the inertia of the people in the cities in 
deciding what ought to be done and in undertaking to do it. That is 
a psychological and, in a noninvidious sense, a political question. 
The solution to the problem involves a very profound understanding 
of the dynamics of urban development and growth. 


I have observed city planning for a good many years, since planning 
is my professional background. I have seen a great many city plans 
that have gathered dust on the shelves throughout the years. Citj^ 
planning started years ago with the city-beautiful idea. Chicago had 
a magnificent plan for parks, boulevards, and its lakefront, and has 
done much toward carrying out the plan. Yet in an address a year 
or two ago to the Chicago Chapter of the American Institute of 
Architects, I could correctly begin by saying, "How lovely is the 
park framework within which this great city is decaying." The old 
city plans failed to recognize all the elements of land use, population 
distribution, and physical facilities that make up the city. It is 
only where all these components of planning are understood and the 
desirable things to be done are translated into the operations of public 
administratioti that a good job can be done. 

Senator Radcliffe. It would probably call upon local authorities 
for closer examination and supervision of private property which has 
probably never yet been exercised. 

Mr. PoMEROY. Of course, that is done in part in zoning. Zoning, 
to begin with, was regarded as an invasion of basic constitutional 
property rights, but it has now been upheld by all the vState supreme 
courts and by the United States Supreme Court. A person living in 
a house on a hundred acres in a rural area can do about anything he 
pleases with his property. Of course, you do not want him to start 
a forest fire, or pollute a stream, or shoot his wife, but you don't 
care much about the kind of a house he builds or what size yards he 
has. But put that house down on a 50-foot lot in a city and the 
situation is vastly different. Urban land is owned subject to the 
responsibility of being a decent neighbor in the community. Zoning 
is the police-power application of a part of that responsibility. 

Zoning is essential, but I was suggesting for urban redevelopment a 
more profound type of control than could be accomplished under the 
police power, which is arbitrary in one sense- of the word — and that 
would be actually making the ownership of land in a urban situation 
subject to the obligation of the person who owns that land to provide 
proper maintenance for any building that he puts on the land. That 
would require the proper amortization of the investment in the build- 
ing, a proper reserve for R. M. and R. — that is, repairs, maintenance, 
and replacements— and when the building is no longer economically 
and socially sound, the removal of the building. The alternative is 
to leave the city ultimately infested with buildings that have long 
ceased to be beneficial to the city. 

Senator Radcliffe. I assume zoning is concerned primarily with 
the future. What can be done as to existing conditions? 

Mr. Pomeroy. I think that entailment of obligation for mainte- 
nance of buildings on the land would have to come as a part of the 
urban redevelopment process, so that as the land is made available 
for use it is made subject to the obligation necessary to keep the 
neighborhood in good condition. It should also be done in the 
development of new neighborhoods. 

Senator Taft. Were you considering the possibility of confining 
this urban redevelopment program solely to the properties that were 
old and poor houses? I mean it is the housing interest that I think 
brings the Federal Government in primarily. I think a limited re- 
development in the hands of public housing authorities is a more 


defensible program than one of having the Federal Government 
interest itself in rebuilding the whole city. 

Mr. PoMEROY. At least it is something that can begin with existing 
agencies and proved procedures, rather than chasing rainbows into 
the future. 

Senator Taft. We have admitted the principle, in effect, of sub- 
sidizing the acquisition of housing to eliminate slums. Part of our 
subsidy is for that purpose. 

Mr. PoMEROY. That is right. 

Senator Taft. It requires no great extension to say in doing that 
you can acquire a little larger area where the things are mixed to- 
gether, at least, and sell part of the land for some other purpose than 

Are there any other questions? 

If not, we have only one witness for this afternoon, and that is Mr. 

(The matter submitted by Mr. Pomeroy was filed with the com- 

Senator Taft. The committee will recess to 2:30, and we hope to 
be through by 3:30. 

(Whereupon, at 12:45 p. m., a recess was taken until 2:30 p. m. of 
the same day.) 

afternoon SESSION 

(The committee reconvened at 2 p. m., pursuant to recess.) 
Senator Taft. The committee will be in order. 
You may proceed, Mr. Marquette. 


Mr. Marquette. I tiiink perhaps, before beginning, I should make 
clear just what the group is that I represent. It is the National Com- 
mittee of Housing Associations, and it is made up of 10 different asso- 
ciations directed by boards of citizens, and principally financed out 
of community chest funds or private contributions. 

Those associations are Committee on Housing, Community Service, 
Society of New York; Pittsburgh Housing Association; Philadelphia 
Housing Association; Citizens' Planning and Housing Council of 
Rochester; Citizens' Planning and Housing Association of Baltimore; 
Citizens' Housing and Planning Council of Detroit; Washington 
Housing Association; Better Housing League of Cincinnati; Metro- 
politan Housing Council of Chicago; Citizens' Housing Council of 
New York. 

These views represent the views of the executives of those associa- 
tions. I want to make it clear that it hasn't been possible to get 
this memorandum back after review by all the members of the boards, 
but presumably in general these views do represent their thinking, 
as near as the executives can understand. 

Senator Ellender. I didn't understand what you said about funds 
coming from community chests? 

Mr. Marquette. Most of these citizens' organizations are agencies 
financed out of community chest funds. 

Senator Ellender, How are those obtained; from the citizens? 


Mr. Marquette. Yes. 

Senator Ellender. I thought those funds were collected for the 

Mr. Marquette. Are you askmg about how community chests get 
their funds, and why? 

Senator Ellender. I was wondering how they get those funds and 
for what purpose? 

Mr. Marquette. They get an allocation. Take my own Better 
Housing League in Cincinnati, we go in with a budget, like the Family 
Welfare Association, or the Children's Aid Association, or what not, 
and we present our case, and we are allocated a certain budget. All 
of these agencies are interested in the over-all problem, I mean it 
isn't just the public housing sector or any other one particular sector 
of the problem. 

Senator Ellender. I see. 

Mr. Marquette. I should also like to make mention of the fact 
that you have had, from the Citizens' Housing Council of New York, 
a memorandum which I think came to the committee several months 
ago, 3 or 4 months ago, and I have read that memorandum and con- 
sider it to be very well thought through, and hope that you will have 
some time to consider it also. 

Now, I have in writing what I have to say. I may interpolate here 
and there, and of course I am prepared to have you stop me whenever 
you may wish. \Mien I finish, there were two or three questions that 
we did not cover in this paper but which were raised this morning, 
on which I thought you might care to have just a word. One or the 
other of you asked about them this morning. 

I happen to have been in housing work for 28 years, having started 
my professional career in New York in housing, and having gone from 
there to Cincinnati, in housing, where shortly afterward I assumed 
the directorship of the federation of all the health agencies of Cin- 
cinnati, so it is now a combined activity. One sees, I might say, in 
health work, the very direct relation of housing to the health of a 
community. I shall not go into that in detail, but if there are any 
questions on the relationship of health to housing that you have to 
ask, I might be able to answer them. 

Hitler's propaganda minister has gone to great pairs to show to his 
people pictures of our slums to convince them that living conditions of 
low-income families in Germany are better than in our country. 
Unfortunately — and I speak from first-hand experience — we cannot 
deny that German cities had fewer slums, that their cities were better 
planned, and that prior to the Hitler regime — which stopped the 
program for housing betterment in all-out preparation for war — and I 
was there when this stopping process was under way, after he came in — 
Germany had done more to provide good housing for low-income fam- 
ilies than we had. 

It is one of our responsibilities to see that this will not be true in the 
years ahead. The conditions under which too many of our families — 
urban and rural — have to live, do not accord with our ideal of equality 
of opportunity for all, and I think you have indicated that in these 
hearings, and to that extent we are in agreement. In a land of our 
resources and ingenuity for production, those conditions can and must 
be rectified. Something like one-fifth of the men who have been sent 
forth from our cities to fight this war for us on the far-flung battlefields 


of the world came from slum homes. Nobody in America should want 
to send them back into slums without the assurance that this Nation 
has a program that will clean out the slums within a reasonable period 
after the war ends. 

It is definitely to the credit of the Congress that aids are being pro- 
vided to make it easier for returning servicemen to buy homes. The 
fact should not be lost sight of, however, that many cannot afford to 
buy homes and that others for various reasons will prefer not to buy. 
They should not for that reason be forced to live in dwellings so far 
below decent American standards as are all too many urban tenements 
and rural shacks. 

At this point it should be emphasized, too, that the returning service- 
men proposing to take advantage of home-purchase credits should be 
safeguarded so that they will not lose what they invest. They will 
need to be advised of the fundamental principles underlying sound 
home purchase. 

When they borrow with F. H. A. guaranties, they have some pro- 
tection, but on loans not so insured there are not sufficient safeguards 
to protect them. There is danger that without some protective meas- 
ures these easy credits may encourage inflation in home prices, 
thereby wiping out part of the benefits intended for servicemen. The 
agreement recently effected by the Veterans' Administration and the 
National Housing Agency is a step in the right direction. 

In presenting our suggestions for a national post-war housing 
program, we should like to list these principles. They are not new, 
and many of them have been heretofore presented in these very hear- 

1 . The ultimate goal should be an adequate supply of homes of good 
standard for all American families — and nothing less. 

2. The field of private enterprise is to house all groups of the popu- 
lation for whom it can provide, within their means, homes of decent 
standard, old or new. Private enterprise should be given every proper 
aid to this end. Speaking for myself, I may say that I hope that the 
time may come, in the not too far distant future, when private enter- 
prise may be able to do it all, and I never would have supported a 
program for public housing had not my own experience over the years 
proved that there just seemed no other way to do it, and I don't know 
of any other way now to get down to the really low-income groups. 

3. A post-war program should encompass the systematic elimina- 
ation of slums within the next 20 years. That has seemed to us a 
possible objective. Under present economic conditions and those 
likelv to exist in the foreseeable future, a well-conceived program of 
public housing, aided by annual Federal contributions, offers the only 
workable program so far presented to meet the housing needs of fam- 
ilies whose incomes are too low to pay the cost at which sanitary, safe, 
and healthful homes are available in the open market. 

4. The present "no man's land" in housing must be eliminated. 
The "no man's land" consists of that section of the population ineli- 
gible for public housing on an income basis and yet unable to pay the 
prevailing cost of dwellings provided by private enterprise. Private 
operators should be given special inducements (short of subsidy) to 
reach down into this "no man's land." We recognize that if residen- 
tial construction costs are 30 percent higher after the war, as some 


economists predict, this will not be a simple task. If private enter- 
prise is unable to proceed under the stimulus of such aids, something 
else will have to be done, because this area of housing need cannot be 
neglected indefinitely. 

Senator Taft. If prices stay up, wages ought to stay up, too. I 
think they must be balanced somehow. We may have a general 
inflation of both. 

Mr. Marquette. It is my hope, too, that they will be balanced, 
and also that the general economic level of the population will stay 
up higher than it was pre-war, and that therefore it ought to be pos- 
sible to move forward on an intelligent, well-balanced program, with 
less, and not more, relatively, I mean relative to what we had in mind. 
I may say in passing that the question T know is so much in your mind, 
and should be in the minds of all of us, is, how much. It is very diffi- 
cult to say just how much. I will say something very generally with 
regard to Cincinnati at a later point, because we hope private enter- 
prise is going to be able to come down to that level of building and we 
hope that incomes are going to go up, so that the two will meet more 
nearly. We don't know just how much public housing should be 
done but we want the minimum consistent with moving ahead on a 
program that will meet the needs. 

5. The National Housing Agency should be given permanent status, 
with such changes as objective study may demonstrate to be desirable. 
We are not advocating that it must be exactly as it is, we don't know 
that, surely, but we do feel that some kind of centralized agency, with 
whatever changes should be indicated from your studies, should be 

6. With public housing advocates clearly defining the limits of 
their field of operation — and I may say. Senator Taft, that I agree 
with you and the others of you, I was thinking of Senator Taft because 
he happened to mention the matter of being careful about that upper 
income limit, I am equally interested in it and I think we must find 
where that limit is. It does vary from community to community 
and we m.ust keep definitely below it, only providing for the families 
that we are certain cannot get decent housing, and leaving a reason- 
able margin so that we don't get too close to the possible area of 
private enterprise operation. As I say, with public housing advo- 
cates clearly defining the limits of their field of operation, there is no 
reason for conflict between public and private enterprise. Sometimes 
it seems in the conflict of these arguments that there is, but I really 
don't believe there should be and I will have something to say further 
about that. Both contributions will be needed to meet the challeng- 
ing problem of providing good homes for our people in the post- 
war years. 

7. The initiative in developing and carrying out housing programs 
should rest with local communities. The Federal Government 
should provide stimulation, guidance, and assistance in suitable ways. 
I think that is being accepted and I think it is absolutely sound, that 
the Federal Government should provide stimulation, guidance, and 
assistance, and exercise such supervision as is indicated to safeguard 
its investm.ent. 

With regard to aids to private enterprise, we recommend the aid of 
the National Housing Agency to local communities in making housing 
market analyses, so that the local communities will know what their 


need is and what the need is in various areas. I am afraid that if 
there isn't that stimulus from some Federal agency, which ought not 
to do it but ought to help them by setting up the standards as to how 
it can be done, because it is not an easy m.atter to do an intelligent 
housing market survey, and we are about to attempt one in Cincinnati 
through our Planning Commission, but if there isn't that stimulus 
from some Federal agency I am afraid that that work will suffer. That 
should be undertaken so that there will not be too much commercial 
construction for sale particularly in the high-price brackets, too little 
for rent, especially in the middle economic brackets, and a dearth of 
home budding for Negroes. 


I believe it was Senator Radcliffe who was interested as to pre- 
ventive measures, and at this point I am talking about some of the 
Tn.easures that do fall in that classification. I think I may say that 
there are one or two communities in which a fairly good job, not 
complete, not altogether satisfactory, is being done. 

I would say, for example, that in the city of Cincinnati there isn't 
much likelihood of more very bad slums being constructed, because 
we do have pretty good zoning. We are advocating its revision and a 
higher standard of open spaces, and a lesser density of land use, fewer 
families on the ground, because it is not quite satisfactory in that 
respect. We have pretty good subdivision regulations, we have a 
pretty good building code, containing housing sections that have to do 
with those things within residential buildings that particularly affect 
the health and living of people — size of room, size of window area, 
light and ventilation and whatnot. In the outlying areas the situa- 
tion isn't quite so good. because under the State law at present we 
cannot have zoning there. 

Those are some of the preventive measures that are important, and 
if they are proper, they will go a long way to prevent future slums. 
In our community that was one of our first points of departure. We 
felt it wasn't proper to use either Federal or local or anybody else's 
funds in clearing slums and trying to reproduce good conditions, if we 
were at the same time creating more new slums, and I think it is now 
being handled reasonably well, although we propose to do better. 

Now that, I think, ought to be stimulated by the National Housing 
Agency. It can't do the job but it can offer certain helps. As a 
matter of fact there doesn't exist right now what I think would be a 
very important contribution, and that is an example, if I might sayso, 
of a proper municipal building code with housing regulations. It is a 
very difficult, technical job to draw up such regulations. No one 
could draw up a set that would be applicable, word for word, to every 
city, but it would be a tremendous help and aid us toward a modern 
revision of a lot of these antiquated codes. 

Some of them are weak in that they don't have proper standards, 
and at the same time are unfortunate in that they have handicapping 
provisions that make it difficult to use new methods of construction 
and new materials that have been proven. Of course those unneces- 
sarily harsh restrictions ought to be eliminated. 

Senator Taft. We might try drawing a model code for the District 
of Columbia. 


Mr. Marquette. If you did that here we would all be glad to have 
the aid of it. There has been a good deal of work done here on a 
Housing Code, which is separate from the Building Code, but I thinlv it 
has never been enacted, although it had some very good provisions in 
it. Maybe you know all about it. 

Senator Taft. Well, we hear about it in the papers, and Senator 
Buck is on that committee. 

Senator Ellender. There is as much politics in the District, even 
though they don't vote, as there is in Cincinnati or Cleveland. 

Mr. Marquette. I suppose so, although I am not able to speak as 
to that. 


We feel that a great deal of our ability to do this big job of housing 
in the post-war period is organization. It will all be done by the 
private building industry, whether public housing, private, or any- 
thing else. They all use the same kind of machinery, and its organiza- 
tion to do a good job is important, and very important. Much of the 
residential building of the past in most communities, in the typical 
city of America, has been done by the small builder who put up six or 
eight houses at a time. So we believe that larger operations, better 
financed and equipped to use cost-saving methods of construction and 
marketing are as necessary- — and we are thinking here of stimulating 
and helping private enterprise to do the job, or as much of it as it 
can — as anything else. 

There are certain things in the field of research that the National 
Agency can help in. There is a lot more we ought to know about types 
of construction, and construction materials. We have got this vast 
experience, now, in public housing, on a large scale, and a number of 
very good private housing developments on a large scale. They 
are not perfect, there have been a lot of things discovered at the local 
level that could be done better by planning and design and operation 
by regions, and I think we should have a careful review of the whole 
business, and it should be of record and available to private enterprise 
as well as public-housing authorities, so that we can profit by our 
mistakes and successes. 

Speaking of financing, the experience of F. H. A. should be 
througlily revised to determine how its benefits can be wisely ex- 
tended. While it has, of course, not operated perfectly, informed and 
objective people will agree that F. H. A. has made a valuable con- 
tribution and that home financing is far better today both for the 
producer and consumer than in the old days of the second- and third- 
mortgage financing system. F. H. A.'s efi^orts to cooperate with 
private builders toward achieving better judgment in location, con- 
struction, and design having met with measurable success, much more 
in some communities than in others, but I know from a knowledge of 
some of the developments that have been built with their help, that 
they have helped to step up standards. 

No small amount of home building in the United States is still 
done without F. H. A. financing and mostly without guidance or 
suitable standards. This makes it possible for those few builders 
who want to build in undesirable locations and of shoddy materials — 
and there are always a few — to get their loans elsewhere, thereby 


avoiding supervision and competing unfairly with reputable contrac- 
tors. Study should be given to ways and means by which this defect 
can be remedied. 

F. H. A. insures the lender. It would seem desirable to give con- 
sideration to some method whereby the home purchaser may be safe- 
guarded against the loss of his equity during periods of sickness 
or unemployment, and we are all agreed we want as much home owner- 
ship as is sound. Now that is difficult and I have no solution in my 
pocket. A method might be considered whereby the purchaser w^ould 
pay into F. H. A. a stipulated monthly reserve which would be 
available to draw upon to meet interest and amortization payments 
during emergencies. The purchase of a home is usually by far the 
largest single investment of savings that a family of moderate income 
ever makes, and commonly it makes but one such investment during a 
lifetime. Obviously these families are not experts in selecting pro- 
tected neighborhoods nor in determining whether the home they 
propose to buy is intelligently planned and well constructed. N. H. A. 
should provide advice for prospective home owners. It might be 
feasible to set up in local offices home informaton services which 
could be consulted by people wanting to buy homes, advising them 
as to the purchase price range within which they ought to attempt to 
buy, and the kind of house, not specifically, "Buy this house" or 
"Don't buy that house," but certain principles that are sound with 
regard to the selection of a home for a particular family might in that 
way be brought to their attention. 

N. H. A. might perform a useful service by drafting and encouraging 
model legislation for a simplified land-title system and sounder and 
well-conceived foreclosure procedures. 

Such measures would stimulate home ownership and make it safer 
for the great number of families who, after the war, will have vast 
accumulated savings available for the purpose. 

Taxation: I approach this with fear and trembling. Senator Taft, 
because I know how much thought and study you have given to that 
subject and how infinitely more you know about it than I ever will, 
but perhaps these general considerations are not amiss and they are 
not intended to be those of people who pretend to have any great 
knowledge of the problems of taxation. 

Property taxes have a far-reaching effect on home ownership. It is 
generally recognized that the whole tax structure at the Federal, the 
State, and the local levels, needs revision. There is no easy solution 
nor any that is likely to be brought about quicldy. Any sound solu- 
tion goes far beyond the matter of local taxes on homes. Nevertheless, 
the National Housing Agency might, through a research bureau, work 
with other groups in Congress, in the Federal administration, in the 
States and in the local governments, to stimulate study and planning 
to the end that a more logical system of taxation might be developed. 
To some extent we feel that private enterprise is handicapped where 
the system of taxation works unfairly. 

Housing for Negroes — a verj^ important part of this whole housing 
problem, incidentally. During the war, private enterprise has built 
housing for Negroes in critical communities. Little was done in the 
pre-war period and it seems likely that after the war practically all of 
the new home building again may be for white families. We urgently 
recommend that careful thought be given to measures which might 


stimulate private home building for this sector of our population, 
which in every economic group suffers more than any other of our 
people from a shortage of decent dwellings. 

No man's land: I have referred to that in my statement of prin- 
ciples, so I will pass it by except to say that that is the area in which 
I think special effort should be made to find out — and I haven't any 
easy solutions to offer either, I don't know whether it is a lowering of 
the interest rate, I don't know just what it would be, I would hope 
that private-enterprise operators would tell us so that we could help 
to work them out — what would be most beneficial to get them into 
this area between where they are building now and what public 
housing is doing and ought to do. 

Senator Taft. Roughly, the group between $1,200 and $2,000? 

Mr. Marquette. That is right, and I think that certainly there 
is an area in which these limited-dividend housing organizations, and 
the larger life-insurance companies, and probably a lot of other 
groups, could operate, but I think they have got to have a whole lot 
more help than they are getting now. I think it is a tough assign- 
ment. We mean what we say when we say that we want private 
enterprise aided, and we are for any logical, practical, intelligent 
program that will help them to do that part of the job. We don't 
want public housing to do it. 

Areas of decay: Now there has been a great deal of discussion on 
that and I am going to summarize, in order to save time, our general 
thinkmg on that subject. 

The problem of replanning these decayed areas of cities is inti- 
mately related to the whole problem of rehousing of our people. For 
the most part, of course, I am interested in the areas that are slum 
areas. They may have other uses mixed in with them, but predomi- 
nantly they are slum areas, and I don't think they all ought to be 
redeveloped for low- rent housing by public housing authorities, by 
any manner of means. 

We now have under way in Cincinnati a master planning project 
which will study all of those areas and indicate what their future use 
ought to be. Maybe it is park and playground areas, maybe it is 
moderate housing — which should be private enterprise; maybe it is 
higher rent housing — which should be private enterprise; maybe it is 
industrial or commercial use; or maybe it is low-cost housing that can 
only be done by public housing, and then, in my judgment, it ought to 
be done without hesitation. 

Where a sector of the population is displaced as a result of such a 
projected improvement for profit, and then done properly by private 
enterprise, public housing should enter into the picture in order to 
make sure, if there isn't already existing sufficient housing of a reason- 
able standard — and I am not talking idealistically — but of a reason- 
able standard, to which those people can go, at approximately the 
rentals they have been paying, or at least within their means, then I 
think it will be necessary to have a coordinated program where public 
housing will help out. 

Otherwise, you will stop any extensive rebuilding of those decayed 
iireas. You just can't take families out and let them go anywhere 
and not pay any attention to what happens to them, without block- 
ing any such programs on any such scale very, very quickly, in my 


I think there are certain helps that private enterprise needs to 
operate in this field. If public housing is to acquire the property, 
and it is to be given the right, as it has been given in some States, to 
sell or lease eitlier to private enterprise or to use for public housing, 
then you would have to make it possible in some way for them to 
make the land available to private enterprise at its use value, because 
a private enterpriser can't pay $3 a square foot for land for a moderate 
rental housing development, which is worth for that use only 75 cents 
a square foot, and make any profit. 

So in some way, somehow, he has got to be helped. And my pro- 
posal — recognizing as you have recognized that it is an exceedingly 
intricate and complicated problem, and an extensive one — would be 
that the Federal Government might enter into the problem in a limited 
way in the financing, because I confess that we do not have enough 
experience to draw upon to know what the ultimate cost is going to 
be, or the extent to which areas in certain reconstructed areas in cer- 
tain sections of a city might even result in an increase in the land 
value. That is conceivable and it might balance out so that the 
losses wouldn't be very great. 

But I don't think anybody has the answer and my proposal is a 
limited exploration with Fedeial assistance into that field, maybe in 
a big city and a small city, and let's find out what does happen, be- 
cause I, at least, confess I don't know. 

I do laiow that it is an exceedingly challenging problem and I hope 
we may be able to help private enterprise to do something with 
regard to it. 

Now, with regard to the use of existing housing, of course, most of 
the existing supply of housing meets standards of health and safety 
and will, of course, continue in use. Dwellings which, by reason of 
bad structural condition, insanitation or lack of light and ventilation, 
or of hopelessly bad neighborhood are unfit, should be eliminated, 
but it is amply demonstrated that this will not be done except by 
planned clearance of bad housing areas. 

Residence neighborhoods that are showing signs of decline but are 
not too far gone should be rehabilitated and protected — and that is 
private enterprise. I could go into more detail as to how that could 
be done. It is, in part, a planning process. Maybe the planning 
commission has got to go in and widen some streets, introduce certain 
park and recreation areas, clear away some buiWings that are tending 
to cause the decline of the area, and what not, and then private enter- 
prise should go ahead and do the rehabilitation, in most instances. 

For a good many years the majority of low-income families will 
continue to live in existing housing. This is proper so long as the 
housing is of good standard and in acceptable neighborhoods. But 
the idea that the problem of decently housing low-income families can 
be solved by building new homes only for higher-income families and 
letting the others gradually filter up into a better standard of homes, 
is untenable and has been so proved by 50 years of experience. It 
just doesn't happen. To some extent it does, but it doesn't happen 
rapidly enough to ever solve the problem. 

Nor is it true that these needs can be met by projects for remodeling 
existing housing. It is true that some sections of some cities might 
be so rehabilitated and housing authorities should, of course, when pri- 
vate enterprise is not interested in doing it in a particular area — and 


I think they should have priority — thoroughly explore such possi- 
bilities when low-rental housing is a proper and an economically 
sound undertaking for that area. Such possibilities are, however, 
very limited. Shack towns and overcrowded tenement blocks can 
never be made into good homes, nor is the remodeling of scattered 
buildings in a decayed neighborhood sound or practical. You have 
got to do it on a neighborhood basis, in my judgment, so that your 
surrounding properties do not pull down the value of the one that 
you try to rehabilitate — in order to make it sound. 

Public housing: The public-housing program has functioned well, 
though not perfectly. Thoughtful advocates of the plan of Federal 
subsidies for local public housing are among the first to say that the 
program can and should be improved. These facts, however, remain: 

Neither in this country nor anywhere else in the world has any work- 
able alternati% e been offered, so far as we know. That doesn't say 
that there isn't any, and that if there is one that it ought not be thor- 
oughly explored, because our aim is only the providing of decent hous- 
ing for these people and if it can be done soundly and properly by 
some other method which nobody has ever proposed, let's have it 
and let's consider it objectively and intelligently and without bias. 
But so far we don't have it. Public housing in our country has made 
one of the greatest contributions to intelligent site planning, design, 
and construction. So have certain private developments. It has 
compelled recognition of the fact that the solution of the problem of 
adequate home life for the low-income groups is more than four walls 
and modern sanitary conveniences. It has shown that what we need 
is intelligently planned neighborhoods with adequate recreational 
facilities for children and adults, both indoors and outdoors, as well 
as good homes. It has demonstrated that it is possible to house 
low-income families decently, and that these families will, in the vast 
majority of cases, take care of the properties. 

The first slum clearance project in Cincinnati was Laurel Homes. 
Originally it contained 1,049 dwelling units; it has since been added to 

\Vlien we made a careful check to find out what kind of families 
we had, that is, how they were taking care of the buildings, were they 
paying the rent, were they disturbing their neighbors — in other words, 
were they undesirables, and you know what I mean by that- we found 
about 40 tenants in that category. Now we have more projects than 

Senator Ellender (interposing). You mean 40 tenants out of 

Mr. Marquette. Out of 1,049. That was a careful check through 
an inspection of all the equipment and everything else. We don't go 
in and supervise the housekeeping and the way the family lives, but 
we go in to check our equipment, but the inspectors are notified to re- 
port to the management office if they see signs of dirtiness or vermin, 
or neglect of the equipment, or anything like that, and then somebody 
goes to that place. 

Senator Ellender. How do they handle those cases? 

Mr. Marquette. Here is the way we handle it and it works pretty 
well. I am consultant for the Housing Authority, without pay, and 
have been ever since it was organized, but we have this Better Housing 
League, this private organization that I am representing as one of these 


10 today. We have a system of what we call home making advisers 
who, before there ever was any public housing, devoted their entire 
time to instructing tenants in the congested areas, and working with 
owners on their problems of management and what not. Their service 
is available to any private owner, by the way, just as we are now doing 
it for the public housing projects. 

But when a report concerning a tenant has come in, then they do go 
back to see what the tenant is doing, whether there is any improve- 
ment, and so forth. If they find out that nothing is happening, and 
that it is just as bad as before, then it is reported to us. We send in 
one of these home-making advisers and she reads the riot act to them, 
and says, "Now look here, you have got to change, you can't go on 
living like this, it just won't be permitted, we are ready to help you." 

And then she goes to work on what is the matter with her house- 
keeping and tells her what to do and how to do it, and goes back and 
shows them actually how to wash the windows, if necessary, and how 
to take care of disposing of the food so that it isn't left around vermin 
and rats to get at. But if, finally, that family makes no effort to 
improve itself, they go out — but that is rare. 

Senator Buck. What becomes of them then? 

Mr. Marquette. They go back where they were before. Now, 
one might raise the question about that, that that isn't doing a con- 
structive job on that particular family. But we admit that housing 
can't remake the nature of people, and we know that there is such a 
certain small minimum group. So far as I know, there haven't been 
more than a half a dozen families that have actually been evicted for 
that cause, but when it comes to the last resort we can't do any- 
thing more than put them out in order to let come in some other 
low-income family that will take advantage of the decent housing 

Senator Buck. Half a dozen families, that is, out of over a thousand? 

Mr. Marquette. Yes. 

Now, there is a better answer that I have given for that group of 
families, and when the time is appropriate we will come up with it. 
I know in our own community, because I have had it in mind for a 
long while — it has been worked out better in Holland than any place 
else in the world, in my judgment, where you build specifically for 
this very small group of so-called undesirable families. I would like 
to take time, but I am afraid I am using more time than I should, to 
tell you about that. I think that is the next step, so you don't 
simply say "go on back to slums," but you say "You may go now"— 
you wouldn't make them do it, but you say "You may go to this 

Senator Buck. That is going down another step. 

Mr. Marquette. Yes. 

Senator Taft. You might fix it so you could run a hose through it 
everv day? 

Afr. Marquette. Exactly, just as close to that as possible, and 
under close social service management, where they do go in and 
interfere with people's lives, which we don't like to do. And that 
will get results in most cases. I have seen that work, too. It is a 
tough application to have to make, but I don't know of any other 
for that certain group, where very likely it is a pretty poor mentality 
that is the cause of the difficulty. 


We feel that families, from their own testimony,, do not feel that 
any stigma attaches to living in these public housing units, but that 
on the other hand, public housing tenants graduate, when their 
incomes increase, to home ownership or to become better tenants 
than they were before, for private enterprise housing. 

Senator Taft, you probably Imow that our top income for eligibility 
was, pre-war, $1,500, and we hope to get back to that as soon as pos- 
sible after the war. I must say that the thing that has disturbecl me 
ro.ore than anything that has happened to public housing has been 
the fact that during this war period we have had to take off the limits, 
because I think it puts us more on the spot, makes it more difficult 
to defend. It has been a tough thing to have to do, but for the war 
effort we just had to do it, and have to take the kick-backs and then 
prove our honesty and integrity by going back to the original income 
limits as soon as we possibly can. 

Senator Taft. You have to remember that, after all, this public 
housing program, has been, in effect, disapproved by the House of 
Representatives for the last 6 years, ever since I have been here. 
Now, whether they are going to change their mind, unless we change 
the program some and sell it to them, is a question. The Senate has 
alw ays been much m.ore favorable than the House, and we may have 
to make some changes in it in order to get the approval of the House. 

Mr. Marquette. Well, I think their views have to be considered, 
and in certain respects they may be sound. I think we ought to find 
out what is in their thinking, and go along with it if it is a sound 

At any rate, whether Congress was urging it or not, I will say that 
for the benefit of the program, myself, it isn't accom.plishing its pur- 
pose unless it does that, and I am interested in housing low-income 
families and taking them out of slums. I am not interested in housing 
people that private enterprise c^n possibly take care of. 

We think it has been demonstrated thai the principle of the adjust- 
able annual subsidy is sound so that in periods of prosperity like the 
present, the subsidy of the Federal Government is reduced substan- 
tially below^ the maximum. Actually, the Federal subsidies now being 
paid are, we understand, 47 percent below the amount contracted for. 
On the other hand, it is equally certain that subsidies needed during 
times of depression will be greater. We will go back up to the maxi- 
mum,, probably, if we hit another depression. 

It has been shown that public projects, while not able to achieve 
low rents if full taxes are paid, can pay in lieu of taxes up to 10 percent 
of the gross rentals. This I aui pointing to particularly, because we 
have made some studies in Cincinnati, that you may not know about, 
that do throw some interesting light on one angle of this tax business. 
In certain communities — I mean in Cincinnati — it has been estab- 
lished by careful research that such payments in lieu of taxes are ap- 
proximately equivalent to w^hat tenants of substandard bousing pay 
in taxes through their rents to landlords. In other words, we took 
four or five areas in the section of our downtowai basin area, and we 
studied what was paid in taxes out of those areas in relation to the 
rental, and we found out that it amounted to just about a dollar and 
a half per family per month, w^hich is just about what 10 percent of 
the total rents paid in taxes would amount to. 


Senator Taft. On the other hand, the taxes paid by the ordinary- 
family living in their own home is around 20 percent. 

Mr. Marquette. That is probably true. 

Senator Taft. I mean, roughly speaking, the tax rate, by and large, 
in the country averages probably 2 percent of the actual value. 

Mr. Marquette. That is right. 

Senator Taft. And the rentals are, say, 10 percent, so that that 
is about 20 percent instead of 10. 

Mr. Marquette. It would be just as true if we paid full taxes; it 
would be over 20 percent, I am sure, in the public housing projects, 
and all we feel we can do is to pay as much as these people paid in 
taxes before, and that is about all. There you get into your local 
subsidy by the partial tax exemption. 

Interestingly, too, on the site of this project that I have mentioned 
before, Laurel Homes, the amount of taxes assessed was approxi- 
mately $27,000, and paying 10 percent of the total rents in lieu of 
taxes would give the local communities a little bit less, but almost as 
much as they got before. 

Now, I am not trying to make out that they aren't losing tax money, 
because if you look at it, the valuation of the new buildings as con- 
structed, and their taxable value, if they were in private enterprise 
hands, would, of course, be much more. But I feel we can't just do 
that; but on the other hand, that the local community does need to 
get some compensation for the services rendered, and as much as is 

Senator Taft. When you pay this 10 percent in Ohio, where does 
it go? 

Mr. Marquette. We don't pay it. We did. We held it in escrow 
or whatever you might call it, but then we got all tangled up in our 
State supreme court decision, so that Ohio now isn't getting anything. 
The projects were taken over by the 'Federal Government, and they 
are not getting their payments in lieu of taxes until our tax muddle is 
straightened out. 

Senator Taft. How could the auditor take money in lieu of taxes, 
anyway? Did he take it before? 

Mr. Marquette. He did in the original instance, in the very begin- 
ning. I don't know how legal it was. You mean, in other w^ords, if 
somebody said to him, "By what authority?" — finally he raised the 
issue himself, and said that he wouldn't accept it. 

Senator Taft. How could he take money from somebody as a gift, 
so to speak, and put it on the regular taxes and divide it up among the 

Mr. Marquette. I think that is done in most States. Maybe you 
know whether there is a difference in our State law. 

Senator Taft. Maybe there is an authorization ; I don't know. The 
State law could authorize it, of course. 

Mr. Marquette. That is what we propose in the remedial legisla- 
tion we are going to ask the State legislature to consider. 

Senator Taft. Has the supreme court made it finally impossible 
to exempt this property for metropolitan housing authorities? 

Mr. Marquette. Yes. 

Senator Taft. There is no further recourse? 

Mr. Marquette. No. 


Senator Taft. Their interpretation of the Ohio Constitution is 
final, is that it? 

Mr. Marquette. There is a difference. Here is this Laurel 
homes, one that was built as a Federal project with Federal money. 
We didn't build it locally, the Federal Government built it 

Senator Taft. P. W. A. built it? 

Mr. Marquette. Yes. That is the type of project that the 
United States Supreme Court decided upon, and when we got our 
State supreme court decision that says they are all taxable, all the 
locally built ones, and then they said the federally built one, too — 
but the locally built ones are fully taxable — then the Federal Govern- 
ment, in order not to continue with these low-income projects if 
they had to pay full taxation, took over title. So that the United 
States Supreme Court decision does settle the issue with regard to 
all of our present local projects, they are not taxable because they 
are now all federally owned. 

But when it comes to building anything more, under the present 
law of Congress we can't move, because we couldn't meet the require- 
ment that the local community put up 20 percent. The state court 
decision, the supreme court decision there is final, and we believe 
cannot be appealed. 

Senator Taft. Under the status of the Ohio Constitution, the 
proper thing to do in Ohio is for the State to set up a system of cash 
subsidy from the State or city, isn't it? That is the only way to 
meet that. 

Mr. Marquette. That is an alternative. I think it is an awfully 
tough one. I don't know anybody else that ever suggested that. 

Senator Taft. You mean it is a tough legislative proposition in 

Mr. Marquette. It is going to be tough to get a local community 
to put up the money in cash. I think it hurts a whole lot less by 
means of tax exemption. I think it will be a real battle to get that 

Senator Taft. StOl, it is the same thing, in substance. 

Mr. Marquette. Yes. 

Senator Taft. And it is a franker facing of the proposition. 

Mr. Marquette. Yes. And, of course, as a matter of fact, the 
more this subsidy — whatever subsidy it is, Federal, State, or any- 
thing else — is right out in the open to be looked at, the better it is. 
There is no need of evading it, and if the public doesn't want it and 
isn't willing to go along with it, then we ought not to have any public 
housing. But we shouldn't do it, I quite agree, by subterfuge or 

We hope that the Congress will make available loans and subsidy 
as soon as possible, in order that the public housing program may 
continue in the post-war period, and that projects for the clearance 
of slums and for the construction of homes for low-income families 
may get under way speedily when the war ends. 

The present limitation in the law on the unit cost of dwelling 
units in public housing should be eliminated, and a limitation placed 
only on the room cost, having in mind probable post-war construction 
costs, because it tends to encourage the construction of too many 
smaller unit structures. 


Senator Taft. I would think the room-cost basis would be a much 
•sounder basis in all this consideration. 

Mr. Marquette. I think so, too. 

Now, we do make this point, and it is very much in my heart, that 
I hope the room cost— while it ought to be a reasonable limit, and 
eliminating anything in the nature of frills — I do hope that the room 
cost limit won't be so low that it is going to result in miserable looking 
housing developments. I don't think that we have to choose be- 
tween an extravagant thing and a wretched looking thing. 

In Cincinnati, I think Senator Taft will agree, we have two proj- 
ects — Wyndham Terrace and English Woods — built on outlying land, 
which I would stake my reputation on that 50 years from now they 
will still be excellent standards of housing, examples of housing, and 
an asset to the community. And they weren't extravagantly built, 
they were well built and well designed ; and I would like to hope that 
we could have our public housing in such form that it won't be miser- 
able looking stuff, because it looks so darned cheap. Not that I 
am advocating anything in the nature of frills or extravagence. 

Senator Ellender. To what extent would it increase the cost of a 
unit by putting it on a room basis rather than on a unit basis? 

Mr. Marquette. Well, there is a great tendency, when you have 
this unit limitation, to build all of them to keep within that $4,500 
unit limitation, or whatever it is, and really what you are trying to 
do, as I understand it, is to be sure that the costs are minimum, con- 
sistent with sound and decent and proper construction; and that, I 
think, ought to be on the basis of the cost per room, and not try to 
keep down the number of rooms. 

Senator Taft. It is to avoid a happening like $15,000 a unit out 
at Green Hills, I think that is what brought in those limitations. 
They don't want extravagant building propositions. 

Mr. Marquette. Well, if you had $1,000 a room, room-cost 
limitation, it would have done the same thing, wouldn't it? 

Senator Taft. I think it is much better. 

By the way, speaking of Green Hills, I have a telegram from a man 
living in Greendale, Milwaukee, a project similar to 

Mr. Marquette. One of the other Greenbelt towns. 

Senator Taft. Yes. Saying that he wants to buy his home, and 
so far as he can find out, every citizen in Greendale wants to buy 
his home. 

Do you see any particular reason why homes in that income class 
should not be sold to the renters? 

Mr. Marquette. No; there are some difficulties, of course, about 
the way they are constructed, because they are in groups. 

Senator Taft. Som^e of them are, but not all. 

Mr. Marquette. That is right. 

I think in our project, practically all of them are, but not in Mil- 
waukee; but if that could be worked out — and it could be, I am 

Senator Taft. It is not really a low-cost housing project. 

Mr. Marquette. Not at all. 

Senator Taft. The Government there has gotten into something 
outside the principles of the present low-cost housing program. 

Mr. Marquette. Yes. I would like to disown that, so far as the 
public housing program is concerned, because I think it has caused us 


more difficulty and more misunderstanding than anything else I know 
of. When it comes to the matter of planned communities, they did a 
good job and they are all well planned communities, and show the value 
of neighborhood considerations in planning, and so forth. But not as 
low-cost construction or low-rental housing, and we are perpetually in 
hot water trying to explain that it is not. 

The Federal Public Housing Authority should continue its present 
policy of allowing as much local automony as possible, exercising only 
as much supervision as is necessary to safeguard the Federal invest- 
ment. It should continue to offer technical advice and assistance to 
local authorities. 

There is no advantage in oversized projects. In other words, we 
believe that the building of these enormous projects ought to be dis- 
couraged. We think that it throws too much housing on the market 
in one place all at once, and it ought to be possible to build projects of 
less size. 

Senator Taft. What is your limit? 

Mr. Marquette. I don't have any particular limit, but I have in 
mind that, in the average community, a project of 350 units ought to 
be allowable; and I would like to feel that our community, for instance, 
could have a program that would carry over 4 or 5 years, and we could 
maybe build 350 units on one site, and then not build any more for 2 
years, and carry it out later. I think that is more intelligent. You 
slap a thousand units on the market all at once, and I don't think that 
makes sense, in one given particular loality; and besides, I am against 
too big projects anyway. 

Senator Ellender. Would a reduction in the number of units in 
anywise affect the cost of each unit? 

Mr. Marc uette. No; because if you get up to 350 units and above, 
you are in an economic area of development anyway, and it doesn't 
make a great deal of difference. 

The primary function of public housing is, of course, in our judgment, 
to fill human needs. To a limited extent, it can serve also as a balance 
wheel in the construction field. It can be stepped up in times of 
decreasing building and toned down when private enterprise is oper- 
ating at its peak. The advantage of this is more apparent when we 
realize that all public housing is designed by private architects and 
constructed by private builders. 

In other words, we want to keep out of the way of that competition 
for the labor and materials of building and architects and everything 
else, insofar as it is consistent with a continuing intelligent program. 

More and more, private money has financed local housing operations. 
This should be encouraged. 

I have a paragraph or two here on rural housing, which I will skip 
over very hurriedly, because I am trying to bring myself to a close 
here promptly, and merely say that it is a part of the whole picture; 
and while those of us represented in this particular memorandum are 
all from cities, we feel that the rural areas have just as much a claim 
to decent housing as the cities do. 

It is a different kind of problem. It needs more study than we 
have given to it already — we haven't done a good job in rural hous- 
ing — but it is one of the things that ought to be done in the next 
really comprehensive housing program; and probably we will have 


to get into the area of home ownership there, because the particular 
farm home ought to be an owned home and not a rented'home. 

I am not going to discuss war housing, either. I think our views 
are pretty much in accord, except that we do feel that the disposition 
of a permanent war housing project ought to be simpHfied — disposi- 
tion to a public housing authority, without having to come back to 
Congress for specific approval, when there is local judgment that 
that is proper, given by a competent authority — whatever would be 
regarded as a local authority that could speak for the community, 
the city council or something of that kind — and concurred in by the 
Director of the National Housing Agency. 

On the other hand, if there are projects that have been publicly 
built during the war but could be used by private enterprise for that 
type of housing, then I think it should be equally easy to turn it 
over to private enterprise. 

We call attention finally to the fact that we are a little bit concerned 
in the matter of rent control, as to what may happen when the war 
ends. We want to see rent control cease when it can, and as early 
as it can, but we are afraid that there is danger if controls ai-e com- 
pletely removed immediately, everywhere, after the war, and that 
that ought to be studied. There are probably some sections where 
it will have to be held on in some respect, with certain reservations, 
in order to prevent a run-away market. 

Now, I think that that is all I have in mind. I could refer to one 
or two of these questions that I know you asked, where I was prepared 
to say somethmg about it, but I won't unless you want it. 

Senator Taft. Go ahead. 

Mr. Marquette. Well, your particular question about subsidy to 
private enterprise for the very low-income housing, not necessarily 
to supplant but to perhaps supplement. 

Well, it ought to be carefully considered. I rather question it for 
a little bit difl'erent reasons than were given. I don't really believe 
that private enterprise would want to do it. Maybe one would say, 
"Well, that ought to be left up to them to say"; and I would have to 
say, "That is correct." 

However, if my presumption is correct, probably nothing very 
much would happen. In other words, here is the area they are oper- 
ating in now, and that is the area they are certainly going to operate 
in again. Then we have this no-man's land, where they can't operaet, 
and where we want to help them to operate. 

Let's presume we do give them aids that make it possible to let 
them go in there and do it profitably, and if it does so well and builds 
well and adds to the supply of good homes, I have no objection to 
proper aids. 

I would hope that something other than direct cash subsidy would 
be possible. Now, why should they want to get down into this area 
that we are talking about? They don't want to build for Negroes. 
That is a large part of that problem. We got 150 priorities — I had 
a lot to do with it myself — for Negro housing in Cincinnati. They 
wouldn't allow any other, and I don't quarrel with that use. I myself 
proved that that was the area of tremendous need, and we got 150 
units built by private enterprise. I helped one of the little develop- 
ments to work it out; I was on their corporation, serving without 


Then I got 100 additional- — a number of people urged it; I was one 
of them. And those 100 aren't being taken up. There is a fear of 
operating in that area. 

Of course, private enterprise has got to come in for those Negro 
families who can pay the full cost. 

Then there is the problem of these large families with large numbers 
of children. I just don't believe that private enterprise wants to get 
into that area. That is full of headaches, where you have got to do 
some kind of an educational job. It is costly to administer, it takes 
a whole lot more people, there is just nothing in it. And I believe 
they would just not do it, even if they have the subsidy. 

That is my approach. I may be wrong about that. 

Senator Taft. At least, it can be said that the field to be examined 
first is the little higher income? 

Mr. Marquette. That is right; and there I would be all out for 
every proper aid, and I think it needs to be a whole lot more than they 
have had at any time in the past. 

They can only do certain things. There is no magic about either 
private or public enterprise, and they have such limitations upon their 
ability to do certain things in that area that without aid they can't 
do it. We have got to help them if we want them to be able to do it. 

With regard to subsidy for home ownership for those with incomes, 
let's say, under $1,500, if we just roughly take that as the public 
housing group^ — I don't know whether that is what whoever suggested 
it had in mind, that quite low income area, or perhaps a group a little 
above that — the matter of some subsidy to stimulate home ownership. 
But down there I would be very hesitant, because I am afraid that 
very few people in that income range are able to carry the burden of 
home ownership. I think what happens is that they get over their 
head, and they can't buy a house that is too substantial to begin 
with, and the cost of repairs is likely to be excessive, particularly if 
they don't keep them up constantly, and the first thing you know, 
you get the houses running down, and I think it is very doubtful as to 
whether that is the group. I think it is this next group abov§ that, 
that .needs the help. 

About a subsidy there — I can only say this: I don't know; I see 
some definite difficulties in the way of it. I am particularly concerned 
about how you would stop speculation. In other words, supposing 
I bought a home for $3,500 or $4,000, and I had a subsidy of $1,000 
or $500, or whatever it might be. Now, to prevent me from selling 
that 5 years later to somebody else and making a profit would be a 
rather tricky thing to do. Maybe by means of mutual ownership, 
or a cooperative, or something like that, it coiud be done. I have 
never been too sold on those cooperatives and mutuals, myself. 
Many people think differently. Maybe it might be the answer. 
But with safeguards, if it could be proved it could be done and safe- 
guarded, I wouldn't object. But I just have never seen a plan that 
seemed to me was quite adequate to reach that. 

I think those are all the things that I had made note of that I 
thought I had anything to say on additionally that might be of any 

Senator Taft. Are there any questions by any member of the 


Mr. Marquette. I want to express my appreciation to all of yon. 
I think you have shown to all of the witnesses who have appeared, 
since I have had the privilege of listening to the testimony, every 
consideration; and I am personally delighted that you are going into 
the thing intelligently and with open minds and not hesitating to 
ask devastating questions when it is necessary to get at the truth. 

Senator Taft. The committee will recess until 10:30 tomorrow 
morning, when they will meet in the Finance Committee room, 
which is room 318. 

(Whereupon, a.t 3:35 p. m., the committee recessed until 10:30 
a. m., Wednesday, January 17, 1945, in room 318, Senate Office 



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