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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 
U. Sw SUP I v/x- i;ULUMiur*i5 










S. Res. 33 

(Extending S. Res. 102, 78th Congress) 




PART 15 

FEBRUARY 7, 1945 

(Index to Parts 6 to 15, inclusive, follows page 2218) 

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

91183 WASHINGTON : 1945 




WALTER F. GEORGE, Georgia, ChaiTman 





SCOTT W. LUCAS, Illinois 

Meyer Jacobstein, Director 

Subcommittee on Housing and Urban Redevelopment 

ROBERT A. TAFT, Ohio, Chairman 
DENNIS CHAVEZ, New Mexico ROBERT M. La FOLLETTE, Jr., Wisconsin! 




Statement of — Pag* 

Johnston, Eric A., president, United States Chamber of Commerce-. 2031 
Bodfish, Morton, executive vice president, United States Savings and 

Loan League 2040 

Boyd, Rev. Beverley M., Federal Council of Churches of Christ in 

America 2064 

Kreutz, Oscar R., executive manager. National Savings and Loan 

League 2065 

Merrion, Joseph E., president, National Association of Home Builders 

of the United States 2075 

Wilkes, James C, counsel. National Association of Home Builders 

of the United States 2085 

Carson, John 2144 




United States Senate, 
Subcommittee on Housing and Urban 


Post-War Economic Policy and Planning, 

Washington, D. C. 

The siibcommittee met, pursuant to adjournment, at 10:30 a. m., 
in room 312 Senate Office Building, Senator Robert A. Taft (chairman) 

Present: Senators Taft (chairman), Radchffe, Buck, Ellender, and 

Senator Taft. The committee will come to order. 

Will you com.e forward please, Mr. Johnston. 


Senator Taft. You have a prepared statement? 

Mr. Johnston. I have, Senator Taft, which I would like to fUe^ 
but I would like to talk to you for a few minutes if I may, and file^the 
statement for your consideration. 

Senator Taft. All right. The reporter will take the statement. 
You may proceed in your own way. 

Mr. Johnston. Gentlemen, my name is Eric Johnston. I am with 
the United States Chamber of Commerce. I am happy to have the 
opportunity of coming before you this morning and discussing at least 
one phase of the urban redevelopment and housing in the post-war 

I am one of those who very definitely feels that housing, the building 
of new homes, will provide one of the major avenues for getting us high 
levels of production, high levels of employment in the post-war period. 

As the very large percentage of homes are built by private initiative 
and private capital, I think we should not put any unnecessary 
obstacles in the way of erection of homes in the post-war period. 

Many groups have appeared before you and presented statements. 
The United States Chamber of Commerce has, among its membership, 
many who are interested in the building of homes, such as insurance 
companies, financial institutions, contracting agencies of one kind or 
another, and those who supply building materials, and this committee 
of the United States Chamber of Commerce that I am speaking of 
has in its membership groups representing all of these various ele- 
ments who are interested in the construction field. 

I think we will solve the problem of construction only through 
thorough consideration and mature judgment, and I think your sub- 
committee is rendering excellent service in that regard. 



"We in the chamber of commerce feel very definitely that the war 
organization which has directed building activities during the war is 
not a stable permanent peacetime organization. 

"We feel very definitely that the National Housing Agency which 
was created to conduct war activities has done a very good job. We 
feel they have combined the direction of all Federal activities toward 
the construction of war housing and we feel that the National Housing 
Administrator and the private home industry have really done a very 
good job, but, of course, this was directed toward the building of war 
homes, and with the cessation of hostilities, we assume there will be 
no longer the necessity for building war homes, and that thereafter 
the activities of the National Housing Administration should be 
separated as they were previous to the war. 

Perhaps I should start at the beginning with something that you 
gentlemen already know, namely, that the National Housing Agency 
was created in February 1942 by Executive Order 9070 under the 
authority of the present President, under title conferred in him under 
section 1 of the National War Act of 1941, This agency combined 
under one direction all of the activities of the Federal Government 
directly connected with the building of war homes. It included, for 
instance, the F. H. A., the Federal Home Loan Banl?; Board, and the 
United States Housing Authority. 

These, of course, have been changed somewhat under the National 
Housing Agency, and I don't think it is necessary for me to go into 
the details as to how they were changed. The important point is, in 
my opinion, that after the war is over we feel the agencies should be 
allowed to go back to their independent status, that the F. H. A. 
should go back to its independent status, that the Federal Home Loan 
Board should be recreated and allowed to go back to its status, and 
we feel that the United States Housing Authority should go back to 
its status. 

We feel that with the expiration of Executive Order 9070, 6 months 
after the war, this will occur. But, if for any reason it is held in one 
organization for liquidation of war housing or any other reason, we 
feel there should be an act of Congress to segregate these agencies 
and restore the independent status of these agencies in the post-war 

We think that the liquidation of war housing should be given to 
some central authority such as the Treasury Department. But we 
very definitely do not feel that those agencies whose purpose is to 
stimulate private construction should be tied in with those agencies 
whose purpose and desire is to subsidize low-rent housing for needy 
families in the post-war period. 

We feel if we tie the two together that they simply will not mLx, 
that we will simply have one controlling the other, and they are en- 
tirely different fields of activity. 

And we urge you that if for any reason these are held together in 
one agency, as they are now, that they be segregated in the post-war 

That, briefly, is the statement we wish to file with you this morning. 

Senator Taft. Do you take any position for or against the public 
housing program? 

Mr, Johnston. I think that is an entirely different subject, Senator 


Senator Taft. It is, but I wondered if the chamber of commerce 
has taken any position. 

Mr. Johnston. The chamber of commerce as an organization feels 
that the subsidy of low-rent housing can better be solved by high 
economic levels of activity than by any other method. 

Personally, I think it is a highly controversial subject in which many 
of our members take one side and many members take another side. 

Speaking personally, and not for the chamber, I think there are 
instances where public housing is essential, but before going further 
in the program I think Congress should carefully investigate it. We 
have spent some $800,000,000.00 in public housing now. I think the 
Congress should find out how it functions. 

As an individual, I am not here taking one position or the other. 

Senator Taft. We have been trying to do just that, but it is up 
to us to develop a policy and make some recommendation. I think 
the thing that strikes me about the Govermnent organization is this: 
If I were dealing with housing in a city like Cincinnati, for instance, 
I would approach the thing from the standpoint of housing as a whole, 
count the number of houses, find out how many are likely to be built, 
and then see whether that covered the field or whether public housing 
was necessary there. It seems to me anybody dealing with the sub- 
ject would want to cover all phases of it at once. 

I thought Mr. Blandford's argument was a pretty good argument 
as a whole for the perm.anent status of a single unit. 

The fear seems to be that the man who gets in will be in favor of 
public housing or in favor of private housing, and he can't be fair 
between them. 

Mr. Johnston. It is very difficult to put two mothers-in-law in 
with a new bride and have them all get along together. 

Senator Taft. But nearly everybody accepts the theory apparently 
that private housing should do all the housing it possibly can. 

Mr. Johnston. Right. 

Senator Taft. And public housing should only be what they can't 

Mr. Johnston. Right. 

Senator Taft. But that there is a field, from your own personal 
expression of opinion, that private housing won't cover. To deter- 
mine that whole question from a fair judicial standpoint, it seems to 
me you have to know what all the agencies are doing and perhaps 
exercise some influence on them. 

Mr. Johnston. Isn't that primarily a local problem, a municipal 
problem, rather than a Federal problem? 

Senator Taft. Surely it ought to be initiated on a municipal basis, 
but when you do that it is certainly going to be much more difficult 
if you have to deal with three or four different Federal agencies instead 
of one. 

Mr. Johnston. It seems to me it should be approached as a welfare 
problem rather than a housing problem. 

Primarily we are interested in welfare in that instance, more than 
anything else. Alost cities of major size, it seems to me, either have 
now .or are planning to have planning commissions. That would 
solve the redevelopment of the city and pro\<ide adequate housing 
within the city. 


I think it is a whole municipal-planning problem. It calls for the 
planning of elimination of blighted areas which again is a problem of 
solvmg your arterial highway system, your whole method of ingress 
and egress from the municipalities. 

If we can solve that problem, which I think must be solved on the 
local level rather than on the national level, it seems to me we have 
fairly well solved the problem of subsidy housing. 

Senator Radcliffe. Do you feel, Mr. Johnston, you can solve the 
slum problem by the handling of isolated spots only? 

Mr. Johnston. I certainly do not. 

Senator Radcliffe. You feel there should be a comprehensive 
city-wide activity, at least, to accomplish that? 

Mr. Johnston. Absolutely. 

Senator Radcliffe. Do you think it is necessary that the building 
of houses be subsidized in order to meet certain demands after the war? 

Mr. Johnston. I don't think so. Senator. My opinion is that if 
we can have high levels of employment and production and wages, 
and I think there is a reasonable hope of domg that, that the whole 
problem of underhousing will be solved. 

Senator Radcliffe. Wliat would be the sources of private industry 
which will look after a situation of that sort? You can readily see 
that it is not very likely that private capital would get sufficient re- 
muneration from these houses, because of the type of house that must 
be built. If that is so, would you favor some sort of subsidy in that 

Mr. Johnston. If that is so, I would. I am not sure that is correct, 

Senator Radcliffe. I am asking you because I don't know. It is 
a problem we are facing and we have to consider it. 

Do you consider that certain large financial institutions, such as 
insurance companies could be induced to come into this field, accep- 
ting a basis of return which would be relatively small? 

Mr, Johnston. I could say "Yes," but let me answer a little more 

Take a city like New York. I think the city of New York has to 
step in and after planning for its community probably condemn a 
whole area, a very large area, and demolish it, and then I think the 
chances are very good that the city can sell that property after demol- 
ishing and redesigning it, and setting up standards that will be built 
in with community centers and residential areas. The city could 
probably sell that property for private construction without the loss 
of any money, maybe even making a little money, and certainly 
strengthen the finances of the city by giving it more income from taxes. 

When these blighted areas have been redesigned and revamped, I 
think insurance companies and private lending groups will organize 
themselv^es to take over portions of those areas for the construction 
of homes for the low-income groups. 

Senator Radcliffe. It is quite obvious that the return which 
they get for their money would probably be very small. 

Mr. Johnston. That is right. 

Senator Radcliffe. Do you think possibly insurance companies 
or other financial institutions, either because they would be satisfied 
with a small yield from a business standpoint, or because of a public- 
spirited attitude, would cooperate in a program of that kind? 


Mr. Johnston. I think so. All ov'^er America there are groups 
who are interesting themselves in that direction. 

Senator Radcliffe. There are some very encouraging develop- 
ments in that direction, I know. 

Mr. Johnston. That is right, and please remember the interest on 
Federal bonds is very low, and if the insurance company can secure 
that interest, or slightly more, and at the same time perform a well- 
worth-while public service, I think they would be interested in doing so. 

I am not speaking for the insurance companies, obviously. 

Senator Radcliffe. It might make an appeal to them. 

Mr. Johnston. It does definitely now. 

Senator Radcliffe. I know that certain companies have given 
much consideration to this subject and have really made considerable 
headway in attempting to work out such plans. 

Mr. Johnston. I know insurance companies and other financial 
institutions have discussed it in their meetings and are considering 
the problem today, not only on the eastern seaboard but in a number 
of areas. 

Senator Radcliffe. I have come in contact with such cases and I 
believe it could easily become a general policy. 

Now, you referred to F. H. A. returning to its former field. Would 
you care to amplify that a bit, as to just what you mean by that? Do 
you feel that it will be necessary or at least desirable that the Go\ ern- 
ment should continue indefinitely guaranteeing loans? 

Mr. Johnston. I am not an expert on that particular phase of the 
subject, Senator. It would appear to be as though the F. H. A. under 
Mr. Ferguson had done a very good job. 

I think it should continue certainly for a period, and then take 
another look at it. I think all these things are not static. I think 
they are dynamic, and Members of Congress should review them and 
constantly know what they are doing. 

At present, I think it should continue pretty much as it did in the 
pre-war period. 

Senator Radcliffe. I think the F. H. A. has done a splendid job, 
and irrespective of what is to be the condition some years to come in 
the reconstruction period following the war, it seems obvious that for 
the time being and with certain limitations, the F. H. A. would have 
to continue on some such basis. 

Senator Chavez. The conversation has been devoted mainly to 
urban housing? 

Mr. Johnston. That is right, sir. 

Senator Chavez. Have you any views with reference to rural 
housing or the approach to rural housing that you would care to 

Mr. Johnston. Of course, I live in a rural community in the State 
of Washington, Senator, and I think that the rural housing problem 
is almost entirely one of prosperity of the farm. I think that is one 
of the things we have to take care of in the post-war world. Cer- 
tainly the average farmer is reasonably prosperous today. 

Senator Chavez. But isn't the approach different than when you 
are dealing with an urban area? 

Mr. Johnston. Completely different. Senator; no argument about 


Senator Chavez. Yesterday we had some suggestions as to the 
depletion of kimber in the post-war period. You being from the 
West and from a lumber State, can you give us your ideas as to the 
possibilities of that violent idea? 

Mr. Johnston. Of course, there would be many substitutes for 
lumber in the post-war world. I know of a lot of them now that are 
ready to put on the market that we didn't even use previous to the 

Also there are still large stands of timber in Washington, Oregon, 
Idaho, and other places. Our problem now is not one of trees. It 
is lack of labor in the lumber mills and logging camps, and so forth. 

Senator Radcliffe. And transportation? 

Mr. Johnston. And transportation. 

Coming from a lumber State, and knowing a lot of lumbermen, I 
do not think lumber will be a short item in the post-war period. 

Senator Chavez. I stated to the committee yesterday that last 
fall I took a 1,200-mile trip through forests only, in New Mexico, 
Idaho, California, and Oregon. I am sorry I did not get an oppor- 
tunity to go into the State of Washington due to the election coming 
on. But it appears to me that the tremendous virgin forests that 
have not been touched, would do away with the idea that we might 
have a lumber shortage after the war. 

Mr. Johnston. I think that is a fictitious thing. Senator. We 
certainly have one now, however. 

Senator Radcliffe. And which applies to hardwood as well as 
softwoods. Senator Chavez? 

Senator Chavez. That is my understanding. I went through 
forests were you can get 150,000 board feet of lumber per acre. You 
see them 20 miles away, but you have to have access roads and things 
of that nature. 

Senator Radcliffe. What kind of trees would they be? 

Senator Chavez, Fir, mostly. 

Senator Taft. Are the Russians and Finns anxious to sell us some 

Mr. Johnston. The Russians would like to sell some. They have 
unlimited lumber. They told me they had one-third of the remain- 
ing standing timber in the world, and I know I flew over hundreds 
and hundreds of miles of virgin timber in Siberia, seemingly endless, 
occasionally interspersed by a little lake, and that's about all, and one 
of the things they are counting on giving us for our manufacturing 
equipment in the post-war period is lumber and pulp. 

Senator Taft. Is Washington State going to permit us to take 
that lumber? 

Mr. Johnston. Washington State is not very interested in the idea, 
I can assure you. We think, in the State of Washington, that by 
proper methods of control, and we believe we nearly have them now, 
that in Oregon and Washington, we will be cutting the same amount 
of timber we have been cutting, into perpetuity because the Douglas 
fir trees, as you know, grow with great rapidity and the tree is mer- 
chantable in a short length of time. 

Senator Chavez. Thirty j^ears? 

Mr. Johnston. About 30 years. 

Senator Radcliffe. Has the chamber of commerce ever given 
careful consideration to, or attempted to sponsor reforestation plans? 


It has been in the mmds of many people for a long time in this country 
as being a live subject. 

Mr. Johnston. We have been very much interested in it and have 
gone even further and feel there should be savings in other natural 

For instance, we feel the operations of coal mines have been ex- 
tremely wasteful, and that there should be some legislation controlling 
that type of natural resource, and we feel, in the chamber of commerce, 
that there are two great resources in America, our human resource, of 
course, and the natural resources which naturally are irreplaceable. 

Senator Buck. Was your attention attracted to anything the 
Russians have done about housing? 

Mr. Johnston. In Russia everything is owned by the State. 
With few exceptions, everything is owned by the State. 

Senator Buck. They still have slums? 

Mr. Johnston. Housing conditions in Russia are very, very bad. 
It is due, maybe, to the war. 

Of course, a large percentage of Russians had to move out of their 
homes into eastern Russia. The Ukraine and almost all of the area 
around Moscow were such that they were made homeless. Housing 
conditions are very bad, with three and four families living in a room 

What the housing conditions were prior to the war, I, of course, do 
not know. But I know Russia has a tremendous plan for housing in 
the post-war period. 

I saw the plans. They trotted them out and showed them to me. 
Many are very attractive. A bungalow type, and they have de- 
veloped them to meet the needs of the community in which they pro- 
pose to erect them. In the north they have used timber, some log 
homes, very attractively done. 

In the south they have used brick and stone. 
' Their housing program is a large one, but I assure you it will be 
many years before Russia will have anything approaching even the 
inadequate housing conditions which we feel we now have in the 
United States. 

They have a tremendous job ahead of them. Today they are 
living almost exclusively in apartment houses, very few homes, in the 
big cities especially. 

Senator Buck. Everything is Government-owned? 

Mr. Johnston. Everything is Government-owned. The Govern- 
ment owns all means of production, whatever they may be, whether a 
plow, or factory, or apartment house. It is all owned by the state, 
with few exceptions. - 

You can buy a home in Russia and own your furniture under certain 
circumstances, but the land belongs to the state and the Government 
tells you when you can sell it and for what price you can sell it. 

But in the post-war period, I was informed, they are going to 
encourage private home ownership, and there were signs in various 
cities in Russia announcing that in the post-war period the Govern- 
ment would loan money for the purchase of private homes for an 
individual, or for the building materials essential to build a home 
for the private individual, and I got the very definite impression, 
although home ownership now is very scanty and found in very few 
places, that nevertheless in the post-war period home ownership will 
be encouraged in Russia. 


Senator Radcliffe. Mr. Johnston, home ownership in Russia has 
never existed to a large extent, I imagine, even before the present 
regime. I imagine the percentage of homes owned ■ 

Air. Johnston. I think larger than you think, Senator. The 
kulak, of course, owned his ground. 

Senator Radcliffe. I had in mind mainly the large estates. 

Mr. Johnston. The kulak was the small farmer, and many of 
them owned their land, and a good many homes were owned in the 

It is obvious that you are right in this, that home ownership in 
Russia never, in the czarist days, approached what it is in the 
United States, and in my opinion a great many more people in the 
United States should own their homes. 

Senator Chavez. I think that should be the basis of legislation. 

Mr. Johnson. I want more and more in the middle class that own 
their homes and other good things of life, too. 

Senator Radcliffe. That has been the basis of a system which 
has veen very helpful to the city of Baltimore. The two-story home 
built on the ground-rent system has been very helpful in developing 

Senator Taft. Have you anything else to add? 

Mr. Johnston. No, Senator, I have not. 

Senator Taft. Thank you very much, Mr. Johnston. 

(The prepared statement of Mr. Johnston is as follows:) 

• Liquidation of War Housing 

(Statement by Eric A. Johnston, President of the Chamber of Commerce of the 

United States) 


Presented Before the Senate Subcommittee on Housing and Urban Redevelopment 
of the Special Committee on Post-War Economic Policy and Planning, February 
7, 1945 

I am not attempting in this statement to cover all the important problems of 
housing and urban development which will face us after the war. Your com- 
mittee is obtaining suggestions, among others, from important trade associations 
in the home building and home finance fields. Many of these organizations are 
members of the national chamber. All of them, I believe, are in contact with 
chamber committees which have these important subjects under active study. 
Satisfactory and acceptable answers will only come from careful consideration and 
through discussion. Your committee is making an important contribution to 
that end. 

The board of directors of the Chamber of Commerce of the United States 
believes that the war organization of the Federal Government's housing activities 
is not suitable for permanent, peacetime operations. This emergency grouping 
of Federal housing activities in the National Housing Agency was for the purpose 
of programing and building houses for war workers. This important objective 
has been very largely accomplished. A good job has been done by the National 
Housing Administrator and by the private home-building industry. This was 
accomplished in the face of building materials and equipment shortages and the 
difhculties inherent in the changing demands of our vast all-out war effort. But 
neither the programing of houses to be built by private builders nor the building 
of war houses by the Government will be necessary activities when the war is over. 

The National Housing Agency was established in February 1942 by Presi- 
dential Executive Order 9070, under the authority of title I of the First War 
Powers Act, 1941. This war agency brought under one direction all activities of 
the Federal Government directly affecting in any way war housing, including 
(a) the Federal Housing Administration and its functions, powers, and duties, 
including those of the Administrator thereof; [h) the Federal Home Loan Bank 
Board and all the functions, powers, and duties of the Board and of its members. 


This Board (1) charters and supervises Federal savings and loan associations; 
(2) supervises 12 regional home loan banks; (3) serves as the board of directors of 
the Home Owners' Loan Corporation; (4) serves as the board of trustees of the 
Federal Savings and Loan Insurance Corporation, (c) The LTnited States Hous- 
ing Authority and its functions, powers, and duties, including those of the 
Administrator thereof. 

This sweeping reorganization replaced the Federal Home Loan Bank Board of 
five members with a single Federal Home Loan Bank Commissioner. The 
Federal Housing Administration continued as formierly under a single head. The 
United States Housing Authority was renamed the Federal Public Housing 
Authority, and given responsibility for spending Lanham and other available 
funds to build war houses and to reconvert old houses to war housing uses. 

The functions of the Federal Hr)me Loan Bank Board continued under the new 
National Housing Agency much as before, with adaptations of course to various 
wartime measures and conditions. The Federal Housing Administration sus- 
pended most of its normal activities and undertook through a new title VI added 
to its act to insure against loss the private builders who built war housing for sale 
or for rent. The L^nited States Housing Authority became the construction and 
operating arm of the new National Housing Agency. It was thus given an 
important war job, which has also served to keep alive its organization. 

Presumably the Federal Home Loan Bank Board and the Federal Housing 
Administration will be reestablished as relatively independent administrations 
under the Federal Loan Agency when Executive Order 9070 expires, as it will 
under the terms of title I of the First War Powers Act, 6 months after the end of 
the national emergency. If this is not the case, either because of the responsi- 
bilities for liquidating war housing placed o\\ the National Housing Agency by 
Congress or for some other reason, then action should be taken at once by Con- 
gress to see to it that these Federal home finance agencies regain their independent 
pre-war status. They serve the needs of private enterprise in the field of residen- 
tial building, which will be of paramount importance to the country's economy 
following the war. They should not be handicapped by being made a part of 
either a war housing liquidation activity or of a subsidized rental Government 
housing activity. 

The board further believes that the activities of the National Housing Agency 
in connection with the disposal of permanent and temporary war housing, and 
such of its organization as may be engaged in these activities, should be trans- 
ferred to an appropriate liquidation agency in the Treasury Department. All 
other Federal agencies in the housing field which are in process of liquidation 
should also be transferred to this proposed Treasury liquidation agency, including 
the United States Housing Corporation, the Home Owners' Loan Corporation, 
the Defense Homes Corporation, and all Government agencies charged with re- 
sponsibilities in connection with defense and war public liousing which may still 
be legally in existence and in process of being liquidated. 

Presumably the United States Housing Authority will resume its pre-war status 
in the Federal Works Agency on the expiration of Executive Order 9070. 

The Veterans' Administration was recently charged by Congress with helping 
veterans to purchase homes through the customary private agencies. This Ad- 
ministration is outstanding for the efficient and able way it has administered 
various services for veterans. There is no reason to believe that it will not con- 
tinue this fine record and meet adequately its new and greatly expanded responsi- 
bilities. Although it injects another Government agency into the Federal Gov- 
ernment's activities in the housing field, it would appear that the only practical 
way to handle such assistance to veterans is through the same agency which 
provides them with other aids and services. 

The chamber board's recommendations contemplate that the following Federal 
agencies will again be grouped, as previously determined after careful study by 
the administration and by Congress under the Reorganization Act of 1939, under 
the Federal Loan Agency; Federal Housing Administration, Federal National 
Mortgage Association, RFC Mortgage Company, Federal Home Loan Bank 
System, Federal Savings and Loan Insurance Corporation, and, in addition, the 
Reconstruction Finance Corporation and its other operations outside the home 
finance and mortgage fields. 

The chamber board feels that its recommendations propose a first important 
step in establishing business and public confidence in the future of the private' 
home financing and home building industry, to provide the Nation with its indi- 
vidual family homes and with its other needed residential buildings. 

Senator Taft. We will now hear from Mr. Morton Bodfish, of the 
United States Savings and Loan League. 



Senator Taft. Mr. Bodfisli, you may proceed. 

Mr. BoDFisH. Mr. Chairman, I am accompanied this morning by 
Mr. Henry P. Irr, who is the vice president of our organization, who is 
here, first because of interest; and second, because our president, Mr. 
W. M. Brock, of Dayton, had to return on account of business engage- 
ments. I also am accompanied by Mr. Horace Kussell, our general 

Needless to say, we are appreciative that the committee and its 
able chairman have given us an opportunity to appear and present our 
views and some suggestions based upon our experience in the home 
financing field. 

For over half a century, or from 1892, the United States Savings and 
Xioan League has been a Nation-wide trade association of the local 
thrift and home financing institutions. Our membership is composed 
of savings and loan associations, building and loan asssociations, co- 
operative banks in the New England area, and homestead associations. 

Our 3,548 .me?nbers have total resources today in excess of $6,- 
000,000,000. The institutions "are located in every State of the Union, 
the District of Columbia, Hawaii, and Alaska. Also affiliated are 47 State organizations of these local savings and home financing 

We have in excess of 7,000,000 saving or investing members. Our 
institutions are lending in excess of $1,000,000,000 a year for financing 
hom.e building, home pin"chase, and home maintenance. That is a 
conservative figure, because our 1944 figures indicate our loan volume 
was in excess of one and a half billion dollars. 

We are tremendously interested in the recommendations of this 
committee insofar as they lead to Federal policy, for the reason that 
we are the only institution whose entire and exclusive business is con- 
fined to the field of home mortgage credit and home financing. We 
have no alternative fields in which we are allowed to operate. We 
are the largest single source of home financing funds, and we do over 
one-third of the home financing of the Nation. 

We feel these institutions have been the backbone of the home 
ownership movement in the country for over a century. We have 
always used the long-term amortized loan, and there are literally 
hundreds of cities which have been built largely tlirough the savings 
and loan operations of these financial cooperatives. 
|. Of course, in the war period we have devoted much of our work and 
activities to the war needs. Our institutions have purchased over one 
and three-quarter billion dollars' worth of War bonds; and, in coopera- 
tion with the Treasury Department, we sold over $1,250,000,000 of 
scries E bonds to our savings members. 

Senator Taft. Mr. Bodfish, what are the relative sizes of the other 
home mortgage lending institutions? You say you cover about one- 
third. You do not include commercial banks and you do not include 
the mutual savings banks? 

Mr. Bodfish. Based on table 3 attached to the statement, you will 
get a picture of the volume percentagewise based on the mortgage 
recordings that are attached to the statement. Senator. 

Now, insurance companies have a large mortgage account, but much 
of it is in large unit business and commercial properties. 


In home loans in 1944 we did 34 percent; the insurance companies 
did 5.6 percent; banks and trust companies, 19 percent; mutual sav- 
ings banks, 3.6 percent — that group operates largely in apartment 
properties and the like — individuals, 24.6 percent, and miscellaneous 
mortgages, 13.3 percent. 

Our interest in the Federal agencies is very substantial, because our 
member institutions and their investors are very vitally affected by 
these agencies which deal with real estate credit. 

To illustrate our interest, our institutions todav own over 
$64,000,000 of the stock of the Federal Home Loan Bank System, 
which, as you know, operates on a self-sustaining basis. We pay all 
the premiums of the Federal Savings and Loan Insurance Corpora- 
tion system, whicli premiums are several times the losses and expenses 
of the Corporation, and which I hope will be adjusted if the bill of the 
distinguished Senator from Ohio receives favorable consideration. 

Fourteen hundred and sixty-five of these institutions are super- 
vised exclusively by the Federal Government, and 992 are supervised 
jointly with both State authorities, and in connection with these 
activities we pay the entire cost through examination fees. 

In the depression and immediately following, the Treasury Depart- 
ment and Home Owners Loan Corporation invested approximately 
$275,000,000 in the shares of our institution. That was following the 
financial crisis, znd the objective was' to get a flow of mortgage credit 
when it was so sorely needed. 

We are very proud of the fact that not only has the Government 
not lost any money on these investments, but over 90 percent of it has 
been returned to the Govermnent, and we expect the remaining 10 
percent will be paid within the next 12 to 24 months. 

This repayment has all been in advance of the schedule laid out by 
Congress, and the Government has had approximately 3 percent per 
annum on its investment in these shares during the entire period in 
which they were invested. 

I mention these things, not only to indicate our substantial interest 
but also because we have been committed in our dealings with the 
Federal Government that these agencies were created at our sugges- 
tion, are used almost exclusively by our institutions and that it is 
our duty to pay our own way. 

We think it is appropriate for Government, either State or National, 
to provide the vehicle, legislation, the framework, or the agencies, but 
we want to be consistent in our claims of being local private enter- 
prise institutions and therefore that we ought to pay our own way. 

We are optimistic about the post-war period and expect our insti- 
tutions to do approximately 50 percent or more of home financing 
involving home building, home owning, and home modernization, if 
local conditions and national policies permit. 

We strongly feel, gentlemen, that the best and most basic policy 
that should be followed in the financing of home building is to follow 
the thought Senator Chavez expressed a little earlier of making uni- 
versal home ownership our goal, and we think that home ownership 
can be best served and most widely attained if it is financed or served 
by locally owned or locally managed private enterprise institutions, 
such as the institutions t-hat I have the honor to work with and 

We desire to go just as far as possible in this post-war period in 
connection with emplo3'ment and home building, without the use of 


Government funds and guaranties. We want not only to provide 
long-term credit at lower rates than have been found in the past, but 
we also want to provide intermediate credits for the financing of 
repairs and maintenance, and we are perfectly willing to go as low as 
possible on the interest-rate situation, as long as we can provide a 
2-percent to 3-percent return to our 7,000,000 investors, which seems 
to us necessary to attract a flow of savings capital from small investors. 
We feel we can't go too far below the Government bond rate on the 
small bonds in obtaining funds from the public. 

Now, we have only two questions we wish to discuss with the 
committee. We want to discuss the set-up of the Federal agencies, 
and then we want to discuss what we consider the positive program in 
which our local institutions can be helpful. We feel the first step is to 
restore the agencies which our institutions support and by which they 
are regulated to the organizational and operational basis which the 
Congress originally established but which was suspended by Executive 
Order 9070, dated February 24, 1942. 

The elimination of the Federal Home Loan Bank Board under 
authority of the First War Powers Act placed all of the administra- 
tive, delegated legislative and quasi-judicial powers of the Board in 
a single Commissioner and made this Commissioner subject to the 
control and direction of the ncwlj created National Housing Adminis- 
trator, whose organization was then, and still is, concerned primarily 
with the construction and operation of war housing and public housing. 
We urge this committee to recommend to the Congress that the 
Federal Home Loan Bank Board be promptly reestablished as 
originally created by Congress, for the following reasons: 

1. It seems clear to us that almost all housing in the country w^as 
privately built, is privately owned, and has been privately financed. 
These activities involve thousands of local institutions, businesses, 
and individuals, and we don't believe the best results will be gaine^ 
by placing the Government agencies and policies affecting them in the 
control of an agency or a group committed to expanding the Govern- 
ment in the housing business. 

I might say incidentally as to this question that the Senate Com- 
mittee on the Judiciary has raised doubts as to the legality of Execu- 
tive Order 9070 insofar as the functions and activities of the Federal 
home loan bank are concerned. 

As you know, the Federal War Powers Act of 1941 authorized the 
redistribution of functions among executive agencies and govern- 
mental corporations only so far as matters relating to the conduct of 
the present war are concerned. 

We don't feel we are directly involved in the conduct of the war, 
and there is a legal point that involves some long-term dangers to the 
present situation. 

When Executive Order 9070 was promulgated, officials of our 
savings and loan organizations raised no objection whatsoever, first, 
because of the war emergency, and second, because of the clear 
understanding that at the end of the war period these agencies would 
return to their statutory form of organization under the Federal 
Home Loan Bank Board and under the Federal Loan Agency. 

Testimony presented by the officials of the National Housing Agency 
before this committee reveals that this is not their intention, but, on 
the contrary, they advocate changing this temporary set-up into a 


permanent consolidation. This, we think, is unnecessary, uneco- 
nomical, and inefficient, aside from beino; inconsistent with the home 
ownership and private enterprise ideals of our Nation. Therefore, we 
think the mixing of these two things, as far as management and control 
is concerned, is not in the public interest. 

To be more explicit, the present National Housing Agency set-up 
places the agencies concerned with the problems of our institutions 
under the supervision and direction of a superagency, the policy- 
making officials of which are concerned primarily with war housing 
and with promotmg a permanent public housing program ultimately 
involving the expenditure of tens of billions of dollars of the taxpayers' 
money. We consider their public housing program entirely incon- 
sistent with and dangerous to the home ownership and private credit 
service objectives for which our mstitutions are established. There- 
fore, we do not consider it a proper or equitable policy that the agencies 
and officials dealing with our business should be controlled, supervised, 
and directed by an administrative agency which has adopted a policy 
whicli we consider contrary to our interests. In our judgment, the 
two programs — public and private — for providing homes for the 
American people involve a basic conflict which should be dealt with 
by the Congress from time to time rather than by an Executive 
agency whose officials and key personnel seem to be aggressively com- 
mitted to a public housing program. 

Our Federal Home Loan Bank System is a reserve credit system^ 
operating under a board and serving local savings and home-financing 
institutions, similar to the way the Federal Reserve Board and the 
Federal Reserve Bank System serves commercial banks. The Federa;! 
Savings and Loan Insurance Corporation protects the accounts of 
savers and investors up to $5,000, much as the Federal Deposit Insur- 
ance Corporation insures bank deposits up to $5,000. The Federal 
Board charters and supervises 1,465 local savings and loan associ- 
ations, much as the Comptroller of the Currency charters and super- 
vises banks. These are financial and credit operations serving local 
private enterprise institutions. They are self-sustaining, and they 
should not be identified or consolidated with agencies which are active 
in the public housing field. 

Under the consolidation, and Executive Order 9070 used the word 
"consolidation," our statutory board was not only abolished and our 
agencies put under the control and direction of this new agency 
created by Executive order, but we are required to help finance and 
pay the administrative expenses of the new operation, and, at the 
present time, our cost is $125,000 a year, which is not inconsiderable 
in an operation we are trying to keep on a self-sustaining basis. 

I think one of the things we feel most particularly about is that 
the present N. H. A. arrangement, involving the consolidation and 
direction of our agencies, which preclude the officials of our agency — • 
and this is true also of the Federal Housing Administration — from 
dealing directly with Congress or the Bureau of the Budget and else- 
where, and all negotiations regarding legislation and the like move 
tlu-ough the N. H. A. picture, and we think this is the sort of an arrange- 
ment that is a handicap to the officials of our agencies and the officials 
of the F. H. A. in the responsibility to advance and promote their 
programs in serving private enterprise and promoting home ownership. 

91183—45 — pt. 15 2 


This is not just a present problem. We are also thinking of 
long-term Government organization. 

I would not be honest if I didn't say we have had the most courteous 
treatment from the officials of the National Housing Agency during 
the 3 years we have been under their jurisdiction. We don't see, 
however, that in the 3 years we have been under their jurisdiction 
that the administrative expenses of our own agencies have been 
decreased — in fact, they have not — nor that the number of personnel 
has been decreased. 

Many of our people feel that our legislative requirements have not 
been sufficiently understood and emphasized before the Congress by 
the officials of N. H. A., and we also feel that some matters of deep 
concern to our business have not received proper consideration. 

We agree that communities and private enterprise should be better 
informed about the housing market, and that there should be more 
technical research in the house building field. 

However, the need, it seems to us, is at the local and community 
level rather than in Washington. Whether the local planning Com- 
missions, municipal governments, the pi-oducers of building materials, 
and the planners and buildings of homes should all turn to the Federal 
Government for market analysis and technical research seems to us to 
be a debatable policy. 

The dangers we see in the policy are, frankly, that if the Federal 
Government expands and expands in this field, it may evolve into a 
situation in which the Federal Government will determine what type 
of houses shall be built, where and when they shall be built, who shall 
build thein, whether they should be publicly or privately owned, and 
who should occupy them. Those are the powers that are being 
exercised, of necessity, under the war program, and we feel that the 
disposition to continue the activities of planning and the building 
activities on a national scale of controls is neither wholesome or desir- 
able in the building of homes and the financing of homes. 

The best statement of the case against a permanent consolidation 
under N. H. A. or a superagency was made recently by a prominent 
administration official. I hope the committee will pardon the quota- 
tion. It will only take a minute. 

There is hazard in the superdepartment. It produces at the administrative 
top a dihited knowledge of organization operations, and correspondingly an ineffec- 
tive point of appeal or contact with community and private enterprise groups con- 
cerned with the functions of the agency. The superdepartment thus tends to 
break down into a system of virtually independent bureaus ttieoretically reporting 
to one top man, creating the semblance of responsibility without real responsibility, 
the pretense of efficiency without real efficiency, and an outward show of unity 
without real unity. 

The resort to the superdepartment is sometimes an evidence of sterility in 
administrative thinking. There are those who identify such objectives as economic 
control or job production as a theme of Federal organization and who propose to 
organize a tigHt monolithic structure around each of them. Personally, I have 
always thought that we should start at the bottom in grouping related functions 
and gradually work our way up until we exhaust the merit of administrative con- 
solidation. At that point we move into an area of higher mathematics. 

This statement is from Mr. Blandford's presentation to this com- 
mittee at the opening of these hearings, and how this statement could 
be made and at the same time urge a permanent consolidation of 
agencies which the Administrator of F. H. A. states are already larger 
than two regular Government departments, I can't understand. 


Quite aside from the three constituent agencies which will continue 
to function as established, the administrative layer wliicli has been 
interposed between ourselves and Congress and the other departments 
of Government, is already a $3,000,000 a year operation with a large 
legal staff and publicity or information staff, research facilities, and 
that sort of thing. 

We also feel that the fact that our board had substantial delegated 
legislative powers and quasi-judicial powers is rather important. 
Much of the work of our board involves the making and interpre- 
tation of regulations. The statutes under which our Federal savings 
and loan associations operate only take about 2 pages in the law books, 
but there are 50 or 60 or 70 pages of administrative law. 

This board has powers of initiating and conductmg receiverships 
and a whole variety of regulatory activities, as well as quasi-judicial 
activities, and we don't want to see these powers exercised by any 
one man at any time. 

We believe that if the Alembers of Congress thoroughly understood 
the situation, they would be willmg to separate the financial and 
private enterprise agencies from the war and public housing activities 
as soon as possible. 

We prefer, of course, an independent board after the pattern of 
the Federal Reserve Board, and the kind of board which had been 
established by the Congress. However, our agencies operated under 
the coordination of the Federal Loan Agency prior to February 24, 
1942, and our return to that status together with the F. H. A. would 
be satisfactory to us. 

Now, to turn to our positive program. 

We did not attempt, in our statement, to deal with several of the 
questions that you raised in your letter inviting us to appear. We 
prepared a rather comprehensive statement in response to the com- 
mittee questionnaire in the middle of last year. That has been in 
the hands of the committee and it does deal with these other subjects 
and we would like very much to see it a matter of public record and 
it does give our view on a variety of things, such as the termination 
of controls, public housing, and the like. 

I think that statement has been examined by the advisers of the 
committee and I have a copy of it here, if it would be appropriate for 
the record. 

Senator Taft. We have all of those statements and have not 
decided what we will do with them. Do you wish to go on here and 
cover the rest of your statement? 

Mr. BoDFisH. I would like to cover the rest of the statement. 
We would like to present what we consider some positive suggestions 
that will assist our savings and loan associations and cooperative 
banks in financing home construction and advancing home ownership 
in the post-war period. 

Again, I might say, we have $7,000,000,000 in our institutions 
right now. We have more cash and Government bonds than at 
any time in our history. We have about 25 percent of such securities 
and cash. 

But even more important, we think, we have a thrift program in 
these institutions that will continue to produce large sums of money 
right out of the local communities which can be reloaned in the same 
local communities to finance the building and maintenance of homes. 


So our suggestions here deal largely with matters that we think 
will help expand home building and home building employment in the 
post-war period. 

Needless to say, from the previous discussion, the first thing we 
would like to see is the immediate reestablishment of the Federal 
Home Loan Bank Board, including the Federal vSavings and Loan 
Insurance Corporation as an independent agency as provided by 
statute, or under the coordination of the Federal Loan Agency. 
This will, of course, require congressional action. 

We would like to see property improvement and home equipment 
loans authorized for our institutions. The Congress can deal with 
the situation of about 1,500 federally chartered institutions and 
associations in the District of Columbia. Without action by Con- 
gress they cannot make property improvement and home equipment 
loans without costly and cumbersome title and mortgage procedures. 

We think also that property-improvement and home-equipment 
paper should be recognized as appropriate collateral in the Federal 
Home Loan Bank System so that several thousand State-chartered 
associations would be encouraged to participate in this program. 

Senator Taft. This would be like title 1 loans without security? 

Mr. BoDFisH. I would say yes, except we have a broad approach 
and proposal to it. We feel that a local home loan or financial insti- 
tution management should be given authority to make unsecured 
property improvement and home equipment loans whether they see 
fit to insure it under title 1 or not. 

In that connection we think we can give the small home owner a 
better rate and a more feasible repayment term. We think the loans 
can be made for a somewhat longer period of time than under title 1. 

Senator Taft. Would you authorize unsecured property improve- 
ment loans, even though there is a mortgage ahead on the property? 

Mr. BoDFisH. Yes; in some cases. If it is a wise improvement and 
it might improve the value of the property. There are 11,000,000 
owned homes in the country, and about half of the people own them 
free and clear of indebtedness. We see no reason why we should not 
serve those property owners with a $1,000 loan • 

Senator Taft. But there might be some question about many of 
the home financing institutions loaning money for the improvement of 
homes on which somebody else had a mortgage. 

Mr. BoDFiSH. We would have to proceed at our peril, and I think 
retribution would be swift and costly. 

The great post-war need, of course, is the 27,000,000 nonfarm homes, 
most of which have not had much improvement or maintenance in the 
last 4 or 5 years. 

Senator Radcliffe. If the property were worth $10,000 and the 
mortgage $2,000 it would seem rather unreasonable that the man be 
deprived of credit. 

Mr. BoDFisH. In the main. Senator, we want to loan them any 
amount, say, from $500 to $1,000. Sometimes we can do it under 
an existing covenant, but as a rule today we have to go through a title 
search, have papers drawn, and all the paraphernalia involved in a 
20-year mortgage. It is too costly, and consequently we don't render 
much service in that connection. 

Senator Radcliffe. When you speak of equipment, would that be 
unsecured too, or subject to chattel mortgage? 


Mr. BoDFisH. It would vary in the States. In the main, with the 
kind of people we deal with, owner-occupants, we are willing to work 
on an unsecured basis. We have had a century of experience dealing 
with folks who occupy their own homes, and we think the character of 
those people is 50 percent of the loan transaction, and in the bulk of 
the business, we would not hesitate to do it without chattel mortgage. 

Senator Chavez. You referred to equipment that would be at- 
tached to real property, such as plumbing or anything that would 
attach to the real property. Is that what 3^ou have in mind? 

Mr. BoDFisH. Senator Chavez, we want to include that kind of 
equipment, but the law around the country is very mixed and varied 
on that situation, and theoretically — take my home State of Illinois — 
if it is an electric-light fixture, it is part of the real estate. 

Senator Chavez. That is what I had in mind. 

Mr. BoDFisH. But if it is a gas fixture which someone can screw 
a cap on, it is personalty. 

Senator Taft. You are referrmg principally to refrigerators and 

Mr. BoDFiSH. To finance completely equipped home purchases 
rather than just house purchases. It is as necessary for them to have 
kitchen equipment and things of that kind. We thmk it is better for 
the borrower to have it in a single transaction, one monthly payment, 
because he is less apt to get beyond his depth and it is more apt to be a 
wise and sound transaction within his means. 

But we would like to have authority up to $1,500 or $2,000 to pro- 
ceed at our own peril if it was a fixture that was theoretically a part 
of the real estate or if it is personalty. 

Senator Radcliffe. Your vice president, Mr. Henry Irr, knows 
that in Baltimore we have in the past been able to permit or foster 
character loans under certain conditions which have turned out very 
satisfactorily in many cases. 

Senator Taft. What do you think your shareholders will think, 
going back to the small building and loan associations that I am 
familiar with? They are saving their money and investing in mort- 
gages. This steps into a field closer to the general banking business. 
Do you think they will generally approve? 

Mr. BoDFisH. I think they will generally approve of our serving 
the home owner. 

You take the institutions with which you are familiar. They 
don't know much about percentages and fancy appraisals and the 
like. The main thing they know is the character of the borrower- 
applicant — that he has got a home and is going to live in it and has a 
frugal wife, and he pays his bills — and the mortgage security is taken 
in case there is a death in the famil}^ or the unexpected something that 
happens only in 1 transaction out of a hundred or 500. 

I think our people would be very concerned and would not be in 
agreement with a general personal loan business. But we don't 
want to loan $100 to a stenographer to buy a catskin coat, or some- 
thing of that kind. We do want to deal with property owners for all 
types of property improvement and property equipment without 
restriction as to whether we will take a mortgage or just the man's 

Senator Buck. Do you make character loans now? 


Mr. BoDFisH. Not without collateral at the present time. There 
are a few States where we can make title 1 loans, but the Federal 
chartered institutions cannot make those, and the bulk of the State 
chartered companies arc not able to do so either. 

Senator Buck. I understood you to say that to get the Home Loan 
Bank Board back as an independent agency it will take congressional 

Mr. BoDFisH. We would prefer it being done promptly by congres- 
sional action. 

Senator Buck. Won't it naturally revert back when the War 
Powers Act has expired? 

Mr. BoDFisH. The emergency, I think, was ended in 1924, in 
World War I, and we want to get out of captivity sooner this time. 

Senator Taft. There will have to be legislation, because there v:i\} he 
a dozen other agencies that might spring into existence suddenly, if 
we don't do something. 

Mr. BoDFisH. When you are dealing with titles, regulations, and 
that sort of thing, I think there should be a statutory transfer and 
validation. I think serious legal questions will arise sooner or later. 

Senator Radcliffb. Mr. Bodfish, I assume from what you say 
that you think there should be a limit not onl}^ as to the amount of 
any individual loan but also on the aggregate of the loans that any 
institutions could make. 

Mr. Bodfish. That is right. 

Senator Radcliffe. How do you feel in regard to the matter of 
general supervision of loans of that sort? Of course, loans made by^ 
banking institutions are subjected to a certain amount of regulation 
and supervision. Do you feel a similar degree of regulation and super- 
vision would be necessary and desirable in your case? 

Mr. Bodfish. Our organization was founded to establish super- 
vision of these financial institutions back in the 1890's when some 
promoters took the local savings loan idea and traded on the stability 
of the institutions by Nation-wide promotion and stock selling. 

We have always believed in supervision, although part of our 
activities now is to keep supervisors supervising and out of manage- 
ment. We would expect regular supervision of unsecured property 
improvement loan business just like the balance of our business is 

We have no institutions in the Home Loan Bank System that are 
not subject to supervision. 

I think the sovereign State of Alaryland is the only remaining 
citadel of supervisory independence, because in all the other States 

Senator Radcliffe. Our building and loan institutions in Maryland 
have been very helpful and really vital. 

Mr. Bodfish. We boast they built the city of Baltimore. I don't 
know if you agree with me. IVIr. Irr's institution and all of the feder- 
ally chartered institutions are subject to supervision. In all State- 
chartered insured institutions around the country the State authorities 
supervise and examine them and the Federal authorities also. 

Senator Taft. That is true of all the State banks? 

Mr. Bodfish. Except Mr. Crowley's F. D. I. C. policy has been to 
depend on the State's field and supervisory examination work, and 
for the inspection the institution, its securities and accounts, and they 


have relied largely on State examiners. I think our supervisory 
people are moving in that way. 

Senator Buck. Your institutions are not supervised in any way now, 
are they? 

Air. BoDFisH. The State chartered are inspected and supervised in 
every State in the Union except in Alaryland. They are examined 
the same as banks and insurance companies are. 

Senator Buck. By the State authorities? 

Mr. BonnsH. By the State authorities. Then there are 1,500 
savings and loan associations chartered by the Federal Government. 

Senator Buck. Those are not inspected? 

Mr. BoDFiSH. They are inspected and supervised by the Federal 
Government, and the State associations are examined by the States. 

Going a little further w^ith this property- improvement question 
brings us to veterans' loans. We think there should be legislation per- 
mitting full participation to federally chartered and District of 
Columbia associations in the veterans' loan program. 

Also w^e would like to see liberalization of the Home Loan Bank Act 
on this subject for the benefit of all members, including State-chartered 
savings and loan associations throughout the country, recognizing 
veterans' loans as prime collateral. 

At the present time we cannot legally make the second loan on top 
of an F. H. A. loan authorized under section 505 as contrasted to sec- 
tion 501, nor the guaranteed property improvement loans to veterans 
without costly procedure. 

We would like to see the Congress also render some assistance with 
regard to the down payment, by legislation, and necessary regula- 
tion. It should be possible to permit families in the post-w^ar period 
to pledge series E War bonds in lieu of a necessary cash down payment 
to build or purchase a home. Owner occupants would thus retain 
their bonds to maturity, receive their full interest return and then 
might use them to reduce the indebtedness on their home purchase. 

We feel that the Veterans' Administration set-up provides very 
liberal financing for the returned veteran, as it should. We are 
entirely in accord with that program -and are cooperating with it 
thoroughly. It might be well, however, to think of the war workers 
and other citizens at home who have accumulated series E bonds 
and might want to use them as a pledge in lieu of the down payment, 
and we would rather do it m a w^ay in w^hich the borrowers didn't 
cash their bonds but held them to maturity and then applied them 
to the mdebtedness, or reinvested m savings bonds. 

Senator Taft. Did you skip No. 4 on purpose? 

j\Ir. BoDFiSH. I didn't mean to. No. 4 is low down-payment loans. 

We believe that private enterprise low down-payment loan plans for 
lending money on long-term mortgages to occupying home owners 
would enable a lot of citizens to build and acquire homes that do not 
now have the customary 20 or 25 percent down payment. We would 
like to see these plans authorized with appropriate safeguards and 
cash dow^n payments as low as 10 percent. 

Such loan plans have been in operation in Great Britain for about 
two decades. As a matter of fact, they sold the bulk of their small 
homes down there at 25 pounds or 30 pounds down payment, which is 
$125 to $150 on a $2,500 to $3,000 home, namely, about a 5-percent 
down payment. 


We believe under proper safeguards of making sure that the cash 
down payment is real, and does not represent paper, or a note, but 
represents savings combined with owner occupancy and other safe- 
guards, that this can be done and facilitate home building and home 

Senator Chavez. Is the general feeling among the average citizen 
one that he would rather deal with a private institution than with an 
agent of the Federal Government? 

Mr. BoDFisH. Senator Chavez, we think so when the deal is com- 
parable. In other words, we feel that if we can render as good 
service, be prompt, at as low rate, and for approximately as long a 
term, that the local citizen would much rather deal with an organiza- 
tion right in his community — managed by a group of citizens in his 

Senator Chavez. Who probably knew him? 

Mr. BoDFiSH. Who probably knew him and his wife and his father, 
when the house was built, who is building the new house, and the like. 
I think that sort of set-up can go further with safety than a stand- 
ardized Nation-wide loan plan or an outside lender. 

Senator Chavez. There is no particular interest in the community 
and no interest in the individual he is dealing with? 

Mr. Bodfish. And it is a long way to Washington. 

Senator Chavez. It is a long way from New Alexico to Dallas, 
Tex., where we would have to go to pay a home-owners' loan. We 
would rather deal with someone close by. 

Mr. Bodfish. We would rather have them do business with our 
institutions in New Mexico, and I think the people in New Mexico 
have enough savings to furnish the money. 

Senator Chavez. I think that would be preferable in any case 
where it could be handled in that way. 

Senator Radcliffe. You referred to Baltimore awhile ago. I 
think one of the factors which made the old building and loan asso- 
ciations so successful in Baltimore was the fact that the manager and 
board of directors usually lived very close to where the property was 
situated and knew the individual seeking a loan. 

The personal contact and the fact that they did live near there were 
factors which very oiten helped them acquire opinions which they 
could not have acquired otherwise. 

Mr. Bodfish. They did a credit analysis that was much more 
thorough and effective than they realized. It didn't have a lot of 
forms and formulas, but it was very excellent, and that is one of the 
reasons we have always adhered to the principle that our institutions 
should operate in a community and not all over the country. 

Senator Chavez. Wasn't that the basis of the moral risk that you 
spoke about a little while ago? 

Mr. Bodfish. That is right; and, Senator Chavez, if you are right 
on the man and his family and foiebears and the like, it doesn't make 
much difference whether you lend him 66% percent or 91% percent or 
80 percent. 

I was talking to ]\Ir. Jones one day. In his early days he built a 
lot of houses and financed them. 

I asked about the percentage question, and he said: "The only 
problem is to be sure you don't lend more than 100 percent, because 


if lie is a small man and occupies his home, and he is a man of character 
and industry he will pay it out." 

Senator Taft. Mr. Bodfish, how much can these Federal associa- 
tions lend today? 

Mr. Bodfish. Seventy-fiver percent of the appraised valuation, 
although they can go, if "their members and directors have authorized, 
to 80. They can make the 10-percent cash down payment loan only 
under title 2 of the F. H. A. 

Senator Taft. That is, if the F. H. A. insures it, they can make 
90-pprcent loans today? 

Mr. Bodfish. That is right. 

Senator Taft. And what you want is authority, in effect, to make 
that loan without any insurance? 

Mr. Bodfish. We have two rather detailed and safeguarded plans, 
one built on the so-called builders pool arrangement which is in use in 
Britain, and an excess reserve procedure. We want to confine it to 
25 percent of assets or less and where there isn't a builder's guarantee 
and deposit to the stronger institution with larger reserves, as they will 
have the capacity to take some risks that an institution just starting 
or with nominal reserves should not take. 

Senator Taft. Doesn't it involve, or won't it involve, a greater 
supervision of appraisal if we allow this? Won't the insurance cor- 
poration insist on examining that with a good deal more care? 

Mr. Bodfish. I think they would like to, but I think experience 
shows that the more you turn a local lender loose and put the whole 
risk and responsibility on him, the more careful he is. 

I would not feel that any more thorough appraisal and credit work 
is necessary in order to make 90-percent loans than to make 80-percent 

Senator Taft. I don't quite agree with that. It seems to me you 
get to a point where a man can do it for nothing if he happens to own 
a lot and the lot is appraised at a figure he didn't pay for it. That is 
done so frequently that I don't think you can protect your depositors 
satisfactorily by just saying you can lend a hundred percent on a 

I think we have a job there. For years the building and loan 
associations were limited to Q^% in Ohio, by law, weren't they? 

Mr. Bodfish. Great attention to percentage was a post-depression 
accent in the main. 

Senator Taft. That was in the law for years, for the purpose, I 
presume, of protecting depositors and share owners. 

Mr. Bodfish. Probably in half the States there is no limit; and, 
incidentally, there are some of the States in which we have had no 
difficulty at all. 

Senator Taft. You know what happened in Ohio with the building 
and loans, and you won't have an easy time getting this sort of tiling 
through the State legislatures. 

Mr. Bodfish. But the realistic situation is that for many, many 
years I think there has been this kind of lending. If the man had a 
good lot or where he had a nominal down payment to offer on reproc- 
essed homes, several types of lenders were pretty successful with low 
down payment operations. 

Our Ohio problems grew out of financing business real estate, raw 
subdivisions, or like real estate, and some other activities that we could 


give chapter and verse on, but the financing of srnall owner-occupied 
homes I don't think gave us any difficulty. 

Senator Buck. What is the objection to the F. H. A.? 

Mr. BoDFisH. About 10 percent of our business is done through 
F. H. A., and we feel if that is a sound plan for Government guaranties 
that it ought to be a sound plan on a private risk or enterprise basis. 

Senator Buck. Is there any advantage at the present time 

Mr. BoDFisH. The advantage is that, come a depression, we would 
take all of our foreclosed real estate and work it out and under the 
F. H. A. it goes to the Government, and they issue Government bonds 
to the lender. 

Senator Buck. Are the district requirements of any advantage? 

Mr. BoDFisH. We think of some advantage, but we think local 
institutions operating in the community are doing as safe lending as is 
being done by F. H. A. 

There is another element involved in this tiling. The F, H. A. 
insurance costs one-half of 1 percent. That sounds small but it is 
25 percent of the mark-up in our business. 

We laiow most of our institutions can carry their own risks in this 
type of small home-loan business on owner occupied homes. 

Senator Taft. We have set up these Federal savings and loan 
associations to put the building-and-loan business back on its feet 
after the depression and after the tremendous failures that occurred 
in the business, and the Federal Government, in effect, with the 
insurance, is behind this thing, guaranteeing . to these depositors, in 
effect, that they won't lose their money. 

You have got the Government in that far, and I don't think you 
can object to a considerable amount of supervision and a supervision, 
if you are going to lend 90 percent, of whether you are appraising 
things right. Plenty of institutions don't. 

I don't think you can just say a local institution knows how to lend 
and they are not going to make bad loans. They have made bad 
loans and many of them went broke because they did make bad loans. 

I agree that they should be on a parallel with F. H. A., but I don't 
know that it does not require some amount of supervision by the time 
you get up to 90 percent. 

Mr. BoDFisH. We don't object to the most thorough supervision 
of our operations and the inspection of our portfolios, and the present 
powers that the authorities have. 

We do have this feeling, in which we may be in error, that just 
because an appraiser gets on the Government pay roll somewhere that 
he is no wiser or more fair and skilled in looking into the real estate 
future than the men who are in business right in a community and 
whose experience and ability are often much greater. 

We feel the Federal Government is quite safe in these Federal 
chartered institutions. We have built up a reserve position in excess 
of 8 percent in the local institutions which would have to be in the 
aggregate exhausted before there would be any sweeping claim on the 
insurance corporation. 

Furthermore, in our proposal, we don't want to go in and make 
this our exclusive business. We want our stronger institutions with 
the larger reserves to be able to go to 10 or 20 percent of assets so we 
can serve builders and home buyers and season the paper. ' We would 
not want an institution to have all of its loans in this category. 


Senator Taft. You mean limited the same as F. H. A. to $6,000 

Mr. BoDFiSH. Yes; although our people feel in view of the changed 
real-estate price situation which we don't expect to recede, that the 
top would be probably $7,500. 

Senator Taft. We had a request yesterday for $7,000. 

Mr. BoDFisH. We would like to see it $7,500 because we don't want 
to go into larger homes than that. That will bring into the market 
a tremendous number of people, and we think we can serve them safely. 

Picking up the rental-housing question, which is No. 6. 

We would like to see limited authority given to our institutions to 
finance rental housing when all their funds are not employed in 
financing individual homes. 

At present we can employ 1 5 percent of our assets in rental housing 
and in the main our people have wanted a 30-percent authorization. 
Such an authorization passed the House of Representatives 3 or 4 
years ago in a comprehensive bill, and we think there is some small 
rental housing we can be helpful on, although again we don't want to 
change the predominant character of our business. We want flexi- 
bility on 25 or 30 percent of our business. 

Senator Taft. How much of your assets are now in rental housing? 

Mr. BoDFisH. Some of the institutions in the larger cities have 
gone up to 15 percent. We don't have more than 5 percent of our total 
business in low rent multi-housing. However, there are institutions 
in New York, or Columbus, or the larger cities that are crowding the 
15 percent. We would like specific authorization for federally 
chartered associations to make adequately secured loans in connection 
Avith rehabilitation or construction in slum or blighted areas. 

We think such loans should be made to redevelopment corporations, 
cooperative-housing units, or other borrowers without the usual re- 
strictions as to term and percentage, but, we only want to help with 
that kind of activity to a sum not to exceed the reserves of our institu- 
tions, which would mean a limitation on each institution of amounts 
put in this sort of special activity. 

Senator Taft. You mean you are suggesting that the building and 
loan associations have the right to lend to limited dividend corpora- 
tions and the like? 

Mr. BoDFisH. We are going to have a lot of redevelopment corpora- 
tions. We liave the laws in several States. We wolild like to see a 
$5,000,000 institution in a million-size city; if it had $500,000 in 
reserves, we would like to see them authorized to go that far in helping 
finance this type of special housing activity which has so much to do 
with the maintenance of our cities. 

Senator Taft. I don't quite know what a redevelopment corpo- 
ration is. I think your place would be after a public body had acquh'ed 
the property and then decided they wanted to build rental housing on 
it, to finance the rental housing, but I don't see the idea of financing 
of the purchase of real estate for all kinds of purposes. 

Mr. Bodfish. We only want to finance housing to be rented or 
sold to occupiers. Maybe my statement was too brief. 

New York, Michigan, and Illinois, and a number of other States 
have laws authorizing redevelopment corporations which in substance 
is a delegation to a special corporation of some rights to assemble 


land. They give them a Hmited delegation of the eminent-domain 

This is not the most important part in our suggestions. 

Senator Radcliffe. Are you suggesting any changes in the system 
of reserves? 

Mr. BoDFisH. No. The institutions have 8.4 percent reserves and 
we hope to build them up to 10 percent or more, which we feel will 
make these institutions strong enough to stand any probable reces- 
sion in real estate that might come along. 

Senator Radcliffe. You want to build them up to 10 percent. 
Wliat is it now? 

Mr. BoDFisH. In excess of 8 percent. We think if we have 10 per- 
cent reserves plus, that we can weather most anything. 

Traditionally, these cooperative financial institutions were not per- 
mitted to accumulate reserves. If you examine the State laws you 
will find that the laws are in the phraseology of giving an institution 
permission to accumulate a reserve for losses. 

Senator Radcliffe. Do you invest these reserves in special types 
of assets? 

Mr. BoDFisH. It is a general balance sheet reserve only, and they 
are not tied into special assets at all. 

Senator Radcliffe. You don't have to segregate your reserves or 
any of the investments which underlie them? 

Mr. BoDFisH. Not at the present time. 

In the post-war period, until fully adequate materials and labor 
are available for all purposes, we would like to see an authorization 
or regulation that all materials for residential building be allocated for 
private home building and not for Government housing or large 
rental projects. 

We would like to see the Government possibly give a head or initial 
start to the small builder and the community operator to whom we 
are going to look to to build the bulk of these private enterprise homes. 

As you know, tlu'ough the war, we built about one Government 
house for every private house that has been permitted under the allo- 
cation of materials, and we think as we move into this post-war 
period, if we want a real private enterprise home building industry, 
we should give the green light to those who are going to build private 
enterprise houses. 

Of course, when ample material and labor is available, there should 
be no restrictions whatsoever. 

We would like to see the early enactment of Senate bill 179 and 
Senate bill 180 and Senate bill 103, being bills designed essentially to 
improve the structure of the Federal Home Loan Bank System to 
fully authorize Federal associations to make all types of F. H. A. loans 
and to give some 2,500 insured savings and loan associations a more 
equitable animal irisurance of accounts premium. 

Senator Taft. We have a long statement from Mr. Eccles that I 
think will bo in the record. That was up before Senator Radcliffe's 

Mr. BoDFisH. That is right. 

Senator Taft. The question of rediscounting of mortgages. 

Mr. BoDFisH. Some of the provisions in the bills met objection from 
Mr. Eccles, and I would like to say for the record that while he is 
a very splendid chairman of the Board of Governors of the Federal 


Reserve System, and it is a splendid banking system, we wish he 
would run his commercial banking system and let us run the home 
mortgage business. 

Senator Taft. The question is whether it didn't amount to the 
Government providmg the market for these mortgages. 

Mr. BoDFisH. We want the Government to sell all mortgages it has 
at the present time, both farm and urban. 

The thing that has given rise to all this discussion is a limited power 
in the discretion of the Secretary of the Treasury to acquire or support 
the debenture market in case we have another 1932 or 1933. We 
don't want them to buy any debentures under normal times, or expand 
the mortgage business or anything of the kind, but we would like to 
see the Secretary of the Treasury in position, if we have another major 
financial crisis, to deal with the situation and support the debentures 
of our system, which are not obligations of the Government, every one 
of which carries on the face the statement that they are not obligations 
of the Government. 

The only thing we are interested in is a little protection, such as 
accorded to other Government operations in case of another major 
financial smash. 

Senator Radcliffe. You just stated you wanted to see the Gov- 
ernment dispose of its mortgages. Have you any special program 
you want to suggest as to what you think the Government should do 
with its H. O. L. C. mortgages? 

Mr. BoDFisH. Senator Radcliffe, I had some very clear views on 
that subject about a year or a year and a half ago, and so much con- 
troversy arose from certain Government officials when we proposed 
that those mortgages be sold, I would rather keep peace in the family 
at the present time, rather than be specific. 

Senator Radcliffe. We would be very glad to have any sugges- 
tions if you have any to offer at the present time. 

Mr. BoDFisH. I will say this: Senator Byrd's Committee on Nones- 
sential Expenditures recommended a program a year and a half ago 
and I am sure the Senator will be more interested in the considered 
views of that committee than in mine. 

I hope you don't mind my not wanting to get into the H. O. L. C. 
c|uestion at this time. 

Senator Radcliffe. Oh, no. I brought it up because the matter 
is very important, and I thought maybe because of the discussion you 
might have some additional ideas on the subject. 

Mr. BoDFisH. I think there is a very basic principle involved that 
is worth consideration by this committee, quite aside from any of the 
H. O. L. C. sales or liquidation. 

I don't believe you will ever get the United States Government out 
of the farm mortgage business, or out of the urban mortgage business 
unless you provide an orderly way for the sale of these long-term 
securities when local and private institutions are willing to buy them, 
and give the borrower exactly the same contract and protection. 

The small country banker today would be delighted to acquire no 
end of the collateral notes and held in various phases of the farm credit 
system, and would be willing to give the borrowers exactly the same 
contracts that now" exist, and I think sooner or later it will be wise 
public policy to develop a way whereby these institutions would, on 


the assumption the Government will get out of private busmess when it 
can, make these notes and securities available. 

The Federal Mortgage Association, about a year and a half ago, 
sold about two-thirds of its securities and got 103 to 104 for this 
mortgage paper. 

As to more local units, we believe that the committee might recom- 
mend the encouragement of the establishment, under State or Federal 
charter of local thrift and home-financing institutions in areas not now 
served. I think you will be surprised to know there are 800 incor- 
porated places, with a population of 2,500 to 25,000, which do not 
have a local thrift and home-financing institution to encourage home 
building, home buying and home maintenance and modernization. 

There are over $50,000,000 of Government funds authorized and' 
available which were in the original local savings and loan organiza- 
tion and rehabilitation program, which might be used to match dollars 
with local groups to get a specialized home financing institution going 
in some of these communities. 

We would like to see the further development of model laws for all 
sized cities, dealing with city planning, zoning, building codes, inspec- 
tion and demolition prohibition against renting unsanitary houses and 
subdivision developments. 

We would like to see studies of mortgage, lien, and other State 
statutes affecting housing and mortgage credit. 

We would like to see it undertaken by some interdepartmental 
body with private business represented. The best pattern I know 
anything about is the National Advisory Committee for Aeronautics. 
We think in the main, this research business should be attached to- 
specialized operations rather than a super and separate research 

Our league has developed a uniform savings-and-loan plan designed 
to encourage home ownership by giving the borrow^er certain protec- 
tion and advantages not generally provided, and which would remove- 
some of the obstacles to wider home ownership. 

I think that the liberal home-loan plan might be of interest to the 

About 100 of our institutions are starting on it. It involves three 
contractual step-downs in the interest rate as the borrower reduces- 
his indebtedness, that is, reduces the risk. 

It involves a continual right to pay in advance and in turn be able 
to lapse payments to that extent at the discretion of the borrower. 
It involves the right after 3 years to lapse payments in case of unem- 
ployment or sickness up to a 6-month period. 

In other words, it is an attempt to write some protections to the 
borrower into the mortgage contract that would make home owning 
somewhat more attractive. 

It has created a lot of attention and we expect to see it widely 
adopted in our institutions. 

In the main, Mr. Chairman, those are the things that we think in 
our field will help us pick up a substantial part of this post-war 
financing load. 

I have a resolution of our convention on the independence of the 
Home Loan Bank System, and I also have a table of our assets by 
States, and tables on our loan activity, which might be helpful to the 


Senator Taft. You may give them to the reporter. 
(The resolution is as follows:) 

A Resolution Adopted by the United States Savings and Loan League- 
AT the Fifty-Second Annual Meeting and National Conference on 
Veterans' Loans and Home Ownership, Chicago, III., November 1944 

The history of the past 12 years has well established the advantages to the 
citizens of our country that have resulted from the creation of the Federal Home 
Loan Bank System. That system now embraces an integrated membership of 
nearly 4,000 thrift and home-financing institutions, providing comprehensive 
facilities that extend to those who live in practically every community throughout 
the land. 

In no little measure that development is the result of the sound and capable 
judgment exercised by those who have administered the affairs of the Federal 
Home Loan Bank System, its affiliated agencies, and the regional home-loan 
banks. The machinery that has assured an ample and dependable supply of 
central reserve credit, the continuous research as to sounder and better methods 
of meeting the needs and demands of the public they serve, are but specific 
instances of the more obvious ways in which its member institutions have received 
and passed on to the people the benefits that result from its activities. 

In asking of the Congress, 12 years ago the establishment of the Federal Home 
Loan Bank System, these 4,000 local thrift and home-financing institutions sought 
a central credit agency, whose capital would be provided by and owned by its 
member institutions. They subscribed to provisions whereby all costs of its 
operations, both in the regional home-loan banks and in its Washington super- 
vision, would be paid by the member institutions. They planned and established 
when the legislation was enacted a central credit agency, to be owned by the 
member institutions and operated at their expense, that would provide better 
and stronger thrift and home-financing facilities. 

To these original aims and purposes, to these objectives, the members of the 
United States Savings and Loan League substantially all of them members of 
the Federal Home Loan Bank System, still subscribe and hereby reaffirm their 

Wherefore, they do now authorize and direct their officers, directors, and 
appropriate committees to press vigorously for the restoration of the independent 
status of the Federal Home Loan Bank System and its affiliated agencies. 

I hereby certify that the foregoing is a true and correct copy of a resolution 
duly adopted by the United States Savings and Loan League at its fiftj'-second 
annual meeting held in Chicago, 111., on November 15, 1944. 

H. A. Cellarius, Secretary-Treasurer. 

(The table of assets is as follows:) 



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Table II. — Estimated amount of mortgage loans m-ade by savings and loan associa- 
tions and estimated number of homes financed 


Number of 



Amount of 

mortgage loans 



Number of 



Amount of 

mortgage loans 



129, 000 
154, 000 
145, 000 
210, 000 
215, 000 
190, 000 
250, 000 
360, 000 
425, 000 
503, 000 
550, 000 
603, 000 
615, 000 
500, 000 
350, 000 


$352, 000, 000 

413, 000, 000 

492, 000, 000 

480, 000, 000 

693, 000, 000 

770, 000, 000 

693, 000, 000 

900, 000, 000 

1, 206. 000, 000 

1, 460, 000, 000 

1, 760, 000, 000 

1, 945, 000, 000 


2, 153, 000, 000 

1, 850, 000, 000 

1, 300, 000, 000 


300, 000 
270, 000 
230, 000 
232, 000 
300, 000 
353, 000 
397, 000 
370, 000 
429, 000 
445, 000 
493, 000 
375, 000 
405, 000 
508, 000 

$900, 000, 000 













1941 _-- 

530, 000, 000 
435, 000, 000 
463, 000, 000 



642, 000, 000 
755, 000, 000 


897, 000, 000 



798, 000, 000 
986, 000, 000 


1, 200, 000, 000 

1925 . 

1, 379, 000, 000 


1942 . 

1, 051, 000, 000 




Total, 1915-44-. 

1, 184, 000, 000 




10, 520, 000 

31, 182, 000, 000 

Sources: For years 1915-35: From reports of Mr. Cellarius, published in History of Building and Loan 
in the United States, and in his annual reports as secretary-treasurer of the United States League. Since 
1936, data on dollar lending volume from estimates of Federal Home Loan Bank Board. • Data on number 
of homes financed estimated from the average loan as obtained from reports of reporting associations and 
published in the Federal Home Loan Bank Review. 

Table III. — Operations of private lenders in the home-mortgage field 


All types of 
lending insti- 

Savings and 
loan associa- 

1939 . 

$3, 765, 595, 000 
4, 031, 368, 000 
3, 942, 613, 000 
3, 861, 401, 000 

$1, 168, 075, 000 

1940 . 

1, 283, 628, 000 


1, 489, 909, 000 

1942 . 


1943 . 

1, 237, 505, 000 


1, 564, 000, 000 





Savings and 
loan asso- 


Banks and 










e. 1 












Based upon data reported monthly by the Federal Home Loan Bank Administration. 



Table IV. — Number of first-mortgage loans in 1940 on 1-family nonfarm homes 
built 1935-40, classified by type of lender and by estimated i amount of original 

Under $1,190 


of total 

$1,190 to $2,380 


of total 

$2,380 to $3,570 


of total 

Savings and loan associations 

Commercial banks 

Savings banks 

Life insurance companies 

Mortgage companies 



Total - 

19, 620 
15, 521 


17, 492 




25, 073 


10, 766 
17, 791 

129, 149 




100, 677 



$3,570 to $4,760 


of total 

$4,760 and over 


of total 


of total 

Savings and loan associations 

Commercial banks 

Savings banks 

Life insurance companies 

Mortgage companies 

Indi v iduals 

Others __ 


25, 329 
11, 004 
12, 649 
16, 537 


33, 894 
47, 459 
28, 118 
32, 036 
15, 338 
31, 186 


133, 340 
67, 629 
47, 515 
51, 269 
131, 643 
85, 933 

111, 726 




635, 153 



1 The original data show only the amount of the loans outstanding as of 1940. The average loan out- 
standing, the payments on which did not include reai-estate tax, amounted to $2,469; average annual mort- 
gage payment was $356. 

Note.— In addition to the above there were 45,248 eases in which the holder of the mortgage was not re- 
ported or erroneously reported. 

Source: Bureau of Census, housing, fourth series. Mortgages on Owner-Occupied Nonfarm Homes, sup- 
plement A, Homes Built in 1935-40, p. 4. 



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The above presents a picture of home ownership and tenancy by income groups 
in American urban and rural nonfarm areas. Clearly, home ownership is found 
in substantial percentages in all income groups. Among wage earners with animal 
incomes under $2,000, 39 percent of the families are in the home-owning class. 
However, the nuinber owning their homes among the families with incomes above 
$2,000 is not more than roughly 50 percent, again shov\ing that home ownership 
versus tenancy is not entirely a matter of high income. 

It is to be noted that the above figures do not reflect the gain in family incomes 
which has taken place during the past 3 years and which increase has been largely 
among the low-income groups. 

Mr. BoDFiSH. We think the policy of the Congress should be one 
of home ownership first, last, and always. 

And while we feel that slums are an evil, they should be dealt 
with as an evil. There is no reason why public money should not 
be spent in dealing with the slums. That still does not lead us to 
the conclusion that the Government shotild build and operate homes, 
mainly apartment homes, for a substantial portion of the population. 

In that comiection, I would like to call to yoin- attention that if 
we built Government homes for everybody that lives in the city who 
is now a tenant and has an income of less than $1,000, it would involve 
8,000,000 families, and 8,000,000 times $6,000 is $48,000,000,000. 

We don't feel, and our experience does not indicate that home 
ownership is confined to the people who make $3,000 or $4,000 and 
over. I think you would be interested to know we have in this 
country 5,487,000 home-owning families with mcomes less than $5,000, 
and about 8}^ million own their homes, with an income of less than 

We feel that an extensive public housing program could be very 
injurious to the whole idea of home ownership. We don't want to 
be unimaginative and say there is no way to assist those who need 
welfare and assistance. There are a number of ways, obviously, 
other than building a few projects for them, and we hope this com- 
mittee will explore the alternatives thorouglily. 

I have one more table here. I might say there is one error in the 
fourth column on the left-hand side where it says "Cumulative 
number of tenant families." That is "Cumulative number of owner 

It is interesting to note the numbers of people who own their own 
homes with modest incomes. We finance a number of people who 
buy $1,000 or $2,000 houses and they pay for them and the first thing 
you know, they rent that one and then they buy a better one. That 
is where most of the rental houses come from. 

We think we ought to keep our eye on the broad objective, on the 
idea of getting most of the citizens of this country on an owned farrn 
or in an owned home. 

We feel the welfare problem today should be kept quite separate 
and investigated thoroughly. 

Senator Taft. In table No. 2, "Number of homes financed," take 
along in 1940 to 1944. Do you know^ what percent of those were new 

Mr. BoDFisH. I have the figures here, I think. I don't seem to have 
my table here, but it is about 40 percent of new houses. 

Of course that dropped down in 1942, when the restrictions went 
into effect, and I would say in 1942, as I recall, we financed about 
100,000 new houses and in 1943 we dropped down to about 50,000. 


Senator Taft. In normal times about 40 percent are new? 

Mr. BoDFisH. Thirty to 40 percent are new, and 60 percent are 
old or refinanced, or something of the kind. 

Senator Buck. You are definitely of the opinion that such agencies 
as F. H. A. and H. O. L. C. should be grouped under the Federal loan 

Mr. BoDFiSH. If they are going to be grouped, we feel they should 
be grouped with financial agencies. We feel the public housing 
agency is a public works and welfare operation, and probably belongs 
in pubhc works, and our agencies belong grouped with financial or 
credit agencies. 

Senator Taft. Thank you very much. 

Is the representative of the Federal Council of Churches here? 

Mr. Boyd. Yes, sir. 

Senator Taft. How long would your statement take? 

Mr. Boyd. Five or ten minutes. 

Senator Taft. I think we will hear you now, then. 


Senator Taft. You may proceed, please. 

Mr. Boyd. Mr. Chairman, I represent the Federal Council of 
Churches appearing not as an expert on housing or any of the economic 
problems, but speaking for 26 Protestant denominations, religious 
bodies, representing about 25,000,000. 

The church's primary interest is in people. We are naturally 
interested in housing because of its effect on crime, juvenile delin- 
quency, disease, and so forth. 

At its last executive committee meeting in January, the Federal 
Council adopted this resolution which, through your courtesy in 
asldng us to appear, we would like to have read into the record: 

Both in the social ideals of the churches and on many other similar statements, 
the churches of the Federal Council are committed to the protection of childhood 
ana of family life. Yet millions of people, because of their low income and the 
high rents in urban areas, are compellea to live in conditions in which the main- 
tenance of wholesome family life is almost impossible. 

Accumulated evidence of many social surveys and studies shows that bad hous- 
ing is conducive to juvenile delinquency, crime, and disease. It robs homes of the 
God-given rights to sunlight and fresh air, denies children adequate places for 
play, and creates an environment tragically detrimental to the standards for 
childhood and the family for which the churches stand: Therefore be it 

Resolved, That the executive committee of the Federal Council of the Churches 
of Christ in America appeal to church members generally to support all sound and 
effective measures for a thorough housing program, urban anrt rural, including 
community planning for all groups and races, slum clearance and rehousing when 
necessary; and without passing judgment on any particular legislative pro- 
posals, approve the general principle of assistance by Federal, State, and local 

I will be glad to answer any questions if the committee members 
have any. 

Senator Taft. We will be glad to hear anything you have to say. 
We have had pretty general principles presented quite elaborately at 
our former hearing. A great many people agree with the position 
you take. 


Mr. Boyd. I tliinlv the only statement I would like to make in 
regard to this is that it is a tremendous problem. Our concern is for 
people as a whole, the country as a whole, not this community only. 

This community may be social-minded and another may not be, 
and the program is uneven unless backed by the Federal Government 
which sees the problem in total. 

Senator Taft. You believe in a continuation of the public housing 

Mr. Boyd. Yes, sir. 

Senator Taft. Thank you very much. 

The committee will adjourn until 2:30 this afternoon. 

(Whereupon, at 12:30 p. m., the hearing was recessed until 2:30 
p. m., of the same day.) 


(The committee reconvened at 2:30 p. m., pursuant to adjournment 
for the noon recess.) 

Senator Taft. Is Mr. Kreutz here? 

Mr. Kreutz. Yes, sir. 

Senator Taft. I think w^e will start. 


Mr. Kreutz. My name is Oscar R. Kreutz. I am executive mana- 
ger of the National Savings and Loan League. I was formerly general 
manager of the Federal Savings & Loan Insurance Corporation. 
^ In behalf of the National Savings and Loan League I wish to thank 
this committee for the opportunity of making this second appearance 
to present new material which we were not free to present on January 
19, 1945. 

Our president, Mr. Arthur G. Erdmann, planned to be here today 
but was prevented by illness from leaving Chicago. Likewise, Mr. 
J. J. O'Malley, Wilkes-Barre, Pa., and Mr. Oscar Falling, Waltham, 
Mass., chairman and vice chairman, respectively, of our Federal 
legislative committee, were unfortunately prevented from being 

At the outset, the National Savings and Loan League desires to 
assist the thinking of this committee by clarifymg one major element 
of confusion in much of the testimony that has been presented to you. 
Much has been said about housing agencies and the need for con- 
solidating and coordinating the great number of Federal activities 
dealing with this subject. Either the assumption upon which this 
testimony has been based is too narrowly conceived or it covers 
entirely too much territory. 

For example, if the Federal Home Loan Bank Board (Administra- 
tion) is a housing agency, then so is the Federal Reserve Board. The 
members of both systems make loans on homes. If the agency which 
supervises Federal savings and loan associations is a housing agency 
then so is the agency which supervises national banks. Both types of 
institutions grant loans to home owners. If the Federal Savings and 
Loan Insurance Corporation is a housing agency, then so is the 


Federal Deposit Insurance Corporation. The members of both have 
in their portfolios mortgages on hoQies. 

You readily recognize the absurdity of classifying as housing 
agencies the Federal Reserve Board, the office of the Comptroller of 
the Currency and the Federal Deposit Insurance Corporation. We 
contend that it is equally absurd to classify the Federal Home Loan 
Bank Board (Administration) and the Federal Savings and Loan 
Insurance Corporation as housing agencies. 

The preamble to the Federal Home Loan Bank Act says: "An act 
to create Federal home-loan banks," and so forth. By this law 
Congress established a system of banks or credit-reserve institutions 
and not housing agencies. Nowhere in this law is there any reference 
to any "housing agency." No sentence in this law places upon those 
who administer it any responsibility for providing more housing; or 
better housing; or, indeed, any type of housing. 

The institutions which became members of the Federal Home Loan 
Bank System joined it to secure a degree of liquidity not theretofore 
available to them. The primary purpose of this system is to provide 
a reservoir of credit through which this liquidity can be assured. 
This purpose must be preserved at all hazards and should not be 
made subordinate to any housing program, however well intentioned 
its proponents. 

The Federal home-loan banks have been and must continue to be 
interested in improving home financing methods and techniques. 
They assume constructive leadership in their field in the same manner 
that Federal Reserve banks have helped their member institutions to 
improve business and industrial practices. But the primary purpose 
of these Federal credit agencies has not been to dictate the kind of 
houses for people to live in, or the methods of business operation. 
Instead, both are concerned with a sound system of credit to protect 
the funds supplied by millions of thrifty investors, shareholders, and 

In authorizing the chartering and supervision of Federal savings and 
loan associations Congress prefaced its action with this statement: 
"In order to provide local mutual thrift institutions in which people 
may invest their funds, and in order to provide for the financing of 
homes," and so forth. The chief functions of P'ederal savings and loan 
associations is therefore to provide facilities for the accumulation and 
the safe investment of the savings of the American people. We agree 
that most of such accumulations are invested in home mortgages. 
But the Board which supervises these institutions is not a housing 
agency. It supervises financial operations, not housing construction 
or ownership. 

When Congress created the Federal Savings and Loan Insurance 
Corporation, it made no reference to the Nation's housing problems. 
This Corporation is charged with the responsibility for insuring the 
safet}^ of investments in Federal savings and loan associations and in 
such State-chartered institutions as elect to avail themselves of its 

Nor is it germane to state that these agencies deal with institutions 
which finance homes. To be sure the assistance which these agencies 
render their members has given the American people a greater sense 
of security in investments in them. As a consequence a greater volume 
of home financing capital has been made available to them. 


In the statement of the National Housing Agency before this com- 
mittee on January 9, 1945, support was given to the above contentions 
in the following words. In discussing the Home Loan Bank System, 
it was stated: 

The chief function of the 12 regional Federal home-loan banks, set up under 
the act of 1932 and now under the supervision of the Federal Home liOan Bank 
Administration, is to supply, primarily on first-mortgage collateral, funds required 
by member institutions to meet home financing needs in their communities and 
the withdrawal demands of * * * their investors (p. 43). 

In regard to Federal savings and loan associations it was stated: 

The chartering of Federal savings and loan associations * * * -v^-as de- 
signed primarih' for two main purposes: First, to provide sound thrift and home 
financing facilities * * * and to develop under Federal charter a group of 
home financing institutions operating under the best standards and practices 

(p. 44). 

"\^ ith respect to the Federal Savings and Loan Insurance Corpora- 
tion, it was stated that it — 

was established by the Congress to do for savings and loan associations what the 
Federal Deposit Insurance Corporation was doing for banks (p. 44). 

In short, studies of the Federal Home Loan Bank System, the char- 
tering and supervision of Federal savings and loan associations, and 
the Federal Savings and Loan Insurance Corporation lead to the con- 
clusion that all of the Federal agencies concerned with their problems 
are a part of our national credit structure and do not belong with 
housing programs. 

The same conclusion is reached from a study of the Federal Housing 
Administration. This agency was established by Congress to en- 
courage private lending institutions to resume lending to home owners 
rather than to participate in any public housing program. It too 
shoidd be completely divorced from housing programs as such. 

In a system of economics as sound and as prosperous as that created 
by private enterprise for the American people we can afford to be 
liberal in dealing with those who are unable to create for themselves 
desirable standards of living. We help to educate the children of low- 
income families; to clothe those who need assistance; and to house 
those unable to pay an economic rent. In our anxiety to be helpful, 
however, we must be careful not to harm rather than help; and we 
must keep our assistance within bounds that will not encourage greater 
demands against the public purse. The American people will help 
those who need help. But we need to think through Federal housing 
plans and programs very carefully. Above all else we must recognize 
any and all housing programs for just what they really are. We must 
not make the mistakes of confusing housing agencies with credit 

Nor do the American people who are able to pay for what they get 
desire regimentation of their daily lives in peacetime, however well- 
intentioned the planners. 

The National Savings and Loan League is a typical American insti- 
tution. Our members are representative savings and loan associations 
manned by operators who are rendering a real service to the thrifty 
people and the home owners of our conmiunities. We appreciate the 
assistance which Congress has rendered to our institutions in providing 
the Federal Home Loan Bank System, the Fedreal Savings and Loan 


Association charter, the Federal Savings and Loan Insurance Corpor- 
ation, and the Federal Hoiismg Administration. We most emphati- 
cally do not believe that any of these agencies should be continued 
under the National Housing Agency. From our vantage point of 
experience we believe most sincerely that continuation of these credit 
agencies under the National Housing Agency and housing-minded 
officials can result in much harm and in little if any good to the 
American people. 

To be sure all of these agencies were placed in the National Housing 
Agency in 1942 by executive order. Leaving out of consideration 
war housing which is an emergency program, the N. H. A. has not 
made a single contribution to any of the above credit agencies and could 
not as a housing agency make any contribution m the future. 

In the report of the National Housing Agency to your committee 
on January 9, 1945, there is a list of the — 

qualitative improvements in housing mortgage finance achieved during the past 
12 years (pps. 37-38). 

(1) There has been general adoption by mortgage lending institutions of the 
long-term amortized loan plan, to replace the costly and hazardous short-term, 
lump-sum-payment mortgage in prevalent use before the depression. 

I might add that that type of amortized lending was pioneered by 
savings-and-loan associations some 100 years ago and at long last 
other finanical institutions lending on the security of homes and 
real estate have come to adopt the principle of the monthly amortized 

Senator Ellender. To what extent have you suffered since 1942 
when you were placed under National Housing? 

Mr. Kreutz. I do not know, Senator, as there are any specific 
instances that could be named in reply to that question. 

Senator Ellender, Well, I have tried to obtain an answer from 
several other witnesses and up to the moment I have not been able 
to obtain an answer and I would like for somebody to present reasons 
or give us some evidence of the fact that you suffer because you have 
been under National Housing. I think that would be the test. 

Mr. Kreutz. May I say that during the period when these credit 
agencies have been under the National Housing Agency, times have 
not been normal. These institutions have not made loans on the 
same basis as they did in the past in that there has been very little 
new construction except for war housing and so their operation has 
been circumscribed and pretty well defined by the needs of the war 
effort. During that period the officials of the National Housing^ 
Agency have properly been giving their attention to the war housing- 
needs of the country and have done a fine job. 

Senator Ellender. Well, to what extent has Mr. Blandford or 
anyone connected with housing interfered witli the operation of any 
of those loaning agencies? In other words, haven't these loaning 
agencies carried on without interference, weren't they their own 
bosses to the same extent that they were before 1942 when they were 
placed under Housing? 

Mr. Kreutz. To a considerable extent, I am sure that is true, 
Senator. There has been, lam satisfied, very little interference during^ 
this period with the procedures and operations of the credit agencies. 


Senator Ellender. We had an example this morning. I attended 
a meeting of the Agricultural Committee wherein evidence was pre- 
sented by witnesses to show that by placing R. F. A. under Agricul- 
ture, R. E. A. did not sufTer as much as the opponents of the plan 
thought it would. Since 1939 R. E. A. has been under Agriculture 
and one witness said that at hrst he was violently opposed to it, but 
since that time he has found out that things have worked out better 
than he expected. 

I presume that a lot of these agencies fear behig put under another 
agency because the latter might become too powerful and in some way 
interfere with their operation. I think we should try and consolidate 
some of these bureaus. Wo in Congress have been criticized very 
severely for letting so many bureaus grow under our very eyes. Many 
of us think we should try and put as many of these as we can under 
one umbrella. If you have facts to present to the committee to show 
that these loaning agencies have suffered, I want to know them. 
Such evidence might temper my views. 

Mr. Kreutz. I may touch on that to your satisfaction a little 
more later on in the statement, but more particularly I think with 
respect to the situation as we may expect to find it during normal 
times, at the end of the present emergency. 

Senator Ellender. Yes. 

Mr. Kreutz (reading): 

(2) Thore has been a general substitution of the high percentage single mortgage 
method of financing for the more expensive and comphcated pyramid of first, 
second, and third mortgage financing once prevalent. 

(3) There has been an appreciable reduction in the cost of home financing. 

(4) There has been a marked improvement in appraisal standards and practices 
during the past decafie. 

(5) The past 10 years have witnessed the creation of an organized "secondary 
market" for mortgages, which permits a degree of fluidity never before attained 
in our mortgage sj'stem. 

(6) There has been a substantial narrowing down of regional differences 
formerly prevalent with repect both to the availability of mortgage bonds and 
their cost to the borrower. 

We should like to emphasize that all of the foiegoing improvements 
in the field of urban mortgage finance were accomplished through the 
joint efforts of private lending institutions and Federal credit agencies. 
The National Housing Agency did not and could not make any contri- 
bution to these improvements. 

Senator Taft. However, this was the Federal Government and it 
was the Federal Government doing something about housing. I do 
not see the logic ot the argument. It was not the National Housing 
Agency, because it was done before that was created. I do not think 
we can say that F. H. A. is not a Government agency primarily con- 
cerned with housing. I do not think you can say it is a credit agency 
only. It is a housing agency. That is its exclusive function. 

Mr. Kreutz. The point we would like to make, if possible, is that 
these credit agencies in particular are more concerned with the credit 
aspects of the financing of housing than they are with the construction 
aspects and the programing of housing. 

Senator Ellender. Quite a few members of your association are 
not very much interested in public housing. That is true, is it not? 

Mr. Kreutz. I think so. Yes, sir. 


Senator Ellender. I believe that in post-war housing, we should 
work from the local level. A survey should be made by local interests 
interested in housing, public and private, including members of your 
organization, to determine the housing needs and the extent to which 
private enterprise, such as private loaning agencies, can supply that 
need. It strikes me that your association, that is, the Home Loan 
Associations of the various States, ought to work together with those 
interested in public housing with the understanding that private 
enterprise will be given the first opportunity to supply the housing 
needs. If it should develop that private enterprise cannot do the 
job in full, then public housing advocates should step in. 

Reasoning from that standpoint, it strikes me that it might be 
beneficial to place all housmg agencies as well as loaning agencies 
under one mnbrella. All are interested in housing and should be 
willing to work together so as to supply housing needs. 

Mr. Kreutz. We would certainly agree, Senator, that there should 
be very careful surveys made at the local level by the local people, 
who have the i^rimary interest. 

Senator Ellender. Who is better able to do that than you who are 
interested in building homes, loaning money on them, and other 
people who are truly interested in supplying the need of the com- 

Mr. Kreutz. I think no one. 

Senator Ellender. That is right. 

Mr, Kreutz. I hope I did not leave the impression that our institu- 
tions are not interested in this local housing problem and are not inter- 
ested in the problem of housing, and public housing, too, if you 
please — they are interested. They are not interested in promoting 
public housing. 

Senator Ellender. No; but I believe that you could show that your 
services could be better utilized. 

Mr. Kreutz. Yes. 

Senator Ellender. By working as members on a committee which 
is interested in supplying local housing needs. 

Mr. Kreutz. I am sure. Senator, that they would agree with that 
point of view and would cooperate wholeheartedly in local programs 
of that kind, and that they would also feel that all other lending 
institutions and individuals, too, if they could in some way be brought 
into the picture, should cooperate in such local studies. 

Now, for example, banks and trust companies of this country, made 
in 1944 more than $800,000,000 worth of mortgage loans, urban 
mortgage loans of $20,000 or less. That is about two-thirds of the 
volume made by savings and loan associations. Then mutual savings 
banks and insurance companies came along and made another sub- 
stantial volume. All of those lending institutions are very much 
interested in the problem wdiich you described and I should think, 
and I am satisfied they would be glad to get together locally to dis- 
cover the facts and to try to work out solutions for the problenis. 

Senator Ellender. Well, of course, I would say that their interest 
should be mutual. 

Mr. Kreutz. Yes. 

Senator Ellender. In seeing that all citizens in a community are 
adequately and properly housed. 


Now, with that m view, it strikes me that it woukl be an easy matter 
to form one single committee, composed of men and women who are 
interested in loaning associations, F. H. A. and every form of housing, 
whether public or private, with the understanding that the private 
enterprise will be given first chance at supplying housing needs. It 
strikes me, with that in view, you folks should not have any diffi.- 
culty in getting together. I believe all the opposition generated here 
in the last 2 years, not wanting to be under one agency with others, 
wanting to be independent, grows from the opposition existing among 
loan associations, and others, to public housing. I may be wrong in 
that, but that is my honest conviction. 

Mr. Kreutz. May I suggest a further reason, Senator, and that is 
the fear that many of these institutions in private capital have, with 
respect to the effect of any large-scale public housing projects 

Senator Ellender. I understand. I get that point of view too. 
But still, it is within your hands to tell what the needs are and supply 
the needs as I suggested, that is, first let private enterprise get a shot 
at it, and if you cannot do the job, then let some of it be done through 
public housing. I do not see where there should be much objection, 
because you are the one to determine the need and then supply the 
need to the extent of your ability. 

Mr. Kreutz. Eight. But we would like to see that job done 

Senator Ellender. So would I. 

Mr. Kreutz. From beginning to end, so far as possible. 

Senator Ellender. Well, if I were to support any housing bill, I 
would insist that that be included in the bill. Let the need be 
decided at home. Let the home folks decide what they want and 
if they need help they can come up here and we can help them. Let 
us not go out to them first. 

It strikes me that in New Orleans or any other big community 
some effort ought to be made by every loaning agency; every housing 
agency and every organization interested in home building, whether 
it be the actual construction or the financing, ought to get together 
and create a committee to decide the needs and how those needs can 
be fulfihed. 

Now, if you could make up your mind to do that, I do believe you 
would not have much difficulty in trying to overbuild. 

Mr. Kreutz. I am sure they would be interested in doing that. 
Senator; and in New Orleans the Homestead Associations which for 
many years have done a large share in the financing of local construc- 
tion and buying there, have organized themselves to be just as 
helpful as they can with the solutiou of that local problem. 

Senator Taft. I think we have an over-all housing council or 
something in Cincinnati. A good many cities are trying to follow 

Mr. Kreutz. But if I may make the point again — that in con- 
nection with those studies these strictly financial institutions and 
credit institutions that work with the credit agencies feel that they 
have no more claim in a Federal housing agency than do the com- 
mercial banks, trust companies, or other financial institutions which 
are doing a pretty substantial part in the financing locally. 


Senator Ellender. But when you boil it clown, all of you are in- 
terested in one thing. What is it? Housing, isn't it? 

Mr. Kreutz. Primarily, I should say, Senator, in increasing the 
percentage of home ownership in this country. 

Senator Ellender. That is your business. That is how you live, 
by inducing me, a man of moderate income, to invest in a home. 
That is your business. 

Mr. Kreutz. Yes. 

Senator Ellender. Your business ought to be extended not only 
to those of means, but to others who would benefit by your advice. 
It strikes me that you ought to work hand in hand. I may be all 
wrong about it, but my own opinion is that because of the antagonism 
■existing in quite a few of these loaning agencies you folks cannot work 

Mr. Kreutz. Shall I proceed? 

Senator Taft. Yes. 

Senator Ellender. I am sorry to have interrupted you. 
. Mr. Kreutz. In addition to the fact that the N. H. A. has nothing 
to contribute to the Federal credit agencies in the home financing 
field, there are other objections to the continuance of their present 
unnatural and illogical combination under the N. H. A. One objec- 
tion is the increased burden of cost which these self-supporting credit 
agencies are required to bear in financing the N. H. A. Another 
objection is the impression which this temporary arrangement makes 
upon all who deal with these agencies. The old adage that "a man 
is known by the company he keeps" applies with telling force here. 
To an ever-increasing extent those who deal with these credit agencies 
are raising the question: "To what extent are your decisions colored 
by your membership in the N. H. A. family?" This family, by the 
way, is considered to be fathered and mothered by housing-minded 
persons. The credit agency members are looked upon as step- 

This stepchild status is well illustrated in the current relationships 
between Congress, on the one hand, and the Federal credit agencies 
created by Congress, on the other. Before the Executive order of 
1942 took away from Congress its direct control over these credit 
agencies you were able at all times to learn directly from them their 
needs and their problems. Although they are all self-supporting and 
provide their own funds to pay operating and administrative expenses. 
Congress had control over their administrative expenses tlirough the 
medium of annual authorizations for that purpose. Under the present 
arrangement of these agencies under the N. H. A. these requests are 
intermingled with requests for appropriations of public moneys to 
support public housing agencies. 

Senator Taft. However, they each present their needs to the Ap- 
propriations Committee entirely separately and without restraint, so 
far as I know. 

Mr. Kreutz. I think that this year, perhaps, for the first time, 
there was a consolidated budget proposal made, and then the indi- 
vidual agencies came along later to justify their individual 

Senator Taft. In fact, I think Ivlr. Ferguson and the others told 
me that there was no change, that Mr. Blandford went down there 
but really said nothing, that the agencies presented their cases sepa- 
rately for appropriations, but I am not sure about that. 


Mr. Kreutz. Likewise in presenting to Congress requests for modi- 
fications in existing legislation, the home financing credit agencies must 
filter their requests through an intermediate agency. This agency is 
manned by people whose thoughts are preoccupied with public hous- 
ing and Federal control over private housing. Some of them, indeed, 
have little understanding of, or sympathy with, the needs and prob- 
lems of urban home financing credit agencies. This filtering process 
is no mere reporting operation. The credit agencies make their re- 
ports to the N. H. A., which in turn submits to Congress whatever 
appeals to its leaders. Even the existence of the filtering process is 
bound to influence the recommendations and requests made by the 
credit agencies. 

In a similar manner the reports made to Congress by its own home 
mortgage credit agencies must be filtered through the same housing- 
minded N. H. A. group. When the reports of these self-supporting 
credit agencies reach Congress they are intermingled with the opera- 
tions of the subsidized public housing program. 

This committee need not be reminded that private home financing 
and publicly financed housing are in serious conflict at most points of 
contact. To the extent that public housing is favored, privately 
financed housing is discouraged. It necessarily follows, therefore, 
that when you place the fortunes of yotir own Federal credit agencies, 
whose chief purpose is to assist private home financing institutions, 
under the control of an agency which is primarily interested in public 
housing and in public control of private housing, you greatly handi- 
cap private home financing operations. Good intentions and inherent 
honesty are not sufficient to insure fair administration. 

Under any concei viable plan of financial support which Congress is 
likely to give to public housing, the total product cannot absorb more 
than a very small proportion of the total construction of housing units 
in the post-war period. It is illogical to permit the ideals of the public 
housing group to dominate the thinking and the planning for the much 
larger private housing program. 

You Members of Congress realize more clearly than the rest of us 
the nature of the economic and financial problems which face our 
Nation in the post-war period. With a staggering public debt and 
Budget prospects for the indefinite future that are anything but en- 
couraging, it is desirable to do everything within our power to en- 
courage private enterprise to maintain production and employment 
at a high level. It happens that in the field of home construction we 
find one of the bright spots in the post-war employment picture — if 
we take precautions to avoid making any unnecessary changes that 
will residt in discouraging private enterprise. Many Americans are 
saving a part of tlieu" wartime incomes for the purpose of buying homes. 
Total savings at the present time are at an all-time high. This pent- 
up demand alone will occupy the time and the energies of the construc- 
tion industry for a long tim-e to come. Add to this the very laudable 
encouragement which Congress has offered to the returning veterans 
in assisting them to finance homes, and we can readily see that we 
will tax the capacity of home production facilities for years after we 
are permitted to resume private construction. 

It is encouraging to note evidences of improving construction tech- 
niques and of the increasing interest in home construction by larger 
companies than have dominated the industry heretofore. If such 


companies are not discouraged from entering the housing field by un- 
wise legislation it is probable that Americans will be able to purchase 
better housing facilities at less cost than would be available to them 

In anticipation of the demands against our facilities in the financing 
of homes for civilians and in furthering the plans of returning veterans, 
the savings and loan associations of the country are ready and anxious 
to resume our role of playing the leading part in the financing of 
American homes. We wholeheartedly approve of the plans of 
Congress to offer special home financing terms to returning veterans. 
To both them and all others who need our assistance in the financing 
of their homes we are prepared to ofl'er the lowest costs and the most 
favorable terms in history. 

The National Savings and Loan League commends the recent action 
of President Roosevelt and the Senate of the United States in ap- 
proving the George resolution. In his message to Senator Barkley 
the President was quoted as saying: 

In 1942 when I transferred certain functions of the Federal Loan Agency to the 
Department of Commerce by Executive order, I provided that they should be 
returned to the agency 6 months after the conclusion of the war or sooner if the 
President or Congress should decide upon an earlier date. Therefore, should 
Congress return these functions to the P^ederal Loan Agency at this time by the 
George resolution, I would approve the measure. 

Again the President has reiterated his intention to return to the 
Federal Loan Agency those home financing credit agencies which he 
took from it by Executive order in 1942. Let it be noted that in his 
reported communication to Senator Barkley the President did not 
indicate any reservation as to any units of the Federal Loan Agency. 
Therefore we must conclude that he intends that all wartime transfers 
of this character should end 6 months after the conclusion of the war 
"or sooner if the President or Congress should decide on an earlier 

The National Savings and Loan League hopes that the home 
financing credit agencies of the Government will be transferred to 
the Federal Loan Agency at an early date. 

Senator Taft. Mr. Kreutz, the substance of your difficulty seems 
to be that the National Housing Agency — j^ou speak of it as a public 
housing agency, and you speak as if Mr. Blandford were a public 
housing man. Is it your charge that that is the fact? For, after all, 
the public housing agency is separate. Mr. Klutznick testified it was 
entirely separate, and the N. H. A., I understand, is not supposed to 
be a public housing agency in any sense. Do you feel that it is? 

Mr. Kreutz. Itis our feeling that the underlying philosophy of the 
people in the National Housing Agency is that 

Senator Taft. You mean in the overhead organization? 

Mr. Kreutz. Yes, sir; is sympathetic to the whole idea of the pro- 
gramming of housing through the Federal Government to a consider- 
able extent. True, using the local facilities and making local studies, 
and all that sort of thing, but with perhaps a bit of emphasis on the 
role which public housing and large-scale housing developments can 
play as contrasted to the philosophy of preaching and promoting and 
development of a higher percentage of the individual home ownership. 

Senator Taft. That did not seem to appear in Mr. Blandford 's 
statement at all to the committee. It seems to me he put more 


emphasis on private housing than pubHc. You may be right; I do 
not know. I just wondered if that was your claim, that the overhead 
organization of the National Housing Agency was primarily interested 
in public housing and was not interested in the other problems. 

Mr. Kreutz. Let us say primarily interested in large-scale housing 
rather than in the promotion of individual home ownership. 

Senator Taft. All right; thank you very much. 

Mr. Kreutz. Thank you. 

Senator Taft. Mr. Merrion? 

Mr. Merrion. Yes, sir. 

Senator Taft. All right; you may proceed, Mr. Merrion. 


Mr. Merrion. I am Joseph E. Merrion, president of the National 
Association of Home Builders of the United States. 

This is Mr. James Wilkes, attorney for the association, and Mr. 
Frank W. Courtwright, executive vice president of the association. 

I am a practical home builder. I come before you as the president 
of my group, which is composed of thousands of small businessmen like 
myself who have been building the great bulk of housing units in this 
country. They, in turn, speak for other thousands of people associated 
with them in the construction of homes down to the smallest carpenter 
building homes, who presently construct two or three houses a year. 
Like the farmers, we produce shelter, have no great concentration of 
production or power. 

The building of houses is primarily a series of small operations, but 
we and our predecessors in the home-building industry have provided 
the 37,000,000 homes that now house the American people; and, in the 
opinion of experts in and out of the Government, this housing is, for 
the most part, good. It is a better job of housing than has been done 
in any other country of the world. There is no question that a certain 
number of these housing units, impressive in number but small in 
percentage, were built to a very low standard. There is no question 
that age, obsolescence, and population movement in cities and the 
encroachment of destructive elements have made similar large volumes 
of housing inadequate and in some cases unfit for human habitation. 
The introduction of the normal complement of building during the 
depression and again under the l»estriction of the war has built up a 
need within itself enough to strain the resources of ours or any other 
industry. A large part of supplying this over-all demand may well 
be said to be the builders' job. 

Our membership is composed of individual home builders in 46 
States and of the membership of affiliated local home builders' organi- 
zations in more than 80 cities throughout the country. It is estimated 
that at least 80 percent of the individuals and firms that are currently 
engaged in the private-home building business are included in our 
membership. Established on a national scale, we are the spearhead 
through which the activities of the many component parts of the 
housing industry reach their culmination. Because we initiate to a 
great extent the home building of the country, and because we are 
accustomed to viewing all of the many contributing factors to the 
creation of a home in their proper relationship, we feel that a large 

91183— 45— pt. 15 4 


part of the responsibility for the future housing of America is ours. 
And we are fully aware that there must be a vigorous analysis of the 
assets of this industry and a long range, statesmanlike regard for the 
whole public interest. 

Before the outbreak of war, it became a])paront that an immense 
housing program would be necessary to house the immigrant war 
workers to operate new war plants and shipyards. It also became 
apparent that with some assistance from a now F. H. A. mortgage 
insurance procedure private enterprise could do the major part of the 
construction. Our association therefore established the Washington 
office and staff, and since November 1941 we have met with all 
interested agencies of Government to clarify priority procedures, to 
assist in preparing the F. H. A. title insurance provision, to present 
the problems of the builders to Government, and to act in a liaison 
capacity between Government and home builders in the field. 

Privately financed war housing. — In contrast with World War I, 
when only 30,000 privately financed war housing units were erected, 
more than a million accommodations have been produced during this 
emergency by private enterprise. In approximately 750 localities 
800,000 new dwelling units were constructed and 200,000 apartments 
were converted for the war effort bv private capital at a total valuation 
of $4,000,000,000. 

Although the bulk of our w^ar housing assignment has been com- 
pleted, we are still engaged in providing housing under the H-l and 
H-2 housing programs of the National Housing Agency. Conscious 
of the war need, home builders willingly accepted innumerable 
restrictions imposed upon them by various agencies. However, with 
the completion of our war-housing job, we are determined that all 
these restrictive limitations placed upon our industry must be elimi- 
nated at the earliest possible moment in order that we may prepare 
to meet with equal vigor and success the immense post-war responsi- 
bilities which will be ours. 

Objectives for the transition and post-v:ar period. — For the transition 
period, we are concerned with the following objectives: 

1. The continued construction of war housing when and where it is 
required for our war plants. 

2. The most efficient utilization of all war housing, both privately 
and publicly financed, to insure its maximum benefit to the war effort. 

3. The lifting of Lf-41 to permit civilian housing as soon as direct 
war needs for materials and manpower permit— thus relieving the 
housing shortage, supplying employment and securing the momentum 
necessary to quickly meet the full post-war housing assignment. 

Long-range housing program. — As I have said, the primary objective 
of the National Association of Home Builders is to assure adequate 
housing in a decent environment for every American family in the 
shortest possible time. In order that this may be accomplished, we 
have set up a number of committees charged with studying the 
problems involved in each of the following major subjects: 

1. The production of an unprecedented volume of new housing, at 
the lowest possible sales and rental levels. This can be accelerated 
by lowering site assembly costs, by lowering the cost of materials, 
by research, by constantly improved design, by closer cooperation 
with labor, the modernization of building codes, through more im- 
proved financing procedures, and by better planned subdivisions and 


2. The strict enforcement of present health and safety codes and the 
promulgation of new ones to the end that substandard structures are 
either demolished or rehabilitated into good, safe, and sanitary homes. 

3. An educational campaign to insure adequate property mainte- 
nance and better housekeeping. 

4. The encouragement of home ownership among the great masses 
of our people. 

5. The rebuilding of the worn-out areas of our cities, conforming 
with a comprehensive city plan wdiicli will insure the most logical use 
of the redeveloped area, by the enactment of legislation to create 
redevelopment agencies with powers of eminent domain for the acqui- 
sition of land in blighted areas, the demolition of unsound structures, 
and the subsequent sale or lease for redevelopment. 

6. Aid to individuals and families unable to pay economic rents, 
through local public welfare agencies receiving their funds from local, 
State or Federal governments. 

Disposition oj 'public war housing. — In addition to the privately 
financed war housing, the Government has built some 700,000 units 
with public funds. Approximately 400,000 of these are temporary 
family dwellings and dormitory accommodations. The Lanham Act 
has been amended to require that these be removed within 2 years 
after the end of the war excepting where the communities and the 
Federal Government agree that there is a special contmuing temporary 
need in the interest of orderly demobilization of the war effort. In 
spite of this legislative requirement enacted in the hope of preventing 
future slums or ghost towns, it is recognized that local pressure against 
the removal of this housing in some instances be very strong. Appeals 
for its continuance will be made by the occupants, by local merchants 
with a selfish interest, and by various civic groups proposing that the 
housing be used temporarily by veterans, present occupants of blighted 
housing and others. It is our recommendation that certain steps be 
taken in advance of the time the structures should be removed. This 
will include: 

{a) Definitive action by N. H. A. so that there will be no question 
as to which projects are permanent and which are temporary. 

(6) Surve3^s made to ascertain what percentage of the occupants 
will leave the locality as war production terminates and w^hat percent- 
-age wish to remain in the area. 

(c) Studies be made of housing available for those who wish to 
remain in the community. 

{d) Replanning of the project site to permit private enterprise 
redevelopment of permanent housing utilizing most of the improve- 
ments installed. 

(e) Arrangements should be made for the disposition of the mate- 
rials and equipment salvaged in order that normal production and 
distribution channels will be distributed to the minimum extent. 

The balance of the public war housing program involves 130,000 
permanent family dwellings, 70,000 demountable dwellings, 60,000 
units financed under the United States Housing Act and some 50,000 
apartments and converted properties leased by the Government. 
Procedures for disposing promptly and equitably of the 200,000 
permanent and demountable dwellings should be established well in 
advance of the time they are placed on the market. Safeguards 
must be set up to prevent a recurrence of the forced sale of World 
War I properties with the consequent deleterious effect upon realty 


values in the adjacent areas. Much of this housing represents good 
vahie which shoukl be reahzed. 

Interim housing -program.- — The National Housing Agency recently 
initiated a program of residential construction known as the H-2 
program to provide employment and supply housing for the resident 
war worker, veterans and families of military personnel in congested 
areas. If the W. P. B. limitation order Lf-41 is lifted immediately 
after the fall of Germany, and that takes place in the reasonably near 
future, the interim program referred to will probably be abandoned. 
Should the war be protracted for an extended period of time this 
H-2 program is important because it will provide housing for badly 
congested communities and will counteract inflationary trends in the 
price of housing and it will keep the lifeblood flowing in the industry. 
With the responsibility of providing employment in the post-war 
years for at least 3,000,000 workers on and off site, it is essential 
that the maximum momentum in this industry be maintained. 
During the balance of the war years, therefore, it is essential that 
within the limitations of manpower and critical materials necessary 
to the direct war effort, maximum activity in the entire construction 
field should be maintained. 

Negro housing. — There is no question but that one of the most 
urgent housing needs of the country is adequate housing for Negroes. 
At our recent conference in Chicago a committee composed of out- 
standing men from 50 important industrial cities met. They have 
pledged the construction of at least 50,000 units both for rental and 
sale to Negroes at the earliest possible moment. While during the 
war housing job, the builders of the Nation have learned many things. 
They have learned to construct good housing for members of the Negro 
race. They have learned the very real advantages of building housing 
for rental. They will do a far better job of housing all groups of our 
people than has ever been done in the past. 

Long-range housing requirements.- — Administrator Blandford of the 
National Housing Agency has recently stated that the total housing 
need for the first post-war decade is 12,600,000 nonfarm dwelling 
units. In addition to this, the Administrator believes that nearly 
4,000,000 substandard structures should be replaced. Half of the 
total estimated need is replacement need and the other half to take 
care of the increase in the number of households. These fall into 
four general categories. 

(1) Normal increase in families and migration from farms, 4,- 

(2) Alarried servicemen's households to be established or rees- 
tablished, 1,400,000; 

(3) Undoubling of married couples living with another head of a 
household, 700,000; 

(4) 100,000 units to bring vacancies up to 5 percent of the total 
housing supply in 1955. 

Due to the dearth of building during much of the depression, 
followed closely by the cessation of civilian building in 1941, there has 
developed in this country an unprecedented need for housing. Savings 
in unheard-of volume await an outlet. The G. I. bill of rights has 
made it possible for milhons of our returning soldiers to finance the 
purchase of a home. We, therefore, agree that 1,000,000 or perhaps 
a larger number of houses per year are urgently needed in the first few 
post-war years. 


Research and statistical reporting service. — Although we do not 
approve of the Kilgore bill as introduced, we are convinced that 
research to assist the private construction industry is vitally essential. 
Although there is a vast quantity of private research on individual 
products, there must be additional study by Government on such 
subjects as combinations of materials, methods of fabrication, educa- 
tion of tradesmen, new techniques in plans and specifications and 
design. Sharp lines of demarcation as to activity must be drawn 
between private industry and Government, but integration of these 
activities is necessary. Furthermore, a reporting system of statistical 
information should be established in order that the industry may 
Ivnow the housing needs in all parts of the country and may thus 
prepare itself to meet these needs. 

Permanent Federal administrative organization oj the housing 
agencies. — We have worked well during the war period with the 
National Housing Agency and believe that its function in the war 
pattern has, in large part, been well performed. We recognize the 
need for programing housing during war times, for allocation of 
critical materials, even for the erection of temporary dwellings in fast 
developing war centers at the expense of the Federal Government. 
The Presidential order setting up N. H. A. was an emergency war 
measure. We beheve that N. H. A. should be terminated at the 
earliest possible moment. 

The Federal Housing Administration. — The F. H. A. has made a 
great contribution both to housing and to the general economy. It 
has established a pattern of good construction, good land planning, 
and sound financing which is of immense importance. 

In order to meet the full housing and emplo3anent need we feel 
that certain liberalizations in the National Housing Act should be 
recommended. Longer a?nortization, smaller equity risk in the low- 
priced bracket are needed if we are to penetrate further the area of 
low-income groups. 

As one of the few self-supporting agencies of government, F. H. A. 
need not be treated in the same fashion as most other agencies of 
government wliich are a burden on the Federal budget. We believe 
the Federal Housing Administration and the Federal Home Loan 
Bank Board should be returned to their original independent status — 
or placed wherever they can as relatively independent agencies 
perform the maxim^um service to the industry and to the public. We 
are presently studying proposals which would liberalize somewhat 
operation under sections 203 and 207 of title II and at a later date will 
present these to Congress. 

The responsibilities of the housing industry in the post-war period 
will be immeasurably greater than they have ever been in the past. 
First, an unprecedented number of people ?nust be employed on and 
off site; and secondly, an immeasurably greater quantity of housing 
for all income groups must be supplied than ever in the past. In 
order to meet these new demands it will be the responsibility of 
F. H. A. to blaze new trails in the field of mortgage insurance. 

Originally created as an employment measure, it soon became clear 
that its effect was to stimulate the industry and to set new standards 
of financing operations in the private mortgage banking field. Our 
primary objective is that the maximum efficiency of operation to meet 
new conditions is achieved. A happy medium must be found in 
administration between the too conservative and the too liberal. 


Public housing. — Although we are as a nation the best-housed people 
in the world, there are slums^nd blighted areas and blighted housing 
in which some millions of our lowest-income group live under disgrace- 
ful conditions. We are agreed that these slums must be eliminated. 
We are convinced that this is a job for private enterprise to do in each 
community by the community and the State. For many excellent 
reasons it is not a job for the Federal Government. 

During the depression years proponents of socialized housing in this 
country were successful in persuading the Congress to pass the United 
States Housing Act. The financing procedure, the conditions under 
which the housing would be built, and the class of tenants which 
would be accepted were kept so vague and complicated that the true 
facts are difficult to ascertain. The Congress generally felt that it 
was a relief measure primarily designed to provide employment. They 
were led to believe that the worst slums would be cleared and rebuilt, 
and those in the greatest need of housing would benefit by the im- 
mense public expenditure. 

Examination of public housing discloses the fact that the cost of 
construction has often been exorbitant; the "one for one" demolition 
requirement has not been met; much of the housing has been built 
on the peripheries of cities while slums remained ; and those who lived 
in the slums and those on relief have not generally been permitted to 
occupy the housing. Instead, a favored few, skimmed from the top 
of the lower-income group, have been housed at the expense of all 
others. Less needy families have occupied the new shelter, paying 
approximately half of the property's rental value. 

We do not concede the need nor the right of the Federal Govern- 
ment, either directly or by subsidy to local housing authorities, to 
enter the housing field by building, owning, or operating permanent 
housing projects. We feel that in so doing the Government is invad- 
ing the field of private enterprise, setting itself up in business in com- 
petition with citizens and taxpayers. 

You may ask: "Wlio is to rebuild the slums of our cities, our villages, 
and our rural areas, and who is to rehouse the millions of Americans 
who are forced to live in substandard and unwholesome dwellings?" 

Actually, this question does not get at the core of the problem. 
Rebuilding the slums and rehousing the badly housed are major social 
problems with which all good Americans, both in Government and 
out, are greatly concerned. Our industry can do the physical job of 
rebuilding more economically than any Government agency, as we 
have many times demonstrated. There is a profit in every job that 
is done for the Government, so that the cash outlay for the housing is 
always as much or more than the cost when done by the builder. 

In my own city of Chicago, I find that the Housing Authority was 
building public housing projects — notably the Jane Addams and the 
Francis Cabrini Homes — at an average unit cost of $6,351 and $6,377 at 
a time when I and others were building and selling free standing single 
family houses on 60-foot lots in the near suburbs of the city for an 
average of $5,500. 

Senator Ellender. With the same facilities? 

Mr. Merrion. With the same facilities. 

Senator Ellender. Brick, the same construction? 

Mr. Merrion. The same general construction, larger square-foot 
area, and I will say at least an equal standard of construction. 


Senator Ellender. Now, you have mentioned two projects, the 
Jane Addams and the Francis Cabrini. Are there any others that 
were built cheaper than the amounts you have mentioned? 

Mr. Merrion. Yes; we are submitting a report on the Chicago 
Housing Authority which gives the break-down of prices. I men- 
tioned those two because they come at a period when we were building 
these comparable projects. 

Senator Taft. Were these houses fireproof? Are they apart- 
ments or houses? 

Mr. Merrion. The public houses? 

Senator Taft. Yes. 

Mr. Merrion. Well, they arc row-type houses, attached houses. 

Senator Taft. Were they more fireproof than you built? 

Mr. Merrion. No ; I would not say so. They had brick walls and a 
brick wall between the two units, but ours had brick outer walls. 
Ours were not attached. 

Senator Taft. Take a thing like Laurel Homos in Cincinnati, that 
is all built of fireproof structure, and that certainly adds expense. 
I do not know how much expense. 

Mr. Merrion. Is that a row-type house? 

Senator Taft. No; that is a downtown apartment house. 

Mr. Merrion. That is different. They do not ordinarily build row 
houses in that construction. They build family dwellings that way. 
That is different. 

Senator Taft. These you say are comparable? 

Mr. Merrion. Yes; these are comparable with the exception that 
one is free standing and the other is attached. That is exactly the 
same type of construction as the type of war housing that has been 
programed at the same time, for less money, I say, because the top 
price was $6,000 and they were all able to build them and come out. 

The most recent public housing project in Chicago, known as the 
Altgeld Gardens, consists of 1,500 small units averaging in cost 
$6,000. There is not a similar unit of war housing in the Chicago area 
that wasn't built for less money during the war period by private 
Chicago builders. I offer for your further study the pamphlet showing 
costs published by the Chicago Public Housing Authority. 

Senator Ellender. Was the cost of your land the same, com- 
paratively speaking, as the cost of the land on which the public 
housing was built in Chicago? 

Mr. Merrion. There is a variation there and, of course, there is a 
variation in the way the Public Housing Authority computes the cost 
of their land. I have never made sufficient study or been able to 
determine just how they arrive at it. 

Senator Ellender. Well, as I understand, when public housing 
was first started, the idea was to clear the slums and the cost of de- 
molisliing, cleaning the lot, was charged to the property. 

Mr. Merrion. I do not doubt that. Senator. 

Senator Ellender. Of course, that in a measure increased the per 
unit cost. Now, do you think it is fair to make a comparison as you 
have indicated between public housing built under those circumstances 
with a home built maybe a mile or two out of town? 

Mr. Merrion. Well, the last comparison that I made was between 
a public housing project built on the outskirts of town and other pri- 
vate housing built in similar areas. 


Senator Ellender. When you say "similar areas," do you mean 
where the pubhc housing was built? 

Mr. Merrion. No; in tliinly settled areas. Tliis public housing 
project was not a clearance of slums. This was built on raw ground, 
on the periphery of the city and most of the war housing was built 
under similar circumstances. 

Senator Ellender. And there was a. difference of $500 per unit 
according to your testimony. 

Mr. Merrion. At least, I would say. 

Senator Ellender. How do you account for that, because it was 
put up by the Federal Government? 

Mr. Merrion. Well, I think the best way to answer that is that the 
men who have been building houses tlirougliout their lifetime and who 
are accustomed to building them probably know more about building 
them and know more about 

Senator Ellender. You know, of course, that all the Federal 
Government did in those cases was simply to advance the money. 
Local authorities were created which borrowed money and proceeded 
to advertise and build the units. 

Senator Taft. For contractors to do it. 

Senator Ellender. Yes; isn't that true? 

Mr. Merrion. Yes; that is true. 

Senator Ellender. Now, I presume that many of your members 
probably built some of these houses or units. 

Mr. Merrion. Very few of our members do that kind of work. 
Our members buy their own ground, usually install their own improve- 
ments, finance their houses, build them, and sell them. 

Senator Ellender. Well, you are really engaged in building indi- 
vidual homes in contrast to these large apartment buildings, aren't 

Mr. Merrion. Well, primarily I would say individual homes are 
our business but we build a lot of rental projects, too. 

Senator Ellender. Well, in your statement, on page 6, you said 
that for many excellent reasons it is not a job for the Federal Govern- 
ment. Now, what do you have in mind there, what jobs do you 
mean, building or furnishing the money to build? 

Mr. Merrion. I think that the whole operation is one for private 

Senator Ellender. I agree with you, if it can be done, but suppose 
it cannot? You start off on a basis that slums ought to be cleared. 
All should have adequate homes. Now, do you think private indus- 
try could do that for Chicago? 

Mr. Merrion. I believe so. 

Senator Ellender. You do? 

Mr. Merrion. Yes. Given the same exact implements that are 
furnished to the Government and to the Housing Authority. 

Senator Ellender. What do you mean by that now? 

Mr. Merrion. Well, first, the right of Government domain to 
condemn the land. Secondly, the tax benefit that they are given 
under local authorities. Thirdly, the same kind of bond financing 
that these public housing, local housing, authorities are able to 
operate under. 

Senator Ellender. The trouble is that cannot be done without 
Government financing. 


Mr. Merrion. Certain steps in that direction we feel can be taken 
that would aid us considerably. 

Senator Ellender. I wish you would elaborate on that, if you do 
not mind, because — — 

Mr. Merrion. Well, I tell you, after I finish my statement, I am 
going to ask you to listen to Mr. Wilkes, who will give you a very 
definite outline of that kind. 

Senator Ellender. I hope he can. 

Mr. Merrion. It must be kept in mind also that in a housing 
project such as the Robert Brooks Homes in Chicago, where the 
rental schedule ranges from $20.50 to $38 per month, the Federal 
Government provides an added $17 to $18 per month. The average 
figure of such Government subsidy in the Chicago area is $200 per 

Senator Taft. I am rather surprised at that because the average 
in the country is only $100, and I thought the limit of the law is $150. 

Mr. Merrion. These are actual figures for the Chicago Housing 

Senator Ellender. Well, it cannot exceed 3% percent of the cost 
per unit. The evidence before us shows that last year it was 2.6. 
So if you take 2.6 of the cost of the highest one here, $6,351, it would 
not be a thing like $200. 

Mr. Merrion. That is the average, but the allowance is how high? 

Senator Ellender. 3K percent. That is the maximum that can 
be paid under the act, as I recall, and of course it is made fluid. In 
fact, if persons are better able to pay a little more; that is, if they get 
better salaries, then there is that proportionate increase. 

The evidence shows, as I said, that because of war and because 
some of the tenants in these houses received a little better salaries 
per month, the cost of the subsidy was reduced to an average as I 
recall, of 2.6. 

Senator Taft. Well, it was less than $100. 

Senator Ellender. Oh, yes; much less. 

Mr. Merrion. Well, that is the national average. 

Senator Taft. I thought the limit was $150, that is 3 percent on 
$5,000, approximately. That is the limit, I think. I am not sure. 

Mr. Merrion. I received figures that came from the Housing Au- 
thority through a local newspaper that set up their average as $204 
on the projects now operating. 

Senator Taft. You mean in Chicago? 

Mr. Merrion. In Chicago. 

Senator Taft. Well, we can check that and find out. 

Mr. Merrion. Estimated over the 60-year period, this would in- 
dicate payment of the full cost of the housing unit twice during its 
lifetime. When we consider building housing units up to a total of 
10,000,000, as is freely advocated, we would then add to the annual 
Federal expense the sum of $2,000,000,000 a year, which over a period 
of 60 years would reach the astounding totafof $120,000,000,000. 

Senator Taft. W^ell, we are not considering any such sum as that. 
You do not need to be concerned about that. 

Senator Buck. How did you arrive at the $2,000,000,000? 

Senator Taft. 10,000,000 houses at $200 a piece. 

Mr. Merrion. We are talking about 10,000,000 houses. Of course 
I have no statistics that prove that except that Mr. Strauss estimates 
that we might need 17,000,000 eventually. 


Senator Ellender. You mean to clear the slums? 

Mr. Merrion. Well, a total housing program to build for the lower 
third and part of the second third. 

Senator Taft. I think the Administration is much more modest. 

Senator Ellender. I presume since the witness is against it, he is 
trying to paint as black a picture as he can. 

Senator Taft. I do not know, but I have an idea from Mr. Bland- 
ford's testimony that he had in mind something like 250,000 a year, 
something like 2]i million in 10 years. He did not say so expressly. 
At $100 a piece that would be $250,000,000, not $2,000,000,000. I 
think that is about the highest figure mentioned — although the A. F. 
of L. did want to build 500,000 a year. I do not think you need fear 
this figure if size is what you are afraid of. 

Mr. Merrion. That is what this country is facing when it contem- 
plates the total program of public-housing proponents. 

Is it not good business on the part of those charged with guarding 
the American taxpayer's money to exhaust every means to encourage 
private industry to do the job before adding this impossible load to 
the already overburdened American taxpayer? 

Consider the loss of revenue to the Government in the issuance of 
$54,000,000,000 in tax-free bonds required to finance this huge pro- 
gram, and the million of dollars of local taxes that would be lost to 
local taxing bodies. 

Consider the political implications of placing hundreds of thousands 
of Americans in projects whose tenants are the beneficiaries of local 
and Federal subsidies. I insert for the record a story from the public 
press of the organization of some 100,000 public-housing tenants in the 
San Francisco area under the guidance of the local housing director. 
I insert also an opinion quoted from the director's book citing the 
grave political implications of public housing. 

Senator Ellender. Is that an opinion or an actual fact, based on 

Mr. Merrion. His opinion? 

Senator Ellender. Yes ; is that just an opinion of this writer? 

Mr. Merrjon. Well, this is a public housing director who has 
written a book and our quotation cites what he thinks are the grave 
political implications of mass public housing. 

I refer you to the tragic experience of the city of Vienna, and various 
other cities in Great Britain and continental Europe with this problem 
of housing politics. 

Our association is opposed to public housing not only because it 
will eventually destroy the entire building industry — dealers, financing 
institutions, and builders, but because it is the first step in the social- 
ization of our country — the destruction of our democratic free-enter- 
prise system. Like many evils, a first step and a small dose is appeal- 
ing and popular. Only by fully recognizing the social, political, and 
industrial disaster which will come with its growth can one properly 
gage the eventual result. 

Obviously, it is ridiculous to construct new housing for the very 
lowest income group. There are great quantities of structurally 
sound but blighted housing which can be rehabilitated for those of 
our people who cannot earn sufficient income to acquire new shelter. 
There are other large quantities of existing housing that will be 
made available to the lower rental groups by the removal of their 


present tenants to the thousands of new housing units being supplied 
by our industry. As in the case of providing the other two essentials 
of life — clothing and food — there is no reason for the Government to 
subsidize the housing itself. The individuals must be given relief in 
the same fashion as in these other necessities of life. 

We, therefore, will resist legislation w^hich seeks to promote and 
expand public housing. Beyond this, w^e w^ill recommend legislation 
which will permit private enterprise to gradually supply the low-cost 
housing need. There is no simple method of solving this problem of 
clearing slums and decently housing the lowest-income group. The 
answer lies in a healthy, expanding economy, an improved educational 
system, a social consciousness in each community which will demand 
the enforcement of safety and sanitation codes and the provision of 
welfare activities which will gradually raise the level of the slum- 
dwellers condition. 

At this point I would like to introduce to you Mr. Wilkes again, 
who is counsel for our national association, and has a very specific 
story he would lilte to tell the committee. 

Senator Taft. Is this the Washington story? 


Mr. Wilkes. Yes it is. Senator Taft. Only that part of it, I 
might say, however, which we believe will be somew^hat typical of 
the national picture. We have not endeavored to give the complete 
details of the Washington situation, although I am prepared to answer 
questions on that collaterally. 

Senator Taft. Well, of course we do not -want to go into the 
District legislation. I am interested to have the proposal. Are you 
joining in the new bill? Would the new bill work out a satisfactory 
basis to you? 

Mr. Wilkes. "Not entirely so; no, sir. The McCarran bill you are 
referring to? 

I am here as the counsel of the national association and not on 
behalf of the Local Home Builders' Association. I repeat, it is not 
my purpose to argue the local case except insofar as the evidence in 
that case might reflect conditions which will be typical of urban areas 
throughout the United States. 

Senator Taft. Well, suppose there were to be no public housing. 
We certainly are faced with the fact that we have millions of families 
with less income than can afford to pay rent in a new house or buy it. 
Now, there is a suggestion at the end of Mr. Merrion's statement that 
existing houses can be made available. Such a plan I do not know, 
but just how will you go about doing that? 

Mr. Wilkes. A number of cities have done substantial things in 
that direction. Greensboro, N. C, I am informed, has amended its 
sanitation and fire codes, safety codes, to the end that people who own 
obsolete homes have to board them up and not use them for housing 
or modernize them. 

Senator Taft. It would seem to me if you are just going to try to 
meet this need by rehabilitation you have to have some kind of agency 
to do it on a tremendous scale. I do not think I can leave it to people 
to modernize housing. They won't do it. 


Mr. Wilkes. It has to be done as a matter of experience, I submit, 
by the executive authorities of the city dictating the minimum require- 
ments. For example, we have in the District of Columbia now only 
a small number, but some houses which have no sewerage introduced 
into the house. The only sewerage facilities are on the back part of 
the lot, an open privy. A regulation promulgated, effective, we will 
say, 3 years after that date, that no house may be occupied for human 
habitation unless public sewerage is exttoded into the house would 
have the effect of either rec{uiring that person, the owner of the prop- 
erty, to board his house up or else go to the expense of introducing a 
sewer into the house. 

Senator Taft. Well, you take a $5,500 house, and the rent of that 
is $55 a month. Is that about right? 

Mr. Wilkes. Rule of thumb. 

Senator Taft. Take that at 25 percent for rent. It means that 
man has to earn $2,640 to buy a house of that sort. There are a 
great many more families under that than there are others, over it, 
over that amount. Now what is your proposal as to how we are going 
to meet that housing plan — that need? Can you get this cost down? 

Mr. Wilkes. Senator, I think the first thing any community has 
to decide is the minimum requirements under which they will permit 
anyone to live in that community. We have dealt with that in con- 
nection with medicine and other health requirements. If a person is 
not getting a sufficient amount of nourishment, food is provided. If 
he is not getting enough fuel, fuel is provided. Now, how much 
food and how much fuel is a matter for the people of the community 
to determine. They are not going to 

Senator Taft. Well, I do not believe you have reached the housing 
problem on a relief basis. I do not think you can issue rent certificates. 
I do not think it is the same as food, because it is an existing- 

Mr. Wilkes. I am not contending it is the same as food. I say 
the approach is the same. You give an example of a house which 
rents for $50 a month The community has got to decide whether 
that is the type of house which is the minimum type anyone must 
have in the community. If it decides that, the public has got to pay 
that bill. My only point is that there has got to be some minimum 
that someone has got to determine; and if any housing is below that 
minimum, then the public has got to step in and by some appropriate 
action say that anything below that minimum has got to be outlawed. 
Is that factual? 

Senator Taft. Yes; that is all right. Suppose you throw away a 
million or two homes. How are you going to replace them? These 
people you throw out have not any money to buy houses or to rent 

Mr. Wilkes. The only way you can replace them after determining 
the minimum requirement is either to build new homes or to build 
better homes, and in higher-priced brackets, and do some remodeling 
with your older homes. I believe there is no other answer to it. 

Senator Taft. You would treat the whole thing by passing older 
housing down. I think, anyway, we ought to have some program for 
doing that, for encouraging the doing of rehabilitation on a much 
larger scale than it is being done. 

Mr. Wilkes. I think that is agreed by everyone, Senator Taft. 
I do not think you can say the program is one of providing handed- 


down houses for the people in the lowest-income group or used houses. 
It is probably a combination of the two. 

Senator Taft. Well, people drive automobiles for years, and I do 
not know why second-hand houses are not as good as any other houses. 
But there is not any program to provide them that I can see, under the 
present law. 

Air. Wilkes. Of course, you take the situation presently existing 
in most of our urban areas and you have no surplus housing, and until 
you have a condition of surplus housing created you cannot do very 
much with the hand-me-down house. You have first got to have that 
vacated before you can do anything by way of reconverting or sub- 
stantially improving it. 

Senator Taft. I am talking about a longer-range proposition, and 
how, if you can't build a $2,500 house which is what many people 
require, then we have got to get some way of either subsidizing or we 
have got to provide $2,500 second-hand houses by rehabilitation. 

Air. Wilkes. Well, our plan involves the going into a very inex- 
pensively built house. We have the plans prepared for it, and it 
happens that it is substantially the same plan that our local public 
housing authority has actually built near our baseball park here, which 
is known as the V Street House Development. 

Senator Taft. What do you think you can build a house for? 

Air. W^iLKES. It is very difficult to place a price as of today, because 
of abnormal conditions. 

Senator Taft. Well, take pre-war. 

Air. Wilkes. $2,750 to $3,250. 

Senator Taft. You think you can build a $3,000 house? 

Air. Wilkes. It can be built, sir. 

Senator Taft. How many rooms? 

Air. Wilkes. Four rooms; no cellar. The house consists of a 
living room with direct entry from the front door, a combination 
dining room and kitchen, modern kitchen equipment; a small storage 
room, two bedrooms, and a modern bath on the second floor. 

Senator Ellender. You can do all of that for $3,000? 

Air. Wilkes. You can. I am speaking of the house and not the 

Senator Ellender. I see. Include the land and the facilities. 
All of these properties, I understand, have certain facilities added 
to them. 

Mr. Wilkes. That includes all the facilities except the lot. 

Senator Ellender. How about the refrigerator? 

Air. Wilkes. It includes no refrigeration. 

Senator Ellender. Let's add that to it, then. In other words, it 
will be considerably more than $3,000 if you add that and the land 
and these other facilities you find in public housing. 

Mr. Wilkes. When I speak of refrigeration, I mean electrical 

Senator Ellender. I understand . That is w^hat I had in mind also. 

Senator Taft. Public housing usually provides a range and a 
refrigerator, don't they? 

Air. Wilkes. They have not put refrigerators in the District of 
Columbia. They have put in ranges but no refrigerators. 

Senator Taft. The lot would run what? 

Mr. Wilkes. The lot cost depends entirely on the location. 


Senator Taft. I was thinking of Anacostia. 

Mr. Wilkes. In Anacostia, $500 or $600. 

Senator Ellender. Let's put it $3,500. Now that would mean 
about $25 a month rent. That is what the owner of that building 
would expect to receive in order to pay insurance, pay taxes, and 
get 4 or 5 percent interest. Is that true? 

Mr. Wilkes. Yes; under the plan of financing which has been 
made available tlirough the local building and loan association, the 
rent could be lower than that. 

Senator Taft. Yes; that is what I wanted to ask you. It is not 
necessarily — certainly 10 percent would cover it. 

Mr. Wilkes. It would cover it; more than cover it. 

Senator Taft. That would cover amortization, too? 

Mr. Wilkes. Yes. Of course, the question of interest and 
amortization are very important in fixing rents. If you have a loan 
amortized in 20 years, you have one problem; and if you have that 
amortized in 33 or 60 years, you have quite another problem; and if 
you are paying 3/^ or 4 percent interest, the profit is, of course, sub- 
stantially less than it would be if you are paying 5 percent. We have 
a very specific plan that we have submitted to Senator Burton in the 
subcommittee, which I think might be of interest to you. 

Senator Ellender. Just one question. 

Senator Taft. Well, all I w^ant to indicate is that I have not seen 
any other solution to replace some public housing. I can see various 
things can be done to help reduce the amount that might be needed, 
but I do not see any — I do not see how we are going to escape some 
public housing program. 

Mr. Wilkes. Well, Senator Taft, the problem involves the so- 
called vicious circle. If you have public housing financed — and we 
have got a good $15,000,000 of it financed locally — it is going to be 
very difficult to get private enterprise to go into that same field and 
serve the lowest-income group, because — ■ — • 

Senator Taft. Yes; but are they? I mean, this house you are 
proposing does not do it. 

Mr. Wilkes. I think it will, if you will let me proceed. For 
example, it involves the cooperation of the city government to the 
extent that these slum-cleared areas will be made available at a write- 
down in their cost, which write-down will be paid back in a period of 
19 years by the increase in taxes from the increase in the value of the 
new buildings erected. 

Beyond 19 years the city will be to the good, in that it will get its 
increase in taxation and it will still have gotten back its original write- 
down in the land-acquisition cost. 

Senator Taft. You are proposing a change in the subsidy still 
but a different kind. 

Mr. Wilkes. Well, it is a very substantially lessened subsidy. In 
the first place, the subsidy at the present time involves an outright 
grant of the entire acquisition cost of the land and the buildings 
which were on it, with no taxes paid on that land or on the buildings 
erected on it perpetually. Our proposal involves a writing down of 
the land cost so that the land cost equals the fair market value for 
the use to which the property is being put and the pa^^ments of full 

Senator Ellender. What good would that write-down do? Is 
that for the purpose of reducing the taxation? 


Mr. Wilkes. In this city your worst lands are in tke downtown 
area of Washington, south of Florida Avenue, west of Fifteenth 
Street NE., and east of Rock Creek and north of the Potomac River. 

Let's say you pay for the obsolete buildings on the land a dollar a 
square foot, or $1.50 a square foot for the land. 

Senator Ellender. Can you get it for that? A lot of people 
here would not part with it for such a small, ridiculous sum. Who 
will pay that difference to the private owner? If we can get them to 
donate it to us, we might go somewhere. Remember, in clearing 
any of these slums owned by private mdividuals, the price is pretty 
high because they were within a stone's throw from the Capitol. 
Wlien you tallc of marking down or pricmg down, who is going to pay 
that difference? 

Mr. Wilkes. Senator, we are confronted with a fact there. We 
have got truly horrible living conditions. You are either going to get 
rid of it, or you are not going to get rid of it. If you get rid of them, 
you can do it in two ways: Under the police power, just closing them 
up and paying the people nothing; or going in and paying them a fair 
market value, leaving it to a jury to determine what the fair market 
value is. 

Senator Buck. Would that be $1.50 a square foot? 

Mr. Wilkes. It might run up to $2 a square foot. A great deal of 
this land is alley land, back land. When you get out to the front 
street it runs into considerably more money. The alley property is 
of successively less value, and that is where the bad conditions exist. 

Senator Taft. If you want to go ahead, I think we are more or less 
familiar with the general circumstances here in Washmgton, and if 
you might, begin with your plan on page 3, 

Mr. Wilkes. I will do that. 

Senator Taft. We will put the whole thing in the record. 

Mr. Wilkes. The builders of housing in American cities, through 
the National Association of Home Builders of the United States, have 
taken the position that the job of post-war construction should be done 
by private enterprise and not by the Government — Federal, State^ 
or local. They maintain that housing should continue to be built^ 
owned, and managed by private enterprise. 

Many countries have attempted to solve the problem of making 
available suitable housing for substantially all of the people. None 
has achieved this ideal. It has most nearly been attained in the United 
States by producing a large volume of new housing. 

In the meantime, howevei , our older housing has suffered not only 
from physical depreciation, but, as well, from obsolescence of design, 
facilities, and equipment. Shelter which had neither a central heating 
system nor sewer connections was considered suitable for people who 
could pay their own way at the turn of the century. These facilities 
are today generally considered necessary to the health and comfort of 
all residents of urban communities. The houses and their equipment 
are old, but the ideas of the city residents are new. 

It is clear that the citizens of cities are in agreement that the slums 
should go. The question is: How may it best be done? 

While slum conditions and the means of eliminating them neces- 
sarily will vary in different cities, many problems are common to 
most of the older and thickly settled urban areas. 

Washington, D. C, has liad an unsolved slum clearance problem 
for many years. The Home Builders Association of Metropolitan 


Washington has presented to a Senate committee testimony and a 
plan which, it is beheved, will be of interest to this committee in its 
•study of the problem from a Nation-wide perspective. 

From October 5, 1943, to June 10, 1944, a subcommittee of the 
Senate District Committee presided over by Senator Burton took 
testimony which is printed as a public document in 1,419 pages. 
Under a resolution (S. Res. 184, 78th Cong., 2d sess.) this subcom- 
mittee undertook to — 

investigate the slum clearance and housing programs now being administered or 
proposed by the National Capital Housing Authority — a local public housing 
autliority — with a view to recommending a sound program for meeting the needs 
of the National Capital for the same, both during the present emergency and in the 
post-w ar period, and for financing the program. 

The organized citizenry of Washington had for many years coop- 
erated with the efforts of the National Capital Housing Authority 
and its predecessor, the Alley Dwelling Authority. The conclusions 
were finally reached by these citizens' groups that the National 
Capital Housing Authority has failed in discharging the duties imposed 
upon it by Congress, particularly in that the slums had not been 
cleared and no plan, good or bad, had been worked out, after more 
than 9 years, for the elimination of even the worst of our slums which 
are located in iidiabited alleys. 

Realizing at the outset the need for some action that would in fact 
eliminate slum conditions and that any real plan of slum elimination 
involved substantial commitments upon the funds of the city, and 
indirectly upon the taxpayers, various associations of interested 
groups were invited by Home Builders Association of Metropolitan 
Washington after a careful study by a committee of that association 
and in consultation with the housing committee of the Federation of 
Citizens Associations. A committee was formed of duly accredited 
representatives of nine of the principal citizens and business asso- 
ciations of the city. 

Simply stated, the plan proposed as approved involves the acquisi- 
tion of slum areas by a Government agency. The slum building 
would then be razed. The part of the cleared land upon which new 
housing is to be erected shall then be sold, or leased for a long term, 
on a competitive-bid basis, to private builders. The Government, 
having used its power of eminent domain to acquire the land, would 
specify in a general way the type of improvements to be erected and 
fix a ceiling on rents for a period of time to be determined upon. 
The low-rental housing would be privately built and managed, and 
private enterprise would either own the fee-simple title to the property 
or a long-term lease upon it. To the extent that the income of an 
individual family is insufficient to meet the requirements of the family 
for food, clothing, heat, medical attention, housing, and other items 
considered as necessary for everyone living in our community to have 
whether or not he can pay for it, the deficit should be determined as it 
has been successfully in cities of the United States for the last half 
century by the welfare department of the local government. This 
agency should continue to administer the distribution of welfare 
moneys o]i the basis of the current needs of the family as disclosed by 
its investigations. Full real-estate taxes should be paid to the 
District of Columbia. 

Two detailed studies were made of two separate city blocks by 
successful home builders of considerable experience. One study 


involved a square which it was proposed shoiikl be cleared and rebuilt. 
The second study was of a block in which the housing conditions are 
probably as bad as can be found in Washington. Here it was pro- 
posed to tear down the alley dwellings and contiguous dwellings facing 
on a wide street, after which new dwelling units would be erected 
thereon. The housing in the balance of the square would then be 
modernized. It was demonstrated that the project was financially 
sound provided the Govermnent would implement the effort of private 
enterpr'se in the following respects: 

First. By using its power of ancient domain in acquiring the site. 

Second. By writing down the site-acquisition cost, if necessary, to 
an amoimt equal to the fair market value for the use determined by 
the govern.mental agency charged with the duty of site acquisition 
and sale or lease to private enterprise. The study showed that the 
increase in real-estate taxes in the particular case, as a result of more 
costly buildings being erected on the property, would fully repay 
the city for the write-down in site acquisition costs in about 19 years — 
"after which the community would receive the full benefit of the 
increased taxes." 

The two principal reasons why private enterprise has been unable to 
deal effectually with slum clearance and rebuilding on the cleared 
land are that they have not had available the power of eminent 
domain and financing has not been available on favorable terms. 
The president of the District of Columbia Building and Loan League 

Local building and loan associations are prepared to loan money on low-rental 
housing such as is proposed to be erected under the plan submitted by the Home 
Builders' Association at rates of interest from 3H to 4 percent and for an amorti- 
zation term up to 33 years upon a basis of advancing 90 percent of the value of the 
properties. Funds during the first year would be available to the minimum 
extent of $3,000,000. 

It is my sincere belief that as these projects get under way more institutions 
will be interested in assisting in the financing of this type of housing and, therefore, 
considerably more funds than mentioned above are likely to be available. 

This is the most favorable financing ever offered to builders in the 
District of Columbia by any public or private source. 

Senator Ellender. Now that would involve subsidy, payment by 
the Government, wouldn't it? 

Mr. Wilkes. It would. And an immediate cash subsidy which 
could be determined from that point on out. 

However, the Government would immediately start collecting taxes 
on the land and all improvements erected on it. 

Senator Ellender. Who would make that advance? 

Mr. Wilkes. It would have to be done by a direct contribution 
of the municipalities. 

We feel that the problem is one common to most municipalities, 
and if the job is to be administered by municipalities it can be done 
considerably more economically than if the burden were thrown on the 
Federal Government. 

It is our proposal locally that the job be done without asking the 
Federal Government for any assistance. 

Senator Ellender. That sounds good, but I doubt if you could get 
any municipality to put up the money. I presume most of them 
would have to obtain authority from their State legislatures and lease 
it out. That is what it would amount to. It would amount to this, 

91183— 45— pt. 15 5 


as I see it, after listening to what you have said so far; the Govern- 
ment would, in a measure, be furnishing the land upon which the 
buildings could be built. 

Mr. Wilkes. It would be furnishing a part of the cost. 

The Government would pay for the sites which are presently im- 
proved and then they would revalue those and fix a price upon them 
which would be a use value for the purpose of low-cost housmg. 

Senator Ellender. Now in this study you are talkmg about, was 
an estimate made of the value of the land? 

Mr. Wilkes. Every property was separately appraised. We have 
the study right here and would be very glad to leave it. 

Senator Ellender. I thought maybe you had it in your statement. 

Senator Taft. Is the evidence before the District committee? 

Mr. Wilkes. It is. I have the full evidence, several hundred pages. 
I will be glad to leave that. 

Senator Ellender. How were those figures reached? By estimat- 
ing or were the owners consulted as to what it was to sell for? How 
were the values reached? 

Mr. Wilkes. By Lewis T. Brueninger and Edward Karr, two regu- 
lar appraisers of the Department of Justice, private builders, but 
regularly employed by them, in condemnation proceedings, going into 
the blocks and separately appraising every lot in the entire sc^uare, 
putting a fair market value upon it, and then as a result of their 
experience over a period of many years in these condemnation cases 
determining what in addition thereto the jury would probably allow 
and I think their approach is probably as accurate a one as would be 

Senator Ellender. Now does that study show the amount of the 
mark-down that would have to be paid? 

Mr. Wilkes. Yes, it does; in dollars and cents. 

Senator Ellender. Hoav much is that? 

Mr. Wilkes. It is very detailed. 

Senator Ellender. Have you any idea how much it is? 

Mr. W^iLKES. It amounts approximately to that part of the value 
which is assignable to the buildings themselves. 

Senator Buck. Fifty percent or forty percent? Rouglily. 

Mr. Wilkes. It would be less than 50 percent but would not miss 
50 percent by far. Now that I am approximating. I do not know the 
answer to that. 

Senator Ellender. In other words, if the lot had a building valued 
at $5,000, you would mark off $2,500 and the other would be carried 
by the municipality? 

Mr. Wilkes. That is it, exactly. 

Senator Ellender. How would that be financed? 

Mr. W^iLKES. By an outright appropriation, in the case of the Dis- 
trict of Columbia, by the Congress of the United States dealing with 
District of Columbia firms, and the District of Columbia selling or 
leasing for a long period of years, the properties at the write-down 
price to private enterprise. 

Senator Ellender. New, let's take Chicago where they are not so 
fortunate as to get a Congress to give them as much money as they 
want. Would the city of Chicago not only get the money to take care 
of the mai-k-down, but would it not also have to obtain the money in 
order to pay the owner of the property? 


Mr. Wilkes. Immediately they would have to do it. Of course- 
any program, in my judgment, involving the elimination of only the 
alley slums of Washington, which are the worst slums which we have 
here and which amount, we will say, to $15,000,000 worth of property,, 
could not physically be done in 1 year, and it has been variously 
estimated that it could be done in 10 or 15 years. I think that the 
job of eliminating the alley slums could reasonably be done in 6 years 
by private enterprise after the job once started, provided the planning 
could keep reasonably in step with the building. 

Senator Taft. Not private enterprise. I mean, the proposal seems 
to be the same thing as the urban redevelopment plan, which was 
presented to this committee at length, proposing to go out and con- 
demn large groups of land, which requires, incidentally, not only 
legislative action in each State, but even constitutional action, be- 
cause in Ohio I do not think it is even constitutional to take land for 
housing. So we would have to have a constitutional amendment to- 
do this. Nevertheless, I do not say that the thing should not be 
tried, only I think it will take a long time to get it going in the Unitedi 

One plan was that the Federal Government loan that redevelopment 
corporation, the city corporation, we will say, money at 1 percent. 
In other words, it was proposed that it be a Federal subsidy tln-ough 
the interest rate. The city goes out and borrows the money and 
issues bonds. They did not think, apparently, that the thing would 
work at all unless the Government did come in and finance these 
redevelopment corporations. 

Mr. Wilkes. Senator Taft, I am acquainted in general, and I 
think in some particular, with that plan. We think the plan is too 
ambitious. They should learn to crawl before walking. 

Senator Taft. I thought it was too ambitious because he was taking 
in a lot of property that was not housing. But in the slum area it 
seemed to me we might give some such approval and might subsidize 
that to some extent. Now, we subdize the two in one lump sum in 
effect. It is hard to separate it. We subsidize both the acquisition 
of slum land and low-rent housing. We put the extra cost of the slum 
land into low-rent housing and subsidize it. 

Now, we could separate those two subsidies and have a different 
kind of subsidy for the acquisition of slums. As far as we could get 
the testimony, that acquisition of slum land added about $500 a unit 
to the construction of new houses, so it is only a fraction of the subsidy 
that is paid under F. H. A. for low-rent housing. We can do that. 
The question still remains. Are we going to do any subsidizing for 
low-rent housing? 

Mr. Wilkes. I suppose it is presumptuous of me to call your 
attention to the net effect of the Federal subsidy, but it seems to be 
greatly misunderstood and I would like to submit this to you for 
your consideration. We have got here $16,000,000 worth of subsidized 
housing built under this plan of subsidy, whereby the local housing 
agency arranges to borrow from the national housing agency a sum 
of money. The national housing agency goes to the Treasurer of the 
United States and arranges to sell debentures, we will say, for 90 
percent of the total development cost. That is everything, buildings, 
land, utilities, sod, electric light bulbs, and a turnkey job. 


Then the local housing agency goes to a bank and borrows the 
other 10 percent and sometimes a little more, and that second 10 
percent is about the same as a first mortgage on the property. 

Senator Buck. It is Government guaranteed. 

Mr. Wilkes. It is Government guaranteed, and as a practical 
matter it is the first money paid out of rent first received. Now, 
when that operation is completed, there is a second contract which is 
entered into between the national housing agency and the local 
housing agency whereby a subsidy for a period of years, or in round 
figures 60 years, is guaranteed to be paid to the local housing agency 
in an amount not to exceed approximately 3^ percent of the total 
construction cost. 

But that is not all. They get an additional subsidy from the local 
government in no tax. So they get about a 4^^-percent subsidy, and 
actually the only obligation that the agency has is to collect enough 
in rent to keep that property in a state of repair. 

Senator Taft. That is right. That is the subsidy. That is the 
program we know. The subsidy in eiTect pays for the whole building, 
not quite, but it is about the same. The Federal subsidy pays the 
cost of the building, so the local housing authority has the building 
for nothing. That is approximately the eft'ect of the present subsidy. 

Mr. Wilkes. Exactly. I have been amazed, in talking to Mem- 
bers of Congress, to realize that a number of them did not know that, 
but of course I would know that the members of this committee 
would know of it. 

Senator Taft. Well, there is no secret any more about the subsidies. 

Senator Ellender. Well, as was pointed out by quite a few wit- 
nesses, the amount of subsidy decreases with the increased amount 
of salary received by the people who live there. 

Mr. Wilkes. That is entirely true. 

Senator Ellender. For the past 2 years, I think, the subsidy pay- 
ments have considerably decreased. 

Mr. Wilkes. Well, if they are 2 instead of 3K percent, you have 
to add 1 % percent for your local tax exemption and you are back up 
to 3% percent again. That means that you only get enough in rent 
to just about pay for the maintenance of your property, and these 
properties are new today and require very little maintenance for the 
first 5 years. 

Senator Taft. The question is whether that subsidy can be re- 
duced. I agree, if we can do it cheaper, I think we should. I do 
not know about these income figures. But taking your income figure 
even on your basis of $3,500 here and 4-percent mortgage, et cetera, 
you will have a rent — what do you figure the rent? 

Mr. Wilkes. The rent can be gotten down in actual figures to 
$24 per month to $26 per month. It depends on what market you 
are building in. 

Senator Taft. $24 or $25 a month, which is $300 a year, which is 
about — well, a $1,200 a year income. 

Mr. Wilkes. Many people do not have that constant income. 

Senator Taft. Well, what are you going to do about that? 

Mr. Wilkes. The community has got to pay for it. 


Senator Ellender. Under your plan they would have to pay twice 
for it. 

Mr. Wilkes. They pay in the site write-down. Now, under public 
housing they pay exactly the same thing excepting that instead of 
writing down this site, they write it off. 

Now, instead of having a complete subsidy, complete permissible 
subsidy, under the existing public housing plan, to the greatest extent 
you have a- subsidy of only the difference between what that family 
can get together to pay as rent, and what it actually has to pay in 
order to meet this minimum $24 or $25. There is nothing new about 

In January of 1944 there were 4,000 families in the District of Co- 
lumbia, if you please, who were receiving rent assistance from the 
Board of Public Welfare. Now, they are not all people who are out 
of work. They are the sick, lame, lazy, incompetent, for one reason 
or another, all unfortunate people, but they are there, and they have 
been with us for some time, and again I get back to this fundamental 
proposition: You go into a European city before the war, and you 
could see people begging on the streets, presumably for money enough 
to get food. Now, we adopted a political philosophy, locally and 
nationally, some years ago, which did not make it necessary for people 
to beg on the street to get food and fuel, and we are paying the cost. 
We have been paying it for generations here, to keep those people in 
food and fuel and to give them medical attention. 

Now, we turn to the question of housing. We have been giving 
them assistance in some awfully poor housing. If you are going to 
increase that housing, the public has got to pay part of the additional 
cost, not all of it, because some people who live in that housing, live 
there not only because of its price but because they cannot get any 
other housing, so that some of those people can afford to pay, instead 
of the $9 a month or $11 a month they are now paying, perhaps $20 
a month, and you have to supplement their income by $6, we will say. 
Other people cannot pay anything, and you have to pay the whole 
$24 to $26. 

Senator Taft. My impression is that if you established that thing 
it would cost you so much more than the subsidy of public housing 
that you could not compare it. Everybody would be entitled in 
effect, when you got through, to be able to pay a $24 rent as being 
the lowest economic rent, and everybody would get it. Everybody 
would get it who did not have an income of $1 ,200. They would come 
around and get that difference. 

I think; when you got through, you would have so much more ex- 
pense than any public housing program that is likely to be adopted — 
and besides, you have the strenuous objection of relief agencies. 
Father O'Grady was here yesterday objecting to putting people on a 
relief basis. I just do not think that plan, as applied to ordinary 
normal life when we are not having a depression or anything, is a wise 
or an economic plan. 

Mr. Wilkes. Pardon me. I think that by our looking at the 
broad picture it is perhaps more difficult to get the restricted problem 
that we have before us. Let's take Washington, which all of you 


gentlemen are acquainted with. We have had an alley slum condi- 
tion here which Congress and the people have been talking about as 
long as I can remember, and I have lived here all of my life — actually 
little has done with it, although we have had an Alley Dwelling 
Authority here for more than 10 years. Fifteen million dollars can 
determine what can be done to eliminate those houses. We are not 
talking about billions now, we are talking about $15,000,000, and 
$15,000,000 is something that our city, without a tax increase, can 
stand over a period of 6 years. That is to say that part of the — — 

Senator Taft. I do not differ with your suggestion in that at all, but 
when you put these families out, why are they there? They are there 
because they cannot afford to pay more than $10 a month rent. 
What are they going to do when you put them out? That is the 
problem we are facing. It is just a question of money. I agree with 
you, and I think it might be done for a fairly reasonable sum and really 
get something done. I do not think you can take care of all the low- 
cost housing problem. 

Mr. Wilkes. You have a problem, however. The theory of 
beginning up here to produce low-cost housing in a strata, we will say, 
of families earning $2,500, when you can begin down with the families 
that earn from nothing up to $1,200, it seems to me, is not sound. 

Senator Taft. I think everyone who has appeared before us has 
agreed that the income should be limited, that people earning over — • 
well, $1,000 to $1,200 a year— should not be allowed to live in sub- 
sidized housing. They admit that they have got into a condition in 
the war that is wholly unjustifiable, in permitting $2,500-a-year 
families to live in public housing. 

Mr. Wilkes. Senator, I think I can demonstrate to you, or, because 
-of my inability, I just fail to demonstrate to you, from a little bit, 
two or more pages of this statement. We get into the cost factors 
that Senator Ellender was asking about, and I think we have devel- 
oped some evidence here which will be of some real mterest. I will 

The Home Builders Association of Metropolitan Washington pro- 
duced proof of many factors important to a consideration of slum 
clearance. Some are enumerated as follows: 

1. Private home builders can and have produced low-rental housing 
at a saving in construction cost of from 25 percent to 45 percent as 
compared with public housing costs. 

2. Management of all housing under control of the National Capital 
Housing Authority actually costs 160 percent of the expense of man- 
agement by private enterprise including a fair profit by the latter. 

3. Architectural fees cost National Capital Housing Authority 
approximately 10 times the charge to private enterprise. 

4. As against the almost nominal construction administrative costs 
to private enterprise, the following is the cost for each single housing 
unit to National Capital Housing Authority in six of its large projects: 

Administrative costs 
Project: per dwelling unit 

Frederick Douglass $519. 28 

Parkside dwellings 438. 01 

V Street houses 229. 83 

Williston apartments 218. 24 

St. Marys apartments 107. 88 

Stoddert dwellings 106. 86 


Now, \ve find in the right-hand column five hundred-odd dollars, 
$438, $229, $218, $107, and $10G. _ 

Senator Taft. What does that include? 

Mr. Wilkes. It is a nebulous sort of a thing but it is taken bodily 
from the record of the National Housing Agency which yearly has to 
submit a report to the President of the United States under the act 
of Congress, and it includes the office overhead and other related 
overhead in the way of superintendence coming from the home 

Now, you will notice that the Stoddert dwelling is only one-fifth 
of the cost of the Frederick Douglass dwelling. Those are both large 
and both in the same section of the city. One is a little bit better than 
the other, but the superintendence should not be any different, and 
I can see no difference from the slight knowledge I have in such 

I will resume. 

Senator Ellender. I notice here that Frederick Douglass, $519.28, 
and the Stoddert Dwellings, $106.86, per unit. Is that for the same 
kind of service? 

Mr. Wilkes. It is the same service, as found by the Govenmient 
auditors of the National Capital Housing Authority as reported to 
the President of the United States. 

Senator Ellender. That does not include water, electricity? 

Air. W^ilkes. It is the administrative costs per dwelling unit in 
connection with the original construction of the dwellings. 

Senator Ellender. That sounds incredible. I am not trying to 
say your figures are not correct. 

Mr. Wilkes. These are taken right from the Government's record. 
Those figures were not denied, although there was a rebuttal and 
surrebuttal. Those figures were not denied. 

The cost of supplying suitable housing to substantially all residents 
of an urban community will constitute a heav}^ additional tax burden. 
For this reason, it was concluded that the cost factor is of prime 
importance if the job is to be done in our day and age. Therefore, 
data with respect to construction and management costs was thor- 
oughly prepared and carefully presented with the permission of 
Senator Burton's subcommittee. 

Myron Davy, a graduate engineer and an outstanding citizen and 
a successful builder of low-rental and moderate-sale-price housing, 
made a study of National Capital Housing Authority's pride and 
joy — its V Street project. His study included inspections of the 
finished product, reference to contract plans and specifications of the 
public-housing products. 

Mr. Davy stated that he has built 700 houses, 108 apartment units, 
stores and commercial buildings in the District of Columbia. He 
compared one of his groups of 15 houses with the V Street houses 
which were built by National Capital Housing Authority at approxi- 
mately the same time, and found that they were comparable in size, 
but his houses were much superior in finish. 


Now, at this point I would like to pass up pictures of the two proj- 
ects here. One is marked "Private housing" and the other is marked 
"Public housing." The private housing deals with 2413 Clay Street 
NE., which is a Davy-built house and typical of 15 which he built at 
the same time and generally typical of several hundred which he has 
built in that immediate vicinity. 

At the right is the pride and joy of local public housing, known as 
the V Street houses. Now, you will see that the architectural values 
are much more attractive, it is submitted, in the private-housing 
example than in the public-housing example. 

The front rooms of each house are pictured in the upper right-hand 
corner. One has an iron railing and a curved stairway leading up 
stairs. The other has a plain wooden balustrade. 

In the living room, in the public housing, is a space heater. That 
is the only heat for the entire four rooms of the house. That coal is 
put into the heater and the heat is dispersed throughout the house 
without any radiation or ventilators or anything of the sort. 

Senator Taft. There is no basement in either case? 

Mr. Wilkes. No basement in either case. The private housing 
has an air-conditioning heating unit. You can see on the left-hand 
side of each picture the comparison between the equipment in the 
kitchens, and on the right-hand side the bathrooms, and in the lower 
part you can see that the floor plan is very similar and almost the same. 

The area and the cube content of the houses are approximately the 
same. They are both of masonry construction, both built in the same 
building season of the same year. 

Senator Ellender. How about the cost of land? 

Mr. Wilkes. The cost of land is omitted by reason of the fact, as 
you pointed out, it would be unfair to charge the public housing the 
cost of buildings, the slum buildings, that were on that site. 

Senator Ellender, Now, how about the cost of bringing the water 
and the electricity to the house? 

Mr. Wilkes, The same in both instances. 

Senator Ellender. Was it the same locality? 

Mr. Wilkes. They were both in areas where row houses are per- 
mitted, and both are row-house developments. The cost is exactly 
the same, the same assessment for water, and so forth. 

Senator Ellender. Why do you think there should be as much as 
$831 difference in the cost? Do you think it is because a Government 
agency has the job of building it, or what? 

Mt. Wilkes. No, sir. There are a number of reasons. In the first 
place the private builder builds on a 12-months-year program. Pri- 
vate builders, in general, pay, it is believed, more per year for their 
labor, but they pay less per hour and less per cube. That is an im- 
portant factor. 

Secondly, Government has not in this instance, and generally can- 
not, build with the same overhead. 

Senator Ellender. Well, aren't the rates for a carpenter the same, 
whether they work for the Government or private individuals? I 
thought all unions had a scale of $1.75. 


Mr. Wilkes. Well, there are two scales, one known as the A scale 
and one iff the B scale. The A scale is applicable to monumental 
buildings and downtown office buildings and the like. The other is 
the B scale, a lesser rate, which is charged for home building, residen- 
tial building, and the reason for it is, as I said before, the downtown 
buildings are done by private contractors. They get through a job 
and they are looking for another and the men are laid off. The home 
builder, by buying the land and keeping himself engaged, his office 
force, his labor force, and everyone, else busy approximately 12 months 
a year, actually gets his labor for a less amount per cube of house 
developed than the Government does. 

Now, the Government has, I suppose, of necessity, all kinds of 
inspection requirements. For instance, if a painting subcontractor 
on a Government job runs out of paint and he needs, we will say, a 
quart to finish up, and it is 10 o'clock in the morning, as a practical 
matter he probably has to lay off his men because he has to get the 
quart of paint and have it inspected before that quart of paint can be 
used. * 

The private operator will go to the nearest hardware store if it is too 
far downtown, and the man, before he runs out, will be using that 
paint before he finishes up his job. 

Senator Ellender. That may be for strictly Government work, 
but I do not know that a local authority does the same thing or has 
the same regulations. 

Mr. Wilkes. Well, I have attached to my statement a summary 
of the evidence, and I am reading from page 6: 

Mr. Wire testified at page 505 that the Parkside specifications contained 600 
pages, while his job required only 10 pages, which was ample. 

Now, the buildings were in the same section, the same general 
character of buildings, and I do not want to exaggerate and I cannot 
give the exact number of pages, but in that 600 pages of specifications, 
as I recall it, 28 had to do with the fertilization of the land in preparation 
for the sodding or seeding, and it required that cow manure not 
less than 6 months nor more than 2 years had to be provided, among 
other things, and it took 28 pages. 

Now, anyone who has had experience with contractors knows this, 
that before they get on a Government job they cannot tell whether 
they are going to have a reasonable or an unreasonable inspector — 
assuming they are all honest — or an experienced or inexperienced one. 
If he gets an unreasonable, inexperienced inspector, he is up against 
something that he has got to take into consideration when he makes 
his bid. Furthermore, a builder has his brickwork and his concrete 
work, and a number of other items wdiich are not subbed out by him, 
and he has to pay no subcontractor's profit, whereas, in general, where 
a job is done by a general contractor for the Government, he subs out 
just about everything except the superintendence and perhaps a little 
bit of carpentry work. 

Senator Ellender. With all due respect, I do not believe that such 
practices are resorted to by the authorities that are created outside 
of the great city of Washington. 


Mr. Wilkes. In the metropolitan area of the District of Columbia, 
and, if I may make a personal reference, in cases under bonds I have 
represented builders for the last 20 years in our local courts from 
many sections of the country, particularly in the erection of post 
offices, and that is the general Federal practice. 

Senator Taft. Mr. Wilkes, the point is that it is more expensive to 
build. I suppose if we really wanted to find that out we would have 
to get an investigator out to investigate. We are glad to have your 
statement and we are not going to hear from the District people in 
reply. 1 do not know what they have to say. I have not any doubt 
that as a general thing it probably is more expensive and usually does 
cost the Government more to build than a private person. What 
exact difference there is, I do not know. 

We have to finish pretty quickly. Do you want to go on to the 
next subject? 

Air. Wilkes. Wliatever your pleasure is. 

Senator Taft. The cost question is interesting, but the chief thing 
of interest to me is how low the private buiWers can build, and I take 
it your statement is they can build for $3,000 outside the land. 

Mr. Wilkes. They can build for a third less, and you cannot mis- 
take that. That is susceptible of proof. It has been proven. They 
manage for substantially less. The management cost — there is no 
refutation of this even attempted— is 13 percent of rents collected by 
the Federal Housing Agency here, and 5 percent is the recognized 
management charge, as collected and charged by private enterprise. 

Senator Taft. Let me ask you this. Are the home builders — do 
you think there will be any large amount of $3,000 houses built in the 
post-war period? 

Mr. Wilkes. Senator, I would like to refer to two things in that 
connection, if I may. That involves — the implication of your ques- 
tion is whether or not builders, when fairer fields are available to them, 
are going to be interested in going into this lower-income building. In 
the first place let me say that Senator Tydings asked that question 
and he asked if it would not be possible to get some of these builders 
to come in and make written pledges to the Senate committee. At 
the bottom of page 10 1 refer to that. 

His (Mr. Davy's) house had tile bathrooms, built-in showers, 
plastered walls and ceilings, as compared with the V Street house wall- 
board. His house had wrought-iron interior stair rail and balustrades 
in lieu of the cheap wooden rails in the V Street houses. Also, it had 
automatic gas-heating furnace, with grills and ducts giving clean, 
filtered, warm air in lieu of the V Street house coal stove of the space- 
heater type which used up one-third of the floor space in the living 
room and spread fine ash over the house. Mr. Davy's heating system 
cost approximately $250 more than the coal stove in the V Street 
houses. The electric range in Mr. Davy's houses cost approximately 
$60 more than the range used in the V Street houses. Mr. Davy 
erected one more closet at front entrance. He also installed an auto- 
matic, insulated, self-contained, gas, hot-water heater in lieu of the 


unsightly, noninsulated, side-arm, manually operated, cheap hot-water 
heater used in the V Street houses. Mr. Davy testified that his 
house sold for $3,990, including $622.90 for profit and sales expenses. 
His construction cost was $3,017.10 per house while the V Street 
houses averaged $3,817.45 per house, or 26)^ percent more to build 
than Mr. Davy's house. 

Mr, Davy testified further that he prepared an estimate of the cost 
of reproducing the V Street house in accordance with the plans and 
specifications which were followed by the National Capital Housing 
Authority but based upon his own units of construction costs. The 
average V Street house would have cost Mr. Davy $2,976.77 to con- 
struct. This amounted to $871.38 less than the National Capital 
Housing Authority actually paid for construction for their average 
V Street house. The National Capital Housing Authority actual 
construction cost was 29}^ percent more than Mr. Davy estimated 
he could have built the same house for at the same time. His esti- 
mate is based upon his assembled costs of practically identical work 
completed during the construction period of the V Street houses. 
An additional saving of $443.75 for each average house could have 
been made by making a few slight changes in the plans which would 
not reduce material quality or durability and would not increase 
rental or sales resistance. Mr. Davy testified that "the costs by a 
public agency are approximately 52 percent higher than equivalent 
costs by private industry doing a better job in its own way." 

Other testimony was given by builders proving that a comparable 
building erected in the same season of the same year was constructed 
and sold for a price, including lot cost, financing charges, profit, and 
a salesman's commission, for less than the mere construction cost of 
the public housing without the ground cost included. 

The only substantial defense offered by the National Capital Hous- 
ing Authority to these construction cost comparisons was that under 
an act of Congress the prevailing rate of wages must be paid on their 
projects and the Secretary of Labor had made an administrative rul- 
ing, binding upon them, that such prevailing wages were the class A 
union wages applicable to monumental structures and heavy types of 
commercial buildings. This accounted for from 3 to 10 percent of the 
differential of 25 to 45 percent established by the builders' testimony, 
which showed that the union-wage rate where applicable to residential 
construction is the lower class B wage rate. 

As to management costs of finished projects. National Capital Hous- 
ing Authority reports showed they averaged 13 percent of rents col- 
lected. The president of the Washmgton Real Estate Board testified 
that the usual and customary charge for management in the District 
of Columbia is 5 percent of rents collected; and that his firm or any 
one of a number of other large rental agencies would gladly take over 
the management of all or any part of the National Capital Housing 
Authority projects for 5 percent of rents collected. 

Architectural services in large low-rental projects involve the draft- 
ing of several typical plans each of which is followed many times in 


the project. Whereas private enterprise pays the architect on a per 
plan basis, it is the practice of the National Capital Housing Authority 
to jpay the architect on the basis of the total construction cost of the 
project, even though a single plan is used for a number of buildings. 

Public-housing procedures are also burdened with charges greatly 
exceeding those of the private "builder building for his own account in 
relation to central-office overhead, administration costs, testing, field 
inspections, and both contractors' and subcontractors' profits. 

Public housing authorities have started off by asking legislative 
bodies for appropriations to erect housing for "the lowest-income 
group." Almost immediately, however, the program changes and the 
construction is of a deluxe and even super deluxe type. 

First the lowest income group is spoken of. Then reference is made 
to the ill-housed lower one-third. More recently, reference has been 
made by public-housing advocates to the advisability of planning to 
rehouse the lower two-thirds in public housing. 

Let us look at the record of the National Capital Housing Authority. 
It started out under the name given it upon creation by the Congress 
of the United States of "Alley Dwelling Authority." Its obligation 
was to clear out alley slums and rebuild housing for the alley slum 
dwellers. The job was supposed to be done within 10 years, after 
which time the occupancy of any of those alley slums was made illegal 
by act of Congress. There were approximately 250 inhabited alloys. 
The Authority cleared 14 of the 250 in 10 years. They rebuilt in only 
5 of the 14 cleared alleys. In the 5 areas rebuilt, only 112 living units 
were erected. A vast majority of the occupants of these 112 units 
never lived in the demolished alley dwellings. 

The National Capital Housing Authority originally estimated 
$9,000,000 as the cost of eliminating residences in the 250 alleys and 
rebuilding for the alley dwellers a sufficient amount of housing accom- 

Congress was slow in appropriating the money, only about $850,000 
having been made available by Congress and by Presidential alloca- 
tions. When, however, in excess of $15,000,000 became available to 
the National Capital Housing Authority through the National Housing 
Agency for its w^ork, its attentions were directed toward building a 
better type of accommodation for families in a higher plane of econo- 
mic prosperity. 

The head of the District of Columbia Board of Public Welfare and 
other officials testified before the Burton subcommittee that there 
were currently 4,000 families in the District of Columbia receiving 
public assistance for the payment of rent. Of these 4,000, only 47, 
or 1.2 percent, were housed on January 28, 1944, in the 2,818 units of 
the National Capital Housing Authority. 

Nor would National Capital Housing Authority under any circum- 
stances consider having more than 25 percent relief clients, and in fact 
feels that a maximum of "25 percent is rather too large." This limi- 
tation is made "in order to assure a helpful environment," "not (to) 
make a poorhouse of it"; "if one filled a property with relief famihes, 


he made a poorhouse of it ; he changed the whole psychology of it and 
interfered with the development of the families." National Capital 
Housmg Authority believes "that we should have families of different 
economic status living more or less as neighbors;" that there is a stim- 
ulus in that "of keeping up with the Joneses, if nothing else, and our 
system provides for that." "Among the items to be considered" in 
determining the proportion of relief clients are: "(1) The families 
themselves; (2) the other families on the property; (3) neighborhood 

Many occupants of the permanent housing projects of the National 
Capital Housing Authority have private telephones and pleasure cars. 
No real-estate taxes are paid on this public housing. Practically all 
is financed so that the only obligation upon the National Capital 
Housing Authority is to collect enough rent to pay for maintenance. 
Many tenants moved from housing which was in good condition, but 
merely overcrowded. Their places in the overcrowded, privately 
owned homes were taken by others who suffer from the same over- 
crowding. The National Capital Housing Authority does not even 
in normal times charge itself with the duty in reporting to local 
health, fire, and building authorities violations of law in the occupancy 
of dwellings— and this even though this constitutes the reason for 
permitting the tenant to obtain accommodations in subsidized public 

At the Senator Burton subcommittee hearings. Senator Tydings, in 
view of the opposition of the operative builders to an expanded Na- 
tional Capital Housing Authority program and their testimony that 
they could do the job better themselves, asked: 

Would it be too much to ask if you could submit to this committee a statement 
signed by the builders that they would obligate themselves to undertake it, as to 
what they would do, what houses they would build, and what they would rent 
for, after they were built? 

On March 31, 1944, immediately after the presentation of the private 
enterprise plan, pledges were presented by responsible local builders 
who agreed to build a total of 23,680 low-rental housing units 
under that plan in the first 6 years after building is permitted under 
Government regulations. Since National Capital Housing Authority 
estimates that there are 20,000 substandard houses currently in need 
of replacement, these builders' pledges constitute an offer to do all 
the building necessary to replace the slums. 

When commitments were asked from these same private builders 
of the District of Columbia for war housing, they obligated themselves 
to build 13,000 units— and built 27,000. 

Attached hereto as a part hereof is a printed copy of my concluding 
statement of the case of the Home Builders Association of Metropoli- 
tan Washington before the Burton subcommittee. It is respectfully 
submitted that the conclusions made in that summary are in large 
part applicable to the slum-clearance problem as presented in most of 
the cities of the United States. 

(The statement referred to is as follows:) 



(Submitted October 5, 1944) 

A. Inteoductory 

Hearings were started on October 5, 1943, under a resolution (S. Res. 184, 

78th Cong., 1st sess.) requiring the Senate Committee on the District of Cohimbia 
to "investigate the slum clearance and housing programs now being administered 
or proposed by the National Capital Housing Authority, with a view to recom- 
mending a sound program for meeting the needs of the National Capital for the 
same, both during the present emergency and in the post-war period, and for 
financing the program." 

The resolution was introduced and the hearings were held at the request of the 
National Capital Housing Authority. 

The organized citizenry of Washington had for many years cooperated with the 
efforts of the National Capital Housing Authority and its predecessor the Alley 
Dwelling Authority. The conclusions were finally reached by these citizens' 
groups that the National Capital Housing Authority has failed in discharging the 
duties imposed upon it by Congress, particularly in that the slums had not been 
cleared and no plan, good or bad, had been worked out, after more than 9 years, for 
the elimination of even the worst of our slums which are located in inhabited alleys. 

The Federation of Citizens Associations and the Federation of Civic Associa- 
tions had both recently taken action vigorously critical of the administration 
■of the Alley Dwelling Authority and its successor, the National Capital Housing 

The Federation of Citizens Associations challenged the Home Builders Asso- 
ciation of Metropolitan Washington to come to grips with the problem of the 
elimination of the slums of the city, and particularly those located in inhabited 

Realizing at the outset the need for some action that would in fact eliminate 
slum conditions and that any real plan of slum elimination involved substantial 
commitments upon the funds of the city, and indirectly upon the taxpayers, 
various associations of interested groups were invited to confer and to consider 
a plan which was tentatively proposed by the Home Builders Association of 
Metropolitan Washington after a careful study by a committee of that association 
and in consultation with the housing committee of the Federation of Citizens 
Associations. A committee was formed of duly accredited representatives of the 
following organizations: 

Washington Board of Trade. 

Washington Real Estate Board. 

Building and Loan League of the District of Columbia. 

Mortgage Bankers Group. 

District of Columbia Bankers Association. 

Washington Taxpayers Association. 

Building Owners and Managers Association. 

Federation of Citizens Associations. 

Home Builders Association of Metropolitan Washington. 

This group adopted a statement of policy (pp. 590-591). 

Thereafter voluminous testimony was taken before Senator Burton's sub- 
committee. I 

it is understood that the National Industrial Conference Board, Inc., 247 Park 
Avenue, New York, N. Y., is undertaking to make a complete summary of all of 
the evidence, together with its findings, which is to be submitted to Senator 
Burton's subcommittee for its consideration and, therefore, will logically be a part 
of these proceedings. In view of this, no attempt will be made to summarize all 
of the testimony before the subcommittee, but, rather, this summation will be 
directed to the salient issues raised at the hearing between the testimony intro- 
duced on behalf of the National Capital Housing Authority and that introduced 
on behalf of the citizens of the District of Columbia through the Home Builders 
Association of Metropolitan Washington. 

In the first place it is again pointed out, that although the National Capital 
Housing Authority requested the hearing, it failed to reveal at the sessions of the 


heiaring any plan for the completion of the work which it was charged to under- 
take in 1934. 

The Home Builders Association of Metropolitan Washington, on the other hand, 
while realizing that the matter of slum clearance involves a difficult problem not 
yet known to be solved anywhere in the world, presented two studies or plans, one 
made by Monroe Warren (p. 580, etc.) and the other presented by Edward R. 
Carr and Lewis T. Breuninger (p. 1356). 

In an effort to make comparisons between the actual accomplishments of the 
National Capital Housing Authority, as a public housing agency, with those of 
private enterprise in the field of low-cost housing, it was felt that the most helpful 
tangible comparison which could be made would be with respect to construction 
costs. Obviously, the people of any community are interested in having public 
improvement completed without wasting public funds, and in view of the tre- 
mendous cost involved in slum clearance, the less the cost the greater is the likeli- 
hood that the whole job or a large part of it will be completed. 

B. Comparative Construction Costs 


The private home builders, it is submitted, have established the fact that they 
developed and built low-rental housing projects comparable to those developed by 
the National Capital Housing Authority, at a saving in construction costs of from 
25 to 45 percent of the officially published costs of the National Capital Housing 
Authority projects. . 

The character and quality of construction was equal or superior to that which 
was found in the National Capital Housing Authority projects. 

The private builders' projects included a number of items which, due to the 
more economical procedure as practiced by the private builders, cost very much 
less than similar items actually cost the National Capital Housing Authority. 
Some of these items are wage rates, profits, bonds, central-office overhead, admin- 
istration costs, job overhead, field inspection, duplicating, and tests and archi- 
tectural and engineering fees. 

Many of the private builders proved the amount of their savings by detailed 
estimates and statements which have not been rebutted by the National Capital 
Housing Authority. This was clearly established in the National Capital Hous- 
ing Authority rebuttal testimony dated June 30 as follows: 

"The National Capital Housing Authority has not attempted nor does it 
intend to attempt to analyze, criticize, or disprove the testimony of the Home 
Builders' witnesses regarding their costs of their own developments." 

Except for the difference in wage rates, the National Capital Housing Authority 
has offered no testimony giving their estimate of the difference between the costs 
of a project actually built by a public agency and a project actually built by a 
private agency. On the other hand, several private builders have presented 
detailed estimates, data, and statistics, which conclusively prove that they can 
develop comparable or superior projects at considerably less cost. 

Even if we were to accept the National Capital Housing Authority's showing 
of the wage rate saving, this would be only a small part of the savings private 
builders have proven they could make by using their own methods and pro- 


Mr. Myron Davy testified (commencing on p. 482) that he prepared an esti- 
mate of the cost of reproducing the V Street house in accordance with the plans 
and specifications which were followed by the National Capital Housing Authority 
but based upon his own units of construction costs. The average V Street house 
would have cost Mr. Davy $2,976.77 to construct. This amounted to $871.38 
less than the National Capital Housing Authorit}' actually paid for construc- 
tion for their average V Street house. The National Capital Housing Authority 
actual construction cost was 29^ percent more than Mr. Davy estimated he 
could have built the same house for at the same time. His estimate is based 
upon his assembled costs of practically identical work completed during the con- 
struction period of the V Street houses. An additional saving of $443.75 for each 
average house could have been made by making a few slight changes in the 
plans which would not reduce material quality or durability and would not in- 
crease rental or sales resistance. Mr. Davy testified "that the costs by a public 


agency are approximately 52 percent higher than equivalent costs by private 
industry doing a better job in its own way." 

Mr. H. Clinton Smith, an independent and disinterested contractor, testified 
(commencing p. 635) that he computed the quantities and prepared an estimate 
of the reproduction cost of an apartment house built by the National Capital 
Housing Authority and known as St. Mary's Court. The prices used in the 
estimate were based upon the costs of comparable work completed during the 
same construction period and according to the methods and procedures as used 
by the operative home builder. According to this estimate a private builder could 
have built St. Mary's Court Apartments for 27 percent less than the project 
actually cost the National Capital Housing Authority., 

Another estimate was prepared by Mr. Smith, in practically the same manner 
as the St. Mary's estimate, for a project known as the Frederick Douglass Dwel- 
lings. According to this estimate this project could have been built by a private 
builder for 26 percent less than the National Capital Housing Authority's actual 
cost for the project. 

Mr. Clarke Daniel testified (p. 563, etc.) that he could have built the National 
Capital Housing Authority project known as Stoddert Dwellings for approxi- 
mately $290,000 less than the National Capital Housing Authority actual con- 
struction cost. This would have resulted in a saving of over 30 percent. 


Mr. Matthew G. Lepley, appearing in his own behalf, stated (p. 256) that he 
built 300 dwelling units of three and one-half rooms average in Glover Park, D. C, 
at a total cost of $3,800 each. These were fireproof masonry apartments. 
Later he built 80 units of the same size for $4,000 per dwelling unit. The Na- 
tional Capital Housing Authority built a project known as Tunlaw Road Houses 
in the same general location, for the sum of $4,560 per unit of comparable size. 
There were 38 three-room and 48 four-room apartments. This was for construc- 
tion cost only on leased ground. Buildings were of temporary frame construc- 
tion. All of these projects were constructed at about the same time. 

Mr. Joseph Deckman testified (p. 282, etc.) that he compared the Parkside 
Dwellings, which cost the National Capital Housing Authority $1,100.88 per 
room, and a group of buildings located on East Capitol Street iu the 3200 to 3300 
block, which cost a private builder, $896 per room. Both projects were built in 
1943. Parkside is constructed with nearly one-half of its buildings of frame 
construction wh.ile the private development is built entirely of masonr}' construc- 
tion. The private enterprise building ha,s tile baths, full basements, more expen- 
sive yards, etc. This comparison showed a difference in costs of approximately 
34 percent. 

Mr. Deckman also compared (p. 277, etc.) the Frederick Douglass Dwellings, 
which cost the National Capital Housing Authority $983.55 per room without 
land, and the Suburban Gardens development, which cost the private builder 
$913 per room. The Frederick Douglass project is mostly of frame construction 
while the Suburban Gardens project is built of brick masonry construction, with 
tile baths, tile roofs, class A kitchen equipment, electric refrigerators, central 
heating plants, and full basements. Suburban Gardens was built in 1942, when 
construction costs were higher than in 1941, when Frederick Douglass was built. 

In his comparison of the preceding projects, Mr. Deckman testified that his 
investigation proved that there was a difference of 20 to 25 percent in cost of 
frame and masonry construction. 

Mr. Deckman presented a list of projects which were built by private home 
builders, and which cost as follows: 

Fairfax Village, a very fine type of apartment construction, cost $1,012 
per room (p. 284, etc.). 

Normandy Village, built by Mr. Eli Busada in 1940, containing five rooms 
per unit, sold for $4,690 per unit complete (p. 293). 

East Pines sold for $3,775 per unit, including costs such as electric re- 
frigerator, land, profits, overhead, salesman's commission, and everything 
complete. The advertised price was a little over $900 per room (p. 289). 

Landover Hills sold for $800 per room, complete including a 5-percent 
salesman's commission (p. 290). 

Fairlawn Village, a development of five-room complete houses built of 
masoiry construction, with tile baths, air-conditioned heating system, insu- 
lated attics, and full basements, sold for $4,990 (p. 291). This project, con- 
taining 403 housing units, was built on much more expensive ground than 
any of the land that public housing has built on under title II. 


Mr. Clarke Daniel testified (p. 411) that his organization known as Standard 
Properties sold many homes at $600 per room, while Frederick Douglass cost 
$1,004.32 per room. He also built complete homes, excluding land costs, in 
East Pines for $2,652.32 in August 1942, and for $2,779 in March 1943 (p. 395). 

Mr. Daniel stated (p. 411) that his Sycamore Hill houses sold complete in 
1940 for $2,990, including automatic heat but no refrigerator. He compares 
these houses with the Frederick Douglass Dwellings consisting of 309 two-bedroom 
units and 4 four-bedroom units, which cost National Capital Housing Authority 
$4,545 per dweUing unit (p. 957). 

He also stated (p. 563) that he has built and sold a large number of houses in 
the Washington area for less than the construction cost alone of any National 
Capital Housing Authority comparable structures. The sale price included all 
items of costs, profits, land, and all sales expenses. 

Mr. Myron Davy stated (p. 474) that he has built 700 houses, 108 apartment 
units, stores and commercial buildings. He compared one of his groups of 15 
houses with the V Street houses which were built by National Capital Housing 
Authority at approximately the same time, and found that they were comparable 
in size, but his houses were much superior in finish. His house had tile bath- 
rooms, built-in showers, plastered walls and ceilings, as compared with the V 
Street house wallV:)oard. His house had wrought-iron interior stair rail and 
balustrades in lieu of the cheap wooden rails in the V Street houses. Also, it 
had automatic gas heating furnace, with grills and ducts giving clean, filtered 
warm air in lieu of the V Street house coal stove of the space-heater type which 
used up one-third of the floor space in the living room and spread fine ash over 
the house. Mr. Davy's heating system cost approximately $250 more than the 
coal stove in the V Street houses. The electric range in Mr. Davy's houses cost 
approximately $60 more than the range used in the V Street houses. Mr. Davy 
erected one more closet at front entrance. He also installed an automatic, 
insulated, self-contained gas hot water heater in lieu of the unsightly noninsulated 
side-arm, manually operated cheap hot water heater used in the V Street houses. 

Mr. Davy stated on page 475 that his house sold for $3,990. including $622.90 
for profit and sales expenses. Hi^ construction cost was $3,017.10 per house 
while the V Street houses averaged $3,817.45 per house, or 26J^2 percent more to 
build than Mr. Davy's house. 

Mr. Harry Poretsky testified (p. 549) that the construction cost, excluding 
land, of the Williston Apartments, built by National Capital Housing Authority 
in 1937, was $1,325.12 per room. He stated that the construction cost, excluding 
land, for his Luzon Avenue Apartments was $800 per room. The Luzon Avenue 
job was much more expensively constructed. There a/e a comparable number of 
rooms per apartment but the rooms are larger in size in the Luzon Avenue apart- 

Mr. Poretsky stated (p. 553) that he built an apartment house at 1811 Irving 
Street NE., which he sold for $1,058 per room, including land, a 10-percent profit 
and a 5-percent sales commission. AH of the floor construction was built of fire- 
proof materials while Williston had wooden joists under the apartments. 

Mr. Poretsky also testified (p. 554) that his Boiling View Apartments, uicluding 
land, cost $1,013 per room. Williston and Boiling View Apartments were of 
comparable construction, three-story, semifireproof buildings. 

All of the apartments included in Mr. Poretsky's testimony were built on a sub- 
stantially higher construction market than the one on which the Williston apart- 
ments were built. WiUiston was built in 1937, Luzon Avenue in 1939, Irving 
Street in 1940, and Boiling View in 1943. The construction costs in the 1943 
market were 33% percent higher than in 1937 when Williston was built. 

Mr. Harry Poretsky described (pp. 555-556) the results of an examination which 
he m,ade of the Williston apartment houses, from which he concluded that the 
buildings were uneconomical in design and construction details. 

After examining the plans and specifications, as well as the two completed 
structures, with great care, Mr. Poretsky concluded that if he had built WiUiston 
he would have used a different design than the one used by National Capital 
Housing Authority, and would have produced a more economical and advanta- 
geous development for the purposes for which the project was intended. 

He would have built 1 building containing 54 apartments instead of the 2 
buildings with only 30 apartments, as designed by the National Capital Housing 
Authority. This more economical improvement of the lot would have fully 
complied with the building code, light, ventilation, and zoning regulations of the 
District of Columbia. It would also have been just as desirable a place to live in 
from every point of view as is afforded by the National Capital Housing Authority 

91183—45 — pt. 15 6 


The same stairways, entrance halls, front entrances, leads, walks, approaches, 
penthouses, etc., would serve 54 apartments as now serve 30 apartments. The 
same number of incinerators, the 1 boiler and service room, 1 janitor's quarters, 
and only 1 water, sewer, gas, and electric service would have been installed if 1 
building had been built instead of the 2 WiUiston buildings. Site improvements 
would have cost less for the 54-unit building than they would have cost for the 
two 15-unit buildings. 

Mr. Poretsky stated (p. 557) that the money expended by National Capital 
Housing Authority to develop the Williston Apartments has not been put to its 
best use and that the uneconomical planning of the Williston Apartments would 
bankrupt a private builder in fair competition with more efficient private builders. 


The total cost of the architectural and engineering items for National Capital 
Housing Authority's Parkside project was given as $64,550.70 by the National 
Capital Housing Authority in their detailed break-down of costs (p. 954). This 
Parkside project consisted of 115 buildings and 373 dwelling units. 

The same items cost Mr. Wire for his Benning Road project, the sum of 
$899.50. This project contained 104 buildings and 350 dwelling units (p. 502). 

The following is actual cost of architectural and engineering commissions per 
dwelling unit for National Capital Housing Authority projects (pp. 951-957): 

Frederick Douglass Dwellings $193. 45 

The V Street houses 192. 12 

The Parkside project - 173. 06 

Williston Apartments 162. 05 

St. Mary's Court Apartments 63. 72 

The Stoddert Dwellings 20. 56 

The record shows the private builders' architectural fees to be as follows: 

Amount paid by Mr. Wire for 1 average dwelling unit $2. 60 

Amount paid by Mr. Davy for 1 average Clay St. house 10. 00 

Estimated cost by Mr. Warren for 1 proposed house 20. 00 

Most of the National Capital Housing Authority housing developments were 

composed of multiduplicated buildings. As an example the Frederick Douglass 

DweUings, out of a total of 107 buildings, had 55 of the one design, 44 of another 

■ design, 6 of a third design, and 2 of a fourth design. The group of 44 differed from 

the group of 55 only slightly in dimensions. 

Designing these multiple box-like units requires far less architectural effort in 
amount and skill than is called for in designing an individual house, office building 
or monumental building. 


The following are the construction administrative costs per dwelling unit as 
compared with an almost nominal cost to private enterprise: 


^'^"J^" dwelling unit 

Frederick Douglass $519. 28 

Parkside Dwellings 438. 01 

V Street houses 229. 83 

Williston Apartments 218. 24 

St. Mary's Apartments 107. 88 

Stoddert Dwellings 106. 86 


Mr. Preston E. Wire testified (p. 486, etc.) that he built in his Benning Road 
project and now maintains and operates there about 700 rented dwelling units, 
all constructed within the past 6 years. He compared the costs of a comparable 
part, of this development, composed of 104 buildings and 350 dwelling units, with 
the Parkside project of 115 buildings and 373 dwelling units. 

He stated (p. 491) that each row of his buildings was completed in 2 months' 
time. "The first group was started May 15, and the leases began on July 15." 
None of his 700 units took to build more than 10 weeks from the time he put 


"the first pick in the ground until the last tenant moved in. The Parkside build- 
ings took several times as long to complete which increased the construction costs 
without any benefit to the tenants. 

He presented (pp. 501 and 502) a detailed break-down of his actual costs of the 
Benning Road development, as taken from his ledger accounts. Mr. Wire's 
-cost sheet includes the whole cost of all public sidewalks and curbs. He also 
paid for the underground electric services. The Parkside had overhead services 
at no cost to National Capital Housing Authority. Sewer and water mains in 
the public spaces were laid by the District of Columbia but at Mr. Wire's expense. 
Mr. Wire connected sewer drains for the roofs and yards into public sewers. 
The Parkside development had no yard drains and the downspouts emptied onto 
the ground, involving less costly and toore unsatisfactory construction. 

Mr. Wire stated (pp. 503-504) that some of his subcontractors paid the A union 
scale of wages, while others paid the B union scale. Several of the subcontractors 
paid a rate of wages unknown to Mr. Wire. The National Capital Housing Au- 
thority, in their comparative estimate of the unit prices of labor costs for Mr. 
Wire's buildings and their Parkside job, based their computations entirely upon the 
•erroneous assumption that Mr. Wire paid only the B rate of wages. The National 
Capital Housing Authority stated (p. 965), "If he [Mr. Wire] paid the B scale 
his costs would be 12 percent less than the Parkside project." 

Mr. Wire testified (p. 505) that the Parkside specifications contained about 600 
pages while his job required only 10 pages which was ample. The Parkside speci- 
fications require methods and conditions which greatly increase costs without pro- 
ducing a corresponding increase in value. This applies to overhead items, inspec- 
tion, approval of materials, change-order delays, and inability to substitute unspec- 
ified materials of equal value when specified materials are difficult to obtain at that 

Comparing the size of rooms, Mr. Wire stated (p. 509), that Parkside had 192 
square feet per average room, and Mr. Wire's project had 194 square feet per 
average room. 

The National Capital Housing Authority reported (p. 950) that Parkside cost 
$1,100.88 per room and Mr. Wire stated (p. 510) that his cost per room was $676. 
Therefore, Mr. Wire built his project for $424.88 less per room than National Cap- 
ital Housing Authority built Parkside. This was a saving of 38J4 percent. It is 
to be noted that National Capital Housing Authority reported (p. 950) after Mr. 
Wire had testified, that their actual cost was $1,100.88 per room for Parkside, 
•instead of the $1,072 cost as was used by Mr. Wire from an earlier published 
National Capital Housirg Authority report in computing 37 percent as the amount 
of saving. 

The National Capital Housing Authority reported (p. 950) that Parkside cost 
$5.73 per square foot and Mr. Wire testified (p. 511) that his project cost him 
$3.47 per square foot. Mr. Wire built his project for $2.26 or 39 percent less than 
National Capital Housing Authority built Parkside. (Mr. Wire testified to 38 per- 
cent because his computation was made before National Capital Housing 
Authority presented its revised report.) 

Mr. Wire's testimony shows (p. 510) that on the basis of his estimates, Parkside 
-cost National Capital Housing Authority 52.3 cents per cubic foot and that his 
project cost 30.1 cents per cubic foot. The saving was 22.2 cents or 4214 percent. 
Mr. Wire stated that his saving on the cubic-foot basis was 41 percent based upon a 
total cost of Parkside of $2,005,181. The National Capital Housing Authority pre- 
sented their revised cost of $2,059,198.43 after Mr. Wire testified. 

Included in the National Capital Housing Authority detailed break-down of 
Parkside costs (p. 954) is an item of unsettled claims amounting to $85,000. This 
item was not reported until after Mr. Wire had testified and therefore it was not 
used in computing his comparative estimates. If these claims are allowed, then the 
total development cost of Parkside would be increased 4 percent and Mr. Wire's 
■percentages of saving would be proportionallv increased. 

The Home Builders' witness stated (p. 1328) that if Mr. Wire used the total 
construction cost (excluding all land acquisition costs) his estimated saving by 
the cubic foot cost comparison method was 46 percent. Mr. Wire in his 41 
and 42 percent comparative estimates based his computations upon the total 
development cost. 

The following is an explanation of the 34 percent saving estimate as given^in 
the rebuttal presented by the witness for the Home Builders (p. 1328). 

Consideration must of course be given to the characteristics of the buildings 
•to be compared. For equal volume of construction, the cost per cubic foot will 
vary somewhat, if different features occur in the two projects, or if the same fea- 
tures vary in amount. 


The Parkside project was so laid out that the cost of the utihties and site im- 
provements was proportionately greater than in Mr. Wire's project. To compen- 
sate for this it seemed desirable to eliminate from the comparison the cost of all 
utilities and site improvements for both projects. Mr. Wire's cost figures howrjver 
did not segregate site improvement costs from other costs. Accordingly for com- 
parative purposes, the cost of Parkside utilities and site improvement is deducted 
from the total figure for Parkside, while the corresponding item is not deducted 
from Mr. Wire's total construction cost. Using the modified figure for Parkside 
and the original figure for the Wire project, Mr. Wire still shows a saving of 34 
percent. It is clear that the actual saving would not be 34 percent, but that it 
would be some figure in excess of 34 percent. When we express the saving as 34 
plus percent we have a figure which is not exact but is verifiably correct. 

It should be noted that the land acquisition costs were deducted for both proj- 
ects before computing either the 46 percent or the 34 percent plus savings esti- 

Detailed comparison of the two projects shows that certain features exist in 
one project and not in the other, and that other features existing in both projects 
differ substantially in the cost of the materials used. Consideration of these 
points of difference makes it evident that they tended to increase the cost of Mr. 
Wire's project far more than they tended to increase the cost of Parkside. There- 
fore, if the two projects had been planned exactly alike and the differences in con- 
struction did not exist, then the percentages of saving as given previously in Mr. 
Wire's estimates would have been increased. 

The following items increased the per cubic foot cost of Mr. Wire's project in 
comparison to the cost of Parkside. These relatively more expensive items found 
in Mr. Wire's project were based upon using the cost figures in the 34 percent 
plus estimate, which omits all utilities and site improvement costs in Parkside. 

It should be made plain that costs only were considered in these estimates and 
comparisons and that the relative merits of the planning of the two projects were 
not at issue here. 

The relatively more expensive items for Mr. Wire's project were as follows: 

Item No. 1. Based upon using the 34 percent plus estimate of comparative 
cost, all of the utilities and site improvements were included in Mr. Wire's project 
and omitted in Parkside. This applied to such portions of the following items as 
were shown to be located outside of the Parkside buildings; sewers, water mains, 
gas, electricity, roads, walks, clearing of site, grading, landscaping, miscellaneous 
yard facilities, general conditions, and equipment. These items, detailed in the 
break-down (p. 953), cost National Capital Housing Authority a total of $350,- 
360.74 for that portion of Parkside which was omitted in the 34 percent plus 
comparative cost estimates. Therefore, on that basis, Mr. Wire's project would 
have a much greater relative value per cubic foot than Parkside. 

Item No. 2. Mr. Wire stated (p. 511) that Parkside had a bath room, kitchen, 
heating plant, etc., for every 5.15 rooms, and his project had the same items for 
every 3.03 rooms. The following statement was made (p. 511)' by Senator 
Burton: "It is generally more expensive to build a series of small apartments 
than large ones." If Mr. Wire had used larger apartments, similar to Parkside's, 
he would have installed only 205 bath rooms, kitchens, heating plants, etc., 
instead of the 350 which he did actually install. On this basis Mr. Wire could 
have saved 145 bath rooms, etc., at an approximate cost of $500 each, or $72,500 
for the saving in total construction cost for his project. 

On the same basis of comparison, if the National Capital Housing Authority 
had planned the Parkside project with the same series of smaller apartments, 
similar to these in Mr. Wire's project, the actual cost of Parkside would have 
been increased over $200,000. 

Item No. 3. All buildings in Mr. Wire's project were of masonry construction. 
Out of a total of 115 buildings, Parkside had 50 of frame construction. If all of 
the Parkside buildings had been built of masonry construction, the total cost 
would have been increased by over $100,000. 

Item No. 4. Downspouts connected to sewers in the Wire project. Parkside 
downspouts empty on the ground. 

Item No. 5. Yard drains connected to sewer in the Wire project. These were 
omitted in the Parkside project. 

Jtem No. 6. All buildings have ceiling joists in the Wire project. Approxi- 
mately 80 percent were omitted in the Parkside project. 

Item No. 7. Quarter-round copings with cement finish were installed at the 
sidewalk and parking line in the Wire project. These were omitted in Parkside. 


Item No. 8. All front entrance steps and platforms were erected entirely of 
concrete with cement finish in the Wire project. In Parkside some were of wood 

Item No. 9. All buildings had window screens in the Wire project. The screens 
were omitted in Parkside. 

Item No. 10. Tile floors were laid in all bathrooms in the Wire project. Park- 
side floors in the bathroom were covered with linoleum. 

Item No. 11. Bedroom closets had trim and doors in the Wire project. These 
were omitted in the Parkside closets. 

Item No. 12. Fences were included in the Wire project. In Parkside they were 

Item No. 13. Face brick was used on all street fronts in the Wire buildings. 
Common brick was used on all of Parkside's street fronts. 

Item No. 14. Six-light sash was installed in windows in the Wire buildings. 
Parkside had cheaper one-light sash. 

Item No. 15. Parapet and fire walls were extended above the roofs in the Wire 
buildings. These were omitted in Parkside. 

Item No. 16. Several groups of buildings had high terraces which required a 
flight of cement steps in the Wire project. This was a much more expensive 
type of entrance approach than those used in Parkside, which had no high 

Item No. 17. Mr. Wire stated (p. 513) that his total cost sheet included the 
following items which were omitted in the total development cost statement of 
Parkside : 

(a) Survey fees. 

(,b) Subdivision costs. 

(c) Financing fees and expenses for securing loans. 

(,d) Taxes on land and improvements during construction, 

(e) Plats. » 

(/) Wall tests. 

ig) Permit fees and expenses. 

The following items are relatively more expensive in the Parkside project and 
increased its cost in comparison to the cost of the Wire project. Because the 
estimates of savings deal only with costs, the relative merits of planning were 
not at issue here or in the preceding list. 

The following items are based upon statements made by National Capital 
Housing Authority (pp. 969, 970): 

First item: More expensive fire protection was installed around the heaters 
than was installed in the Wire project. 

Second item: A better grade of wood flooring was laid. 

Third item: A blanket of 2-inch insulation was provided between the rafters. 

Fourth item: Kitchen floors were covered with linoleum. The Wire project 
had finished wood floors in the kitchens. 

Fifth item: More shelving was installed than Mr. Wire used in his project. 

Sixth item: Vents were provided between the rafters. 

The cost of any one of the first three items in Mr. Wire's list of relatively more 
■expensive items, based upon the 34 percent plus savings estimate, would amount 
to several times the cost of all of the items in the Parkside list above. 


Under a ruling of the Secretary of Labor, National Capital Housing Authority 
was forced to pay an A wage rate on all of its work, although this is without 
precedent in the home building and small apartment building industry's history 
in the metropolitan area of the District of Columbia. 

The local home building done by private enterprise during the last several 
years on Federal Housing Administration insured projects was constructed under 
wage conditions approximating a so-called B scale. This was a scale offered in 
several trades by unions to induce builders to use union labor. It was supposed 
to approximate the scale of wages paid in open-shop operations. Home building 
and small apartment construction in the District of Columbia and throughout 
the United States generally is done under open shop conditions, excepting when 
the United States Government owns the operation. 

Mr. Clark Daniel (p. 395) testified that the A scale of wages was 10 percent 
higher than the B scale. 

Mr. H. Clinton Smith testified that the use of the B scale instead of the A 
scale saved approximately 10 percent for the total of labor and material (p. 649). 


Mr. Clement F. Preller testified (p. 795) as follows: 

"Senator Burton. What is the diflFerence in the rate between A and B? Tea 

"Mr. Preller. Possibly 10 percent. Around 20. 

"Senator Burton. That would be 10 percent man-hours and materials? 

"Mr. Preller. No; 10 percent on labor only." 

The National Capital Housing Authority presented testimony in their wage- 
rate tables (p. 980) which showed that labor was approximately one-third (34.59 
percent) of the total construction cost. Therefore, Mr. Preller's testimony, that 
the difference "on labor only" was 10 percent, is to be interpreted as meaning that 
the difference in total construction costs would be between 3 and 4 percent. 
This witness is president of the American Federation of Labor Building Trades 
Council and favored the continuation of building by the National Capital Hous- 
ing Authority. 

Mr. Joseph Deckman testified (p. 273) that 10 percent was the difference 
between the A and the B wage rates. 

Mr. Bernard E. Loshbough, of the National Capital Housing Authority, testified 
(p. 965) that: "If Mr. Wire paid the B scale his costs would be 12 percent less 
than the Parkside project" and "it would be entirely due to the lower wage rates 

On page 980 the National Capital Housing Authority presented tables I and II 
by which they attempted to show that the use of the A wage rates increased the 
total construction cost of a project 17.08 percent more than the total construc- 
tion cost if the B wage rate was used. However, the Home Builders' witness 
(p. 1327) pointed out that if the tables I and II had been prepared on the basis 
of analyzing the decrease or saving represented by the use of the B wage rate 
instead of the A rate, the conclusion reached by the decrease method would have 
been 11.01 percent instead of the 17.08 percent for the increase method as used 
by the National Capital Housing Authority in their table II. 

The National Capital Housing Authority presented (p. 1366) their table III 
which attempts to show that the Kelly Miller project cost 23.09 percent more 
for total construction cost than it would have cost if the Federal Housing Admin- 
istration wage rate had been used. They also attempted to show, by their table 
IV, that the James Creek Dwellings project construction cost was 20.09 percent 
more than it would have cost if the Federal Housing Administration wage rate 
had been used. 

The National Capital Housing Authority table giving the comparison of the 
Federal Housing Administration and the National Capital Housing Authority 
wage rates (p. 983) shows that some trades have the same rates for both scales of 
wages. For one trade the table shows that the Federal Housing Administration^ 
rate was more than the National Capital Housing Authority rate. 

On page 1172, Gen. U. S. Grant III testified: "The National Capital Housing 
Authority is forced to pay 15 to 30 percent more for its labor than does private 
enterprise." According to this testimony the percentages given are for labor 
only. The National Capital Housing Authority stated in their testimony, 
referring to the wage rate tables, that labor amounted to 34.59 percent of the 
total construction cost. This would be approximately one-third for labor only, 
and if the "15 to 30 percent more for its labor" item was spread over the total 
construction cost, then the percentages would become 5 to 10 percent. General 
Grant also favored the continuation of a construction program by the National 
Capital Housing Authority. 

The following statements were made (p. 800) by Mr. Milton R. Stevens, 
representing Plasters and Cement Finishers Union, Local No. 96: 

"There are very few operators today paying the A scale in the city." 

"It is true that very few men who receive the A scale buy houses that were 
built under the A scale." 

"It is true that his union does have an A and a B scale." 

"The A scale is $2 per hour and the B scale is some $1,375 and other $1.50." 

Mr. John Locher, president, Washington Central Labor Union, American 
Federation of Labor, testified (p. 810) as follows: 

"Question. But you [your unions] have done very little of the work that has 
been done by the Home Builders Association. — Answer. That is correct." 

Mr. Bernard E. Loshbough, of the National Capital Housing Authority, testi- 
fied (p. 972) that: "The B rate was established for only three trades in July 1942. 
These trades are bricklayers, electricians, and laborers. Since that time the B 
rate has practically disappeared." 


This statement made by Mr. Loshbough was contradicted by the following 
testimony given (p. 801) by Mr. Milton R. Stevens, representing Plasterers and 
Cement Finishers Union, Local No. 96. 

"Question. But you do have an A scale and a B scale in your union? — Answer. 
It is true." 

It is to be noted that Mr. Loshbough failed to include this union in the above 
list of three unions which have a B scale. 

Several witnesses who advocated or favored the National Capital Housing 
. Authority construction program offered various percentages for the difference in 
the wage rates which were paid by private and public agencies. The following 
are the percentages offered in the testimony: 

(a) 17.08 percent was given in the National Capital Housing Authority 
tables I and II as the differential based upon the amount of an increase in 
total construction costs. 

(b) 11.01 percent was the differential given under the same conditions as 
(a) except on basis of a decrease in costs. 

(c) 23.09 percent for the National Capital Housing Authority table III 
on the basis of an increase. 

(d) 14.05 percent for the National Capital Housing Authority table III 
on the basis of a decrease. 

(e) 20.09 percent for the National Capital Housing Authority table IV 
on the basis of an increase. 

(/) 12.77 percent for the National Capital Housing Authority table IV 
on the basis of a decrease. 

(fif) 12 percent for the difference between Mr. Wire's and the Parkside 

(h) 3 or 4 percent for the equivalent of the testimony of Mr. Clement F. 
Preller that the difference was "10 percent on labor only." The National 
Capital Housing Authority tables show that labor was approximately one- 
third of total construction costs. 

(i) 5 to 10 percent for the equivalent of the testimony of Gen. U. S. 
Grant III, who stated that: "The National Capital Housing Authority is 
forced to pay 15 to 30 percent more for its labor." 

These many variables in percentages and differences of opinions demonstrate 
how difficult it would be to determine the proper wage rate differential. 

Mr. Bernard E. Loshbough, of the National Capital Housing Authority, 
presented for the record (p. 980) tables I and II, which were cost comparison 
studies of the effect of wage rates. From these tables he concluded that 17.08 
percent was the increase in total construction cost due to the difference between 
the Federal Housing Administration wage rates and the National Capital Hous- 
ing Authority wage rates. He refers to the National Capital Housing Authority 
rate as the A rate and the Federal Housing Administration rate as the B rate. 
The National Capital Housing Authority claims that their tables show that, due 
to wage rates only, their total construction costs were 17.08 percent more than 
the total construction costs of the private builders. The lower wage rates used 
in the tables are not the wage rates furnished by the private builders, but are 
some rates assumed by the National Capital Housing Authority. The Home 
Builders' witness (p. 132i) conclusivtly proved that the source material used in 
the tables was derived from eight especially designed houses outside this city, and 
cannot be considered as rt liable and representative as a comparison with typical 
homes of standard construction in the District of Columbia or projects built 
by private builders. 

The National Capital Housing Authority witness testified (p. 984) : " Wit- 
nesses appearing before this committee have stated that they could build the 
National Capital Housing Authority projects from 26 to 41 percent more cheaply 
than could the National Capital Housing Authority." This statement "more 
cheaply" shows that the National Capital Housing Authority understood that 
the cost comparisons as made by the private builders were prepared by the 
decrease in costs method and not by the increase in costs method as used in the 
National Capital Housing Authority tables. 

If the National Capital Housing Authority tables had been prepared on the 
basis of analyzing the decrease in costs, which the National Capital Housing 
Authority has testified was the actual method used by the private builders, then 
the tables would show a wage differential of 11.01 percent instead of the 17.08 
percent as given in the National Capital Housing Authority tables. The National 
Capital Housing Authority tables cannot be representative of the difference in 


the actual wage rates because the National Capital Housing Authority testified 
(p. 1361): "The National Capital Housing Authority never had, nor does it now 
have, access to the actual rates used by Home Builders' members." 

The Home Builders' witness (p. 1321) proved by facts and detailed figures 
that the National Capital Housing Authority tables were invalid and that the 
conclusions drawn from tht taVjles were inaccurate. It was shown that a very 
large percentage of the workmen usually emplo.yed on this '-ype of construc- 
tion were not included in the comparison of wage rates as analyzed in the tables. 
The National Capital Housing Authority based their tables upon the assumption 
that all of the work in each trade would be performed with journeymen exclusively. 
The National Capital Housing Authority also assumes in the tables that the only 
men employed on concrete work would be journeymen bricklayers. On most 
construction jobs the number of nonjourneymen would equal or exceed the number 
of journeymen employed. On masonry and concrete work a large majority of the 
men employed are nonjourneymen who have a wage differential of 44.44 percent 
while journeymen have a differential of only 7.69 percent. In the item of plumb- 
ing, where the classifications are about evenly divided, the difference between the 
National Capital Housing Authority rate and the Federal Housing Administration 
rate is 55.55 percent for journeymen and minus 2.66 for the nonjourneymen. 
Other trades have proportional differences. The National Capital Housing 
Authority does not deny that there were inaccuracies in their analysis of their 
tables but claim that they were "minor omissions," and of "negligible import- 
ance" (p. 1361). 

The above figures clearly establish the fact that the inaccuracies in the analysis 
of the National Capital Housing Authority wage rate tables are "major" and not 
"minor" omissions, and are of "great" and not "negligible" importance. The 
difference between plus 55.55 and minus 2.66 is certainly more than "negligible." 


The National Capital Housing Authority offered testimony as follows (p. 1362) : 
"The cubic-foot method has not been considered as a reliable method of estimating 
in recent years, and is never used by builders who submit contract bids." Accord- 
ing to the testimony of H. Clinton Smith (p. 1328), preparing estimates of costs 
by the cubic-foot method is the most universally used procedure in comparing 
costs of completed structures when the actual costs of the structures were known. 

If the actual costs of two structures of different size were known, arid a compari- 
son of costs was to be prepared, the cost of each cubic foot of each structure could 
be computed and the comparison of actual costs could be accurately determined. 
Why should time and money be spent in preparing estimates which would be an 
approximation only, when the actual costs of the completed structures were 
known, and the comparison would be made from accurate actual costs instead of 
the approximate estimates as advocated by National Capital Housing Authority? 

The Bureau of Labor Statistics of the Department of Labor used very ex- 
tensively what they refer to as "a cubic-foot comparison of the costs of con- 
struction." Another Government agency which used the cubic-foot method was 
the National Capital Housing Authority. In their table 2 of the annual report 
for the fiscal year ending June 30, 1938, the National Capital Housing Authority 
gives the "building contract cost per cubic foot," for a comparison of the costs 
of several types of structures. 

The Bureau of Labor Statistics in their Serial No. R. 933, which is the publica- 
tion from which the National Capital Housing Authority derived the information 
they used in their tables I and II, also used "cents per cubic foot" construction 
cost comparison. 

The reason Federal Housing Administration changed from the cubic-foot 
method was the fact that different estimators used different methods of computing 
the volume of structures. Mr. Wire cubed both Parkside and his own project 
by exactly the same methods, which assures an accurate comparison and elimi- 
nates any objection which Federal Housing Administration could have to this 
method of cost comparison of completed structures. Mr. Loshbough conceded 
the accuracy of the cubical computations of Mr. Wire after checking them him- 
self, but then seeks to discredit the use of this method of comparison without 
supporting his opinion by that of any other person or by any authority. 



Mr. Clarke Daniel offered (p. 567) an explanation of the reasons whj'- private 
enterprise builders operated more economically than the Government under the 
National Capital Housing Authority procedures. Unrestricted use of materials 
allows the private builder to take advantage of new methods of fabrication and 
simj^tlification of production procedure. Each workman is able to do more than 
one job, so that in good weather the men work outside, in bad weather they all 
have inside jobs. In this way they are able to be supplied continuous work day 
in and day out, year in and year out. Thereby mechanics work more days per 
year and earn more per year although they receive less per hour. The mechanics 
are especially trained in that particular type of construction and produce more 
than men who have had more experience on entirely different types of construction. 
The men like this work and they become, along with the private enterprise home 
builder, professional low-cost housing mechanics and builders. 

The Home Builders' witness stated (p. 1321) that the National Capital Hous- 
ing Authority spent considerably more money for the construction of their 
projects than" an operative buildtr using his own methods and procedure would 
have spent for comparable construction. A comparison of the break-down 
figures of the Parkside project and Mr. Wire's Benning Road project shows that 
if Mr. Wire's methods and procedure had been applied to the Parkside project, 
there would have been a saving of approximately $300,000, involving only three 
items. These items were the bond, the contractor's profit, and the difference in 
administration costs. On the basis of following Mr. Wire's methods, the first 
two items would be eliminated entirely. The third item is explained by comparing 
the administration costs of the two projects. A detailed cost report was made by 
National Capital Housing Authority (p. 953) in which their cost for the item of 
administration was given as $163,376.58. This same item cost Mr. "Wire (p. 502) 
for his Benning Road project $14,175, which is his actual expenditure of $8,714.08, 
raised proportionately to meet the larger size of the Parkside project. The saving 
for this one item of administration costs would have been $149,201.58. The total 
saving for these three items would have been approximately 20 percent of the 
total construction costs, and would have been in addition to the saving realized 
from the difference in wage rates. 

According to the testimony of Mr. Matthew G. Lepley, a witness in his own 
behalf (p. 252) the operative "builder has a very much smaller overhead cost than 
the public agency or the general contractor. The overhead is also increased and 
other expenses incurred by the loss in time and money due to the delay in getting 
material approved and receiving change orders. Other savings were due to the 
fact that on Government-constructed projects the general contractor's greatest 
overhead expense is in preparing estimates for bids. The operative builder saves 
all of this expense. The general contractor, building Government jobs, can use 
specified materials only, while the operative builder can take advantage of unusual 
bargains in materials as the opportunity presents itself. 

The Home Builders' witness (p. 645) explained that the private builder can 
purchase materials of his own selection in large lots at wholesale prices and use 
the materials in several different projects. He can make purchases at the low 
levels of seasonal or market conditions. This is made possible by the fact that 
the private builder has complete control over his plans and specifications, which 
is not the case with the general contractor on Government-constructed projects' 


Mr. Bernard E. Loshbough of the National Capital Housing Authority presented 
for the record (pp. 949-957) detailed break-downs of costs for six National Capital 
Housing Authority projects. 

In reply to a request made by Mr. James C. Wilkes, counsel for the Home 
Builders' Association, these break-downs were prepared and mailed to Mr. Wilkes 
on March 24, 1944, for his information and use in preparing studies of the com- 
parisons of the National Capital Housing Authority costs and the costs of the 
private builders. The National Capital Housing Authority referred to these as 
a "detailed break-down of costs," and it was reasonable for the Home Builders' 
Association to expect and believe that the figures contained in the break-downs 
which National Capital Housing Authority placed in the record were accurate 
and represented the actual costs. 

Mr. Loshbough also placed in the record (p. 941) a letter which Mr. John 
Ihlder of the National Capital Housing Authority wrote Mr. Clarke Daniel. In 
this letter the following statement was made: "Actual recorded costs for these 


items are not available inasmuch as the projects are built by a contractor sub- 
mitting the lowest bid after the project has been publicly advertised for construc- 
tion bids. When the project is finished the contractor's itemized break-down 
as to actual costs of these items is not made available to the National Capital 
Housing Authority." 

The National Capital Housing Authority made this statement (p. 1361): "The 
private builders have never had a complete break-down of labor and material 
costs, either for their own use or publicly available. Neither was sufficient data 
for specific public projects readily available at that time for making this needed 

The National Capital Housing Authority presented a break-down of costs for 
Stoddert Dwellings (p. 951) which omitted the items of masonry and concrete. 
The plans for this project show that these items were included in the construction 
of this project and that they cost a substantial amount. 

None of the six detailed break-downs include any items for the builder's over- 
head or profit. Three of the six break-downs have omitted all items under general 
conditions except the bond. 



The National Capital Housing Authority (p. 965, etc.) presented for the record 
their "comparative cost estimate study," which was an analysis of the differences 
in the costs of the construction of their Parkside Dwellings project, located on 
Kenilworth Avenue NE., and Mr. Preston E. Wire's project, located at Eighteenth 
and Benning Road, NE. 

Because their whole case on comparing National Capital Housing Authority 
construction costs with private enterprise costs depends upon this "study" a 
careful analysis of the study is considered necessary to demonstrate its utter 
unreliability. Its conclusions are ridiculously baseless and unfortunately not 
even nearly correct. 

From this study National Capital Housing Authority presented some conclu- 
sions which were not proven by any facts or figures or reasonable inferences 
therefrom. The meager outline which they presented (p. 965, etc.), and (p. 1363) 
described very vaguely the procedure they used in the preparation of their esti- 

The National Capital Housing Authority clearly established the fact that they 
did not intend to permit the committee to obtain any additional facts or figures 
which would explain some of their unrevealed computations and procedures. 
"They made this statement (p. 1363): "These estimates will be made available to 
any impartial technical agency or individual which the committee may designate 
to "pass upon the correctness of the data contained therein." This establishes the 
fact that National Capital Housing Authority proposes that only the correctness 
of the data contained therein would be passed upon. 

If some of the estimated items were incomplete or if some were omitted, and if 
the data used were based not on accurate figures derived from actual detailed 
costs, but on the "set-up" figures which represented the opinions of an undis- 
closed estimator, then the conclusions drawn from the estimate could be incorrect 
although the "data contained therein" were "passed upon." 

The National Capital Housing Authority (p. 1363) states that they used Parkside's 
"actual costs" in the preparation of the estimate used in their study. However, 
their Mr. Bernard E. Loshbough placed in the record (p. 941) a letter which their 
Mr. John Ihlder wrote Mr. Claike Daniel, a private builder. This letter con- 
tained the following quotation: "Actual recorded costs for these items [detailed 
break-down of costs requested by Mr. Clarke Daniel] are not available inasmuch 
as the projects are built by a contractor submitting the lowest bid after the project 
has been publicly advertised for construction bids. When the project is finished 
the contractor's itemized break-down as to actual costs of these items is not made 
available to National Capital Housing Authority." 

The National Capital Housing Authority also made this statement (p. 1361): 
"The private builders have never had a complete break-down of labor and ma- 
terial cost, either for their own use or publicly available. Neither were sufficient 
data for specific public projects readily available at that time for making this 
needed study." 

These statements clearly show that the only actual construction costs avail- 
able to National Capital Housing Authority were the cost of the contracts let by 
National Capital Housing Authority, and that the "detailed break-down of costs" 


placed in the record by National Capital Housing Authority (pp. 951-957) are 
not actual costs, as would be assumed from the fact that National Capital Hous- 
ing Authority placed them in the record for the purpose of being used in the com- 
parative cost estimates, of the private builders. 

Mr. Wire did not have a break-down of his own costs beyond the subcontract 
totals and other totals listed by him (p. 501). Unless National Capital Housing 
Authority had other information than that which is already in the record, the 
attempt made by National Capital Housing Authority to estimate the amount 
of labor actually spent on each individual item in one unit would have been mere 

The "one unit" used in the National Capital Housing Authority study is not 
revealed, but it is a reasonable assumption that it was selected from the three 
units previously placed in the record by National Capital Housing Authority 
(p. 949) under the heading of "Summary of costs." These three units are, (1) a 
dwelling unit, (2) a room, and (3) a square foot. 

The National Capital Housing Authority (p. 1363), testified that "unit prices 
for labor and materials were set up" for Mr. Wire's project. Mr. Wire's actual 
unit prices for labor and materials, which were the only data for these items 
susceptible of being checked, were not available to the estimator. The National 
Capital Housing Authority testified, in the same rebuttal, "The private builders 
have never had a complete break-down of labor and material, either for their own 
use or publicly available." 

If the data were based upon set-up figures or estimator's opinions and not on 
actual cost figures or facts, and if some other agency or individual passed upon 
the data, it would not necessarily follow that the set-up figures were represent- 
ative of the actual costs for Mr. Wire's project. 

In describing their study in the June 30 rebuttal the National Capital Housing 
Authority presented only three figures, as follows: 

(a) Nineteen hundred and forty-one — which was a date given in the 
description; and which was not used in computing the estimate, of course. 

(6) Four percent — which was the amount given for a range of error ; and this 
figure was not used as a percentage in the computations when the estimate 
was prepared. 

(c) Twelve percent — which was a conclusion. Likewise this figure was not 
used in the computations. 

Therefore, no figures used in computing the estimate were revealed in the out- 
line of the study as presented by the National Capital Housing Authority. 

The National Capital Housing Authority states (p. 1363) that the estimated 
cost of their "one unit" of Parkside was "checked against actual costs and found 
correct." They assumed that their estimated cost and the actual costs of this 
"one unit" were exactly the same figure. But the National Capital Housing 
Authority testified (p. 941) that the "break-down of actual costs was not made 
available to National Capital Housing Authority." Without this break-down 
of actual costs the National Capital Housing Authority could not have known 
the actual costs of the "one unit" which they claimed they used in checking 
their estimates. The detailed set-up figures, which National Capital Housing 
Authority claimed represented the unknown costs in their estimates, were 
assumed by them to be the same as the actual detailed costs because the total 
of their set-up figures was the same as the actual total costs. The National 
Capital Housing Authority should have considered the fact that many com- 
binations of different figures could have all equaled the total costs, and none of 
the figures used would have necessarily been representative of the actual costs of 
the individual items which made up the total. 

If the National Capital Housing Authority used a building or a part of a 
building as their "one unit" they were confronted with the fact that there were 
considerable variations in the different Parkside buildings. Nearly one-half of 
the buildings were frame, while the others were of masonry construction. Sizes 
and designs varied also, and there was no typical building unit for the entire 

This type of estimate as used in the study was further complicated by the fact 
that a number of items involving labor costs, such as fencing, screening, tiling, 
etc., in the Wire job, and linoleum, insulation, outside framing, siding, etc., in 
the Parkside project, were included in the costs of one project and omitted in the 
other. The actual costs of these items used in only one of the projects could not, 
according to the methods used by the National Capital Housing Authority in 
preparing their estimate, have been included in the comparative cost study. 


The 12-percent estimate of savings presented by the National Capital Housing 
Authority in their description of the study (p. 965), was based entirely upon the 
difference in wage rates. This was stated in the following National Capital 
Housing Authority testimony: "If he [Mr. Wire] paid the B scale, his costs would 
be 12 percent less than the Parkside project. It would be entirely due to the 
lower wage rates used." 

Senator Burton (p. 965) then asked the witness: "Does that rather clearly 
establish in a comparable way the difference in effect, on this project of the A 
and B scale was about 12 percent?" 

Mr. Loshbough answered, "Using the wage rates only." (Note. — This answer 
was given in the stenographic transcript (p. 2206) but it was changed in the 
printed record.) This definitely proves that the 12-percent saving estimate as 
given in the study was based solely upon the saving due to the difference between 
the A and the B wage rates and no consideration was given to the saving produced 
by the difference in costs of any other items. The National Capital Housing 
Authority also assumed that, if both projects paid the same wage rates, Mr. 
Wire's costs for all items would be exactly the same as the National Capital 
Housing Authority actually paid for the Parkside items.. Based upon this 
assumption the Parkside's and Mr. Wire's projects would have a cost differential 
of zero. 

This is shown in the statement (p. 984) made by the National Capital Housing 
Authority witness, Mr. Loshbough: "There would be no cost differential if Mr. 
Wire paid the A wage scale." 

Contradicting his own testimony "that there would be no cost differential" if 
Mr. Wire and Parkside paid the A wage scale, Mr. Loshbough previously had 
testified (p. 965): "From these studies it was found that Mr. Wire's cost would 
be a little more than Parkside buildings actually cost the National Capital 
Housing Authority if he had paid the A scale of wages." 

The previous National Capital Housing Authority testimony clearly established 
that the study was based upon the rather remarkable conclusion that when one 
item cost a little more than the other, then the two items cost exactly the same. 

Mr. John Ihlder, of the National Capital Housing Authority testified (p. 936) : 
"I believe that their [the private builders] costs, if they paid the same wages, 
might be slightly higher." 

On the same day that Mr. Ihlder made this statement his principal witness and 
construction chief, Mr. Loshbough, testified (p. 964) : "We do not say that a 
public agency can build housing cheaper than private agencies, and have never 
contended that." 

Mr. Loshbough was very emphatic in his contention that the 12-percent cost 
differential, given in the study, applied to the total development cost of Parkside. 
This was established by the following testimony given in the transcript and 
printed record. 

Senator Burton asked Mr. Loshbough this question (p. 965) : "Does that 
rather clearly establish, in a comparable way, the difference in effect on this 
project of the A and B scale was about 12 percent?" 

Mr. Loshbough answered (stenographic transcript, p. 2206), "Using the wage 
rates only." 

However, in the printed record (p. 965) this answer has been changed to read 
"Using the B wage rates as applied to our plans and specifications." 

Senator Burton (p. 966) asked this question: "12 percent of what?" 

Mr. Loshbough's answer as given on p. 2206 in the stenographic transcript was: 
"Of the total development cost of Parkside." However, in the printed record 
this answer has been changed to read: "Of the construction cost of Parkside" 
(p. 966). 

Senator Burton asked (p. 966) : "That ruling requiring you to use the A scale 
really increased by 12 percent your total development costs, your cost of build- 

Mr. Loshbough's answer as given in the transcript on page 2207 was: "Yes. 
I go into that a httle later and develop that." However, in the printed record on 
page 966 this answer has been changed to read: "The construction cost. I go into 
that a little later and develop that." 

Following the previous questions asked by Senator Burton, this question was 
asked by Mr. James C. Wilkes (p. 966) : "May I ask at tliis point if you mean the 
total development cost, or the total construction cost?" 

Mr. Loshbough answered: "The total development cost of the whole job, site, 
utilities, streets." 

Mr. Wilkes then asked: "Your 12 percent is based on total development cost 
and not total construction cost?" 


Mr. Loshbough answered: "That is right." 

After this answer there was inserted, in the printed record only, this footnote: 
"Mr. Loshbough answered in the affirmative to Mr. Wilkes' question, which was 
an incorrect answer." 

The National Capital Housing Authority has given the following explanation of 
the reason ^\hy their 12 percent estimate of saving is very different from the per- 
centages of actual savings as presented by the private builders. 

The Na<^ional Capital Housing Authority testified (p. 1363): "The cost 
estimate referred to above [the study] was intended to approximate the com- 
petitive-bidding method." 

A private builder, developing a speculative project whose costs approximated 
the costs of a general contractor who was bidding on a Government contract, 
would not be successful if he had to meet the competition of private builders who 
use more efficient and economical methods and procedures. 

The National Capital Housing Authority based the estimate in the study upon 
the incorrect and unwarranted assumption that Mr. Wire's costs would be exactly 
the same as a Government general contractor's actual costs, except for the differ- 
ence in wage rates. 

This assumption is in conflict with a statement made by the National Capital 
Housing Authority (p. 1365): "A review of the entire record of these hearings 
clearly establishes' the fact that there are variables between the National Capital 
Housing Authority construction program and that of the Home Builders. Some 
of these variables are the result of different policies and procedures." These 
variables mentioned in the previous quotation did not refer to wage rates because 
later in the same paragraph, National Capital Housing Authority stated that 
there were, "other cost differentials — for example, wage differentials." 

The National Capital Housing Authority stated that the 12-percent-saving 
estimate in the study was based upon the difference between the A and the B scale 
of wages. They gave testimony (p. 965), "If he [Mr. Wire] paid the B scale, his 
costs would be 12 percent less than the Parkside project." 

Mr. Wire testified (p. 501) that he did not pay the B scale exclusively. For 
some items he paid the A scale, for some other items he paid the B scale, and for 
several items his subcontractors paid a scale never known to Mr. Wire. 

The 12-percent conclusion, drawn from the National Capital Housing Authority 
study, was invalid if it was based exclusively on the B scale, instead of the com- 
bination of scales as actually paid on Mr. Wire's project. 

The National Capital Housing Authority established the fact that the 12 
percent conclusion which they drew from the analysis of their study was assumed 
by them to represent the amount of savings, or the decrease in costs. This was in 
accordance with the testimony given (p. 965) by their Loshbough: "If he [Mr. 
Wire] paid the B scale, his costs would be 12 percent less than the Parkside project." 

On page 966 Senator Burton asked Mr. Loshbough this question: "That 
ruhng requiring you to use the A scale really increased by 12 percent your total 
development costs?" 

Mr. Loshbough's answer in the transcript (p. 2206) was, "Yes." 

In the printed record this question was answered: "The construction cost." 

In both answers Mr. Loshbough testified that the 12 percent was an increase 
in costs. 

In one place he testifies that the 12 percent was the amount of decrease in 
costs and in another place he testifies that it represented an increase in costs. 

The National Capital Housing Authority did not disclose who made the study. 
Their Mr. Loshbough testified (p. 965) : "So a study was made by the National 
Capital Housing Authority and from it we determined the unit costs for labor 
and materials." Therefore the study must have been made by some person or 
persons on the staff of the National Capital Housing Authority. The undisclosed 
estimator was assumed to have the abihty to determine "Mr. Wire's unit prices 
of labor" for "one unit." This would require an unusual amount of knowledge 
and experience of the actual conditions under which the Wire job was constructed. 
Mr. Wire has shown in his testimony that he never possessed records or knowledge 
which would permit him to do, with any degree of reliability, what the National 
Capital Housing Authority claimed they were able to do with "assured accuracy" 
in their study. 

The National Capital Housing Authority stated (p. 1361): "The private 
builders havt never had a complete break-down of labor and material costs, 
either for their own use or publicly available." 


These break-downs of costs are absolutely necessary if the National Capital 
Housing Authority accuratel}' "determined the unit costs of labor and materials," 
as they claimed in their description of their study (p. 965). 

The National Capital Housing Authority study was based upon the unit costs 
of labor and materials exclusively, and all items of profit and overhead costs were 
omitted in their computations. 

On page 965 the National Capital Housing Authority witness testified: "So a 
study was made and from it we determined the unit costs for labor and materials." 

The National Capital Housing Authority witness states (p. 1363) that "Unit 
prices for labor and materials were set up." But all unit prices for profit and 
overhead were omitted. Therefore the comparative estimate was incomplete and 
the conclusions which the National Capital Housing Authority drew from their 
study were not representative of the actual difference in costs. 

The actual costs of these overhead items would have to be known to National 
Capital Housing Authority if "This estimate was checked against actual costs 
and found correct" as the National Capital Housing Authority witness testified. 

If the total of an estimate, containing only items of labor and materials, was 
checked against actual total costs and equalled same, then the unit prices for 
labor and materials would be incorrect because labor and materials were in many 
cases only approximately two-thirds to three-quarters of the total costs. The 
balance would be profit and overhead costs, which were entirely omitted in the 
National Capital Housing Authority estimates. 

This omission was clearly established by the statement made by the National 
Capital Housing Authority which described "their comparative cost-estimate 
study" (p. 1363): "The detailed estimate was based upon Mr. Wire's unit 
prices for labor and the proper unit prices for the specified materials," and "this 
estimate was checked against actual costs and found correct." 

The National Capital Housing Authority witness assumed that if the total of 
their estimate, which was made up of numerous "set-up" figures for the unknown 
unit prices, checked with the actual total costs of a completed structure, then all 
of their "unit prices for labor and materials" which they "set up" in their estinaate, 
would have been exactly the same as the actual costs of the labor employed on the 
job and the material used in the building. 

The actual costs of these overhead items would vary with each subcontract 
and with each project. They would be unknown quantities to everyone except 
the firms that had a part in the construction of a particular job. The actual cost 
of all overhead items would have to be known to the National Capital Housing 
Authority if "this estimate was checked against actual costs and found correct," 
as the National Capital Housing Authority witness testified (p. 1363). The 
Bureau of Labor Statistics (Serial No. 282) in a study of "percentage distribu- 
tion of labor, material, and overhead costs" for a low-cost housing project, gave 
25.11 percent for overhead and profit for the total project, and each class of 
work had a variable cost for overhead and profit ranging from 0.45 to 53.40 
percent of the total. To obtain this information the Bureau of Labor Statistics 
found it necessary to examine the ledger accounts of "240 firms that had a part in 
the construction of the building." 

It is reasonable to assume that it would be just as necessary for the National 
Capital Housing Authority to have this information as it would be for the expert 
statisticians of the Bureau of Labor Statistics to determine proper proportions for 
labor, material, and overhead. 

The percentages given in the Bureau of Labor Statistics anal5'sis would not 
necessarily apply to Mr. Wire's or Parkside projects, but this demonstrates how 
involved and impossible it would be to get assured accuracy for these costs unless 
the National Capital Housing Authority witness had information giving the de- 
tailed costs which were actually paid on the projects. These detailed actual costs 
of all items were not available to National Capital Housing Authority or to any- 
one else. To have "set up" or estimated these costs would have given only a 
very rough approximation of the actual costs. 

If no computations for overhead items were included in the study, or if figures 
were^^'set up" and they were different from the actual costs for the overhead 
items, then the balance for labor and material would be incorrect and the "unit 
prices for labor" would be incorrect. In that case the 12-percent difference as 
given in the conclusion of National Capital Housing Authority would also be 

The National Capital Housing Authority stated (p. 1363) in their descrpition 
of the estimate in the study that: "All quantities were taken" and that: "This 
estimate was checked against Mr. Wire's own costs." These National Capital 


Housing Authority estimates were not for an entire project but were based upon 
the costs of one undisclosed unit for each project. Unless the National Capital 
Housing Authority knew the actual quantities and "Mr. Wire's own costs" for 
this one unit, their estimates were unreliable and not representative of the actual 

In Mr. Wire's statement of actual cost as given by him (p. 501), the first item 
was "rough grading and excavations." 

If the undisclosed National Capital Housing Authority estimator attempted to 
determine the quantities of earth moved (National Capital Housing Authority 
stated "quantities were taken") he would have to know the actual grades before 
and after the construction of the "one unit." Mr. Wire testified (p. 501) that a 
part of the cost of this item included power shovels, trucks, and bulldozers. If 
their estimate was properly prepared, according to their procedure, it was neces- 
sary for National Capital Housing Authority to know the actual cost of the opera- 
tion of this equipment. 

Even "consulting a subcontractor" would not give "assured accuracy" for labor, 
because the largest portion of labor costs (p. 501) for excavating was included in 
the pay rolls under Mr. Wire's own item of carpenter labor. 

The Bureau of Labor Statistics of the Department of Labor, in their publication 
known as Serial No. R 282, analyzed the costs of a low-cost housing project. In 
their table No. 2, Percentage distribution of labor, material, and overhead costs, 
they state: "In excavation and grading, the amount expended for labor and ma- 
terial represented 47.75 percent of the total charges and the overhead charges 
amounted to 52.25 percent of the total." In their description of their estimate 
the National Capital Housing Authority has considered the cost of labor and ma- 
terial only and have omitted overhead. 

The percentages given in the Bureau of Labor Statistics' table No. 2, for dis- 
tribution of labor, material, and overhead costs, did not necessarily represent the 
percentages for the actual costs of these items for the Parkside project or Mr. 
Wire's project. However, this table of percentages did establish the fact that the 
subcontractor's accounts included a large percentage of their total costs, which 
did not represent labor and material. 

It is submitted that the basis of the study is erroneous and the whole study 
should be discarded as being without merit or value. 

C. Comparative Management Costs 

Private enterprise can manage rental properties more cheaply than can public 
housing. This item actually costs public housing an average of 160 percent more. 

The cost of management of National Capital Housing Authority permanent 
projects in 1943 averaged 13 percent of rents collected (pp. 659-660). In con- 
trast, the usual and customary rate of commission on rental management in the 
District of Columbia is 5 percent of rents collected, which includes a fair profit; 
and any real estate office in the city would be glad to manage any part or all of the 
National Capital Housing Authority's projects for this standard fee (p. 621). 
This fee includes a profit plus certain services not performed by National Capital 
Housing Authority (p. 661). 

The National Capital Housing Authority breaks down its 13 percent manage- 
ment cost as follows: "Central office salaries of 6 percent, project office salaries 
and expense of 6 percent, and tenant reexamination salaries and expense of about 
1 percent" (p. 920). It explains a lower cost for title I as resulting from not 
having any project offices (p. 920). This claim is difficult to understand, to say 
the least, in view of the fact that large-scale operation and the maintenance of 
project offices are normally means of reducing unit cost of management. 

The National Capital Housing Authority has congratulated itself on managing 
for 5 percent: "May I say that, according to our interpretation of the act of 
Congress, the Authority has charged a 5-percent commission for administering 
title I properties, just as if they had been turned over to us on a 5-percent com- 
mission * * * g_ thing that gratifies * * * very much is that our regular 
charge for all property seems to be just about that. Although we are giving 
greater service the cost was only approximately 5 percent of commercial rent" 
(p. 14). The statement is inaccurate, even on National Capital Housing Ad- 
m.inistration's assumption that a commercial rent is equal to 12 percent of develop- 
ment cost (pp. 916, 922-925). But, as has already been pointed out, any local 
real estate office would manage any or all of National Capital Housing Authority's 
projects for 5 percent of rents collected. 

National Capital Housing Authority attempts to defend its higher management 
costs by maintaining that "the traditional 5 percent agency fee has been a cause of 
deterioration," that the "5 percent management commission was that under which 


our slums have developed" (p. 1101). It is reasonable to suppose that private 
builders with a stake in protecting their investments would hesitate to have their 
properties managed on 5 percent commission unless they knew from experience 
that this would assure adequate and intelligent maintenance of their properties. 
The difference between the private 5 percent and public 13 percent management 
cost is not one of quantity or quality of services rendered, but of the efficiency 
with which the work is done. Obviously the Government has not in the past and 
will not in the future be able to approximate private enterprises' efficiency in the 
management of real estate. 

D. Meeting the Need of the Needy 

The National Capital Housing Authority has not met, and as a matter of settled 
policy has not tried to meet, the housing needs of the very lowest income groups. 
Its permanent nonwar housing consists of only 112 units under title I and 2,706 
units under title II, a total of 2,818 units (p. 153). In these 2,818 units there 
were, as of Januarj' 28, 1944, 47 families on public relief, or 1.7 percent of the 
tenants in National Capital Housing Authority permanent nonwar housing 
(9. 93). At that time the District's Board of Public Welfare was paying rent for 
about 4,000 families (p. 97) ; these were not individuals but households (see p. 90). 
Thus public housing has 1.2 percent of the public relief cases and private enter- 
prise houses the other 98.8 percent. Further, since "it was finally agreed that 
National Capital Housing Authority shall charge client families the full economic 
rent" (p. 167), it is the evident intention that relief families are to be automatically 
excluded from the benefits of any subsidies National Capital Housing Authority 
receives for reducing rents. 

Nor would National Capital Housing Authority under any circumstances con- 
sider having more than 25 percent relief clients (pp. 5, 102, 108, 165, 175), and in 
fact feels that a maximum of "25 percent is rather too large" (p. 175). This 
limitation is made "in order to assure a helpful environment" (p. 165), "not [to] 
make a poorhouse of it" (p. 102) ; "if one filled a property with relief families, he 
made a poorhouse of it; he changed the whole psychology of it and interfered with 
the development of the families" (p. 102). National Capital Housing Authority 
believes "that we should have families of different economic status living more or 
less as neighbors" ; that there is a stimulus in that "of keeping up with the Joneses," 
if nothing else, and our system provides for that" (p. 196). "Among the items to 
be considered" in determining the proportion of relief clients are: "(1) The fam- 
ilies themselves; (2) the other families on the property; (3) neighborhood accept- 
ance" (p. 197). 

Clearly the National Capital Housing Authority tenants are a selected, favored 
group — as vmconsciously evidenced by Mrs. Coggs' praise, "By the careful selection 
of tenants and proper maintenance of the homes, it has demonstrated that Negro 
neighborhoods need not be blighted or run down" (p. 1 1 33, etc.). [Italics supplied.] 
The 1941 annual report spoke of the National Capital Housing Authority's belief 
"that to accept tenants indiscriminately * * * regardless of whether they 
give promise of responding to a better environment, would be as great folly as to 
throw a small force of raw recruits against an army of veterans. * * * Ever 
since 1936 * * * {^ has sought to so select its tenants that in each property 
there will be at least a small dynamic group whose influence will make for progress" 
(1941 annual report, pp. 9-10.) [Italics supplied.] In addition to formal 
eligibility requirements, "other conditions * * * administratively imposed 
* * * concerned the character and reputation of the prospect, his house- 
keeping habits, his general stability and his health — 'his' meaning 'his family's' " 
(1941 report, pp. 14-15). 

Private builders, on the other hand, feel strongly that rental aid should be 
extended first to those who need it most, and that it should be handled through 
normal public-welfare channels. A representative of the American Association of 
Social Workers, misunderstanding the form of rental aid the builders propose, 
attacked it on the ground that it "constitutes a reversion to the demoralizing 
method of 'relief in kind' as contrasted with the improved current practice that 
encourages the individual to manage his own finances and make his own contracts 
so that he may have the incentive to become self-supporting" (p. 1241). This is, 
on the contrary, the builders' valid objection to public housing, since public 
housing is relief in kind, while rental aid administered through normal welfare 
channels is budgetary relief that gives the individual the opportunity to manage 
for himself. 

Even if the National Capital Housing Authority did take a full 25 percent of 
relief clients as tenants, it would take 16 years, under its 20-year plan, to house 
all of them in the houses proposed to be built. If the N.q.tional Capital Housing 


Authority should take only the present proportion of relief clients, then at the 
end of 20 years, with 22,818 dwelling units under public ownership, there would 
still (assuming a constant relief load) be 90.5 percent of relief clients still taken 
care of in privately owned housing. 

Since public housing, therefore, has not met the housing needs of the lowest 
income groups, and does not — even under a tremendously expanded program — - 
intend to meet it for many years to come, the private builders urge the adoption 
of a program which will meet their needs. 

E. Self-Liquidation of Title I 

The National Capital Housing Authority has repeatedly claimed that its title I 
fund is self-liquidating. Since "the title II program * * * jg j^q^ before 
this committee in any proposed legislation" (p. 1086), it is essential to determine 
what success the National Capital Housing Authority has had in the past in its 
effort to achieve self-liquidation under title I, in order to predict "^hat would be 
the results of extending that program. 

The 1937 annual report stated, "The Authority has never made a promise 
or a prophecy as to its program, but it has stated and now repeats that its financial 
objective is to end its work as promptly as possible and without a deficit" (p. 
1009). Again, in 1939, "These operations are expected to pay all costs" (1939 
annual report, p. 4). The 1943 report speaks of "the Authority's demonstration 
of slum reclamation without ultimate cost to the taxpayer" (1943 annual report, 
]). 8). Similar statements far too numerous for quotation have been made 
throughout these hearings (for a few see pp. 3, 18, 42, 150, 163, 171-172, 177, 
200, 203, 926, 1078, 1097, 1169). 

The National Capital Housing Authority's title I fund has received contribu- 
tions from two sources: (1) Federal appropriations and allocations amounting to 
$865,496.80: and (2) District real-estate tax exemptions totaling $46,777.04 by 
June 30, 1942, and currently $9,389.09 a year (pp. 22-23). The National Capital 
Housing Authority explains: 

"We were given $865,000 of Federal money. That was given to us as an 
appropriation, not loaned. We could have spent it in a year and closed the 
account. Instead we voluntarily treated it as a loan to be repaid with interest. 
At the same time the property we acquired with the proceeds of this loan was 
exempt from District taxes. But we voluntarily assumed that the amount of 
this tax exemption also was a loan to be repaid with interest" (p. 177). 

If these two contributions are to be repaid with interest, then the National 
Capital Housing Authority's present obligations (as of June 30, 1942) amount to 
$912,273.84 plus a good deal of accumulated interest. The National Capital 
Housing Authority reported net assets of $831,089.33 as of that date (p. 23). 
These assets are considerably overstated, since, among other things, they include 
quite inadequate reserves for repairs, maintenance, and replacements, and for 
vacancy and collection losses. (Hart's Second Rebuttal to Haskell, p. 1373.) So 
title I was nowhere near self-liquidation on June 30, 1942; though the National 
Capital Housing Authority positively stated, "It has been shown that the National 
Capital Housing Authoritv's * * * miQ j fund was self-liquidating on June 
30, 1942 * * *" (p. 1078). This statement is not only unwarranted, but it 
is ridiculous. 

If the fund is far from self-liquidation now, it is increasing its deficit by 75 
percent of income per year, so that title I will be further in the hole the longer it 
continues to operate. (Hart's Rebuttal to Haskell, pp. 5-10, exhibit A.) 

The National Capital Housing Authority now asks for loans which are to be 
self-liquidating (pp. 148, 161). Ultimately, a $100,000,000 title I program is 
contemplated by the National Capital Housing Authority starting with 
$20,000,000 in the next 2 years (p. 19). But such a self-liquidating program, 
piling up annual deficits amounting to more than three-fourths of income, would 
cost far more than the private builders' proposal of use-value write-downs plus 
necessary supplementation of tenants' inadequate incomes. 

F. Comparative Rents 

The National Capital Housing Authority rightly says, "While we in public 
housing wish to reduce costs * * *, it is of little more than academic interest 
merely to claim that private costs are lower than ours if the end result is higher 
rents ito tenants or, through subsidy, grea.ter cost to taxpayers" (p. 183). Private 
enterprise not only can show savings in the cost of construction and operation, 
but as well also can show that it can translate these savings into lower rents. 

91183 — 45 — pt. 15 7 


Since the issue is what can be done under the plans now proposed, and since 
radical changes are proposed in private-enterprise financing, present private rents 
based on far less liberal financing are hardly valid for comparison. Such a com- 
parison is available in Mr. Warren's testimony on the relative rents that could 
be achieved by a private builder and by the National Capital Housing Authority 
on houses comparable to the V Street Houses at 1944 prices. 

He assumed a, saving to the operative builder of 28 percent in construction 
cost (p. 601). The management cost for the public project is assumed to be 13 
percent, the average for the National Capital Housing Authority permanent 
housing, since the National Capital Housing Authority's lower figure for title I 
seems to have been detei mined chiefly by the impression that it had to show such 
a figure (pp. 601-602). (See p. 14.) Charging the private project with $75 for 
repairs and the public with $100, justified by Mr. Warren on the added cost 
entailed by governmental operation (p. 602), is also more than justified by the 
increased expense of repairs which will be incurred in the last 27 years of the public 
property's operation. 

Though the public project has the advantage of 60-year amortization at 3 per- 
cent, as opposed to 33-year amortization at SVi percent for the private project, 
the private dwelling can rent at $35 a month and pay out as compared to $43 a 
month rent required for the public built dwelling if it also is to pay out(p. 590). 
On the same assumptions for identical three- and four-room apartments, the 
private three-room apartment could rent (with all services included) for $36.50, as 
against $48 for the public; and a private four-room apartment could rent for 
$42.50, as against $54 for the public (p. 608). 

These figures would seem conclusive, and the National Capital Housing Author- 
ity has in fact not challenged them. Instead it has quoted the present V Street 
rent (based on 1938 prices) as evidence that the National Capital Housing Author- 
ity can rent for $25 what a private builder cannot rent for less than $35 (based on 
war inflated 1944 prices of materials and labor). 

"A two-bedroom house as proposed by Mr. Warren * * * has a shelter 
rent of $35. The National Capital Housing Authority project which he took as 
a guide * * * has an economic shelter rent of $25. Consequently, if we are 
to subsidize and if there were no public housing, it would be necessary to increase 
the subsidy $10 per family in order to put them into these cheapest houses pro- 
posed by private builders" (p. 1090). 

The validity of the National Capital Housing Authority's comparison depends, 
first, on title I's being self-liquidating: 

"Mr. Wilkes. Secondly, may I ask the question, your National Capital Hous- 
ing Authority $25 rent is based upon the assumption that title I is self liquidating? 

"Mr. Ihlder. On the evidence and proof that it is; yes" (p. 1091). 

Since it has been proven quite conclusively that title I is, on the contrary, very 
far from being self-liquidating, the comparison is altogether invalid. Second, it 
is based on a so-called economic rent for V Street houses which is very much 
less than a true economic rent, and which is based on a far lower use-value for the 
land than is used in the Warren estimates (Hart's second rebuttal to Haskell, 
(p. 1373). An economic rent for V Street comparable to the Warren $35 rent 
would be considerably in excess of $37 (Hart's second rebuttal to Haskell, p. 1373, 
and this is without taking any account of the pronounced increase in construction 
costs between 1938 and 1944. 

The National Capital Housing Authority has presented another line of attempted 
proof which is unworthy of serious consideration, but which has been repeated so- 
often in different forms that it should be answered once for all. This is the argu- 
ment that since private rents include an owner's profit, they must necessarily be 
higher than public housing rents which do not include an owner's profit. The 
National Capital Housing Authority, for example, defines "economic rent" as that 
which "includes every cost, but it does not include owner's profit. The lack of 
owner's profit is what diff"erentiates it from commercial rent" (p. 4). From this- 
it is easy to proceed to the following: 

These economic rents are lower than the commercial rents the National Capital 
Housing Authority's tenants would have to pay * * * jf there were no public 
housing. So, if their rents were stepped up to a profit-snaking level, then it would 
be necessary to give rent assistance to many who now are paying from their own 
earnings the full cost of their dwellings. Under (the builders' plan), the rent 
charged each family for a proper dwelling would exceed the economic rents for 
public housing in order to assure profits to owners" (pp. 1092-1093). [Italics sup- 


The whole argument ignores the fact that there are many differences in public 
and private rents besides the item of owner's profit, and the proof that private 
rents can include an owner's profit and still be considerably under the lowest rents 
public housing can achieve if it is to be self-liquidating — as private housing must 

G. Government Assistance Required in Slum Clearance 

As the National Capital Housing Authority has said: "The purpose is to get rid 
of slums at a minimum cost to the taxpayer" (p. 926). Therefore, the ultimate 
test is the relative tenant assistance needed by the private-enterprise plan and 
under the public-housing plan to get the job done. Obviously good housing, 
especially if it is new housing, cannot be furnished at the same rental as the alley 

If private enterprise is to do the whole job, two types of financial assistance will 
be necessary — one, amounting to the difference between the "fair market value" 
of the slum properties as presently improved; the other, assistance to tenants who 
cannot afford to pay the full rent in dwellings erected to replace the slum quarters 
which have been demolished. 

The first of these Government financial commitments would presumably be 
the same in the two cases, since the sections on determination of use value, S. 1923, 
section 6 (p. 1186), and S. 1930, section 9 (p. 1192), show no material difference- 
On this point, then, there is nothing to choose between the two. 

Private enterprise has shown that it will be able to achieve cheaper rents" crm 
comparable properties than public housing (always on the condition that public-- 
housing rents are to be self -liquidating, as private enterprise rents must be). It 
necessarily follows that, in a given case, a family would require less assistance in a 
dwelling built by private enterprise under the proposed plan than in public housing.. 

This saving will be increased by the amount of income taxes and other taxes 
to be colle'^ted from the private enterprise rents. It is apparent, also, that the 
National Capital Housing Authority intends to take its automatic exemption 
from real estate tax as a subsidy (top of p. 1099). There is no provision in either' 
S. 1699 or S. 1930 for any repayment of this tax exemption to the District. 

The selection of tenants and the administering of the subsidies is, under the' 
private-enten^rise plan, to be done by the Board of Public Welfare. On its title 
II properties the National Capital Housing Authority estimates the cost of this 
service at 1 percent of rents collected (p. 920). On title I properties, however,, 
where there are no graded rents, this service is not included in present manage- 
ment costs. There will thus be the same additional cost to the taxpayer for this- 
one item whether the program is carried out under an expanded title I or by 
private enterprise. 

The same persons can, therefore, be housed in dwellings built and managed by 
private enterprise under the proposed plan at a lower net cost to the taxpayer 
than they could be housed in comparable dwellings erected and operated by the; 
public-housing authority. 

H." National Capital Housing Authority 60- Year Amortization 

The loans secured on dwellings private builders propose under their plan are to' 
be amortized over 33 years. The National Capital Housing Authority has a con- 
siderable advantage in its financing— at least so far as its immediate' showing on; 
rents is concerned —through amortizing its dwelling construction cost over 60 years, 
and then only to the extent of 80 percent of the construction cost (p. 908) . 

The standard Bureau of Internal Revenue allowances for depreciation are 4(J 
years for masonry buildings and 25 years for frame buildings (p. 279j. Thirty- 
three years is the longest amortization period mortgagf institutions think sound for 
rental property (pp. 536-38, 579, 624) . So public housing is engaging in a practica 
which the -weight of responsible opinion regards as highly unsound. 

The National Capital Housing Authority justifies its extreme practice on the- 
ground that the "National Capital Housing Authority projects, built with the ob- 
jective of meeting a need that never before has been met, are designed for long life 
and low maintenance. This longer life of the buildings, due to better planning and 
adequate reserves for repairs and replacements * * * j^^g made it possible to 
provide for a longer period of amortization with consequent lower annual pay- 
ments" (p. 1092j. Again, it was stated that it was "the engineers of the Author- 
ity who decided that the properties as constructed would last 60 years" (p. 334). 

The actual situation is just the reverse of this. The decision to' amortize the pro- 
perties over 60 years was made before any National Capital Housing Authority 
houses had been built (pp. 909-10) . It then* became the obligation of the Authority 


to give its houses a useful life of 60 years. Actually it is assuming a 75-year useful 
life for the buildings, since it amortizes only 80 percent in 60 years (pp. 908, 910-11). 

There is no question but that, generally speaking, houses can be made to stand 
for 60 years. The question is whether it is economically sound to finance them over 
60 years and thus make it imperative to keep them in operation that long in order 
to get the investment paid off. The physical hfe of a building may be indefinitely 
prolonged, but the useful economic life of a building ceases when income no longer 
meets the cost of operation, including increasing maintenance costs. Low-rental 
properties are subject to rather hard wear and tear. Any houses are subject to the 
relatively unpredictal)le influences of neighborhood blight. It must also be borne 
in mind that "technological advances, new methods, new materials, new designs, 
pnd new ways of assembling will all have an important bearing on house construc- 
tion within the next few yeaVs and it is entirely conceivable that structures of this 
type will be so outmoded that they will be removed as being uneconomical to 
maintain or to continue to rent when perhaps much more efficient homes can be 
offered and at the same or even lower rents" (p. 543). There are houses in Wash- 
ington 60 years of age, but what percentage of the houses standing in Washington 
60 years ago are still in existence? 

National Capital Housing Authority consistently assumes that it will continue to 
draw the initial full-rental income from its properties for the full 60 years. There 
is one suggestion, however, that the 20 percent use-value is the expected capitalized 
rental value at the end of 60 years — that in 60 3'ears the properties may be drawing 
only a fifth of the original rents : 

"Yet after 40 and more than 60 years they were still producing good revenues 
that indicated from $3,000 to $10,000 and more capital value. This seems to indi- 
cate that with good management a house should be worth considerably more than 
20 percent of its original cost after 60 j'ears, that being what vie had figured" (p. 
1034). [ItaHcs supplied.] 

But for the Williston Apartments, for example, utility charges and operating 
services alone were 34.8 percent of rents in 1942 (exhibit XIII, p. 892). Repairs, 
maintenance, and replacements for Williston will average at least $4,402.23 over 
the whole life of the property ($3,144.45 from Hart's first rebuttal to Haskell 
(p. 1317), exhibit A, plus 40 percent, ibid, herein), or a further 38.5 percent of 
rents; and in the sixtieth year they will greatly exceed that average. Williston 
must, therefore, draw well over 75 percent of present rents — over 50 percent 
of a rent half again as high as the present rent — simply to pay for operating 
services, utilities, and maintenance. It is clear that, whatever the physical life 
of the Williston Apartments may be, the useful economic life will have ended 
long before. 

I. Construction Under Title II 

While no extension of title II is being requested as an outcome of these hear- 
ings. National Capital Housing Authority does contemplate further activity in 
this direction: "It is recognized that any additional program under title II 
would be carried out as part of a national program under legislation which is 
considered by other committees of this Congress" (p. 1086). It is evident that 
any gap between the 20,000 house proposed title I program and the program of 
at least 60,000 houses which would be needed to house all the lower income third 
could be taken up with title II housing without any congressional action at all, 
provided the Federal Public Housing Authority had the funds available. This 
gives a new turn to the question of public housing's competition with private 

What is chiefly significant about title II financing, as it relates to this question 
of competition, is that one governmental agency, Federal Public Housing Au- 
thority, loans to another governmental agency. National Capital Housing Au- 
thority, up to 90 percent of the development cost of its projects (p. 830) the 
other 10 percent to be borrowed from local banking sources; and then pledges for 
58 years the payment to National Capital Housing Authority of an annual sub- 
sidy of 3 percent of the development cost (p. 821), which is only 0.1112 less than 
the amount required to repay the full principal and interest (p. 821) to Federal 
Public Housing Authority and the local bank. Thus the Federal Government 
in fact obligates itself to pay for the land, utilities, and buildings, requiring the 
rents to produce only enough revenue to pay for rental collection charges and 

National Capital Housing Authority contends that this coincidence between 
the subsidv and the interest-and-amortization requirement is purely coincidental 
(pp. 832-833, 844). The fact remains that under the law National Capital 


Housing Authority could, if it wishod, and as a matter of fact many authorities 
do, let the subsidy take care of carrying charges and simply collect from tenants 
enough to pay operating expenses. The total subsidy National Capital Housing 
Authority receives is even far greater than 3 percent, since there is also District 
real-estate tax exemption (pp. 171, 196, 200), which at 1.75 percent makes a 
total subsidy of 4.75 percent. This is over 150 percent of interest and amortiza- 
tion. Who would ever have su.spected that such a scheme could have been 
slipped through Congress, obligating the Government of the United States to 
hundreds of millions of dollars and proposing to obligate it to the extent of billions? 

Even with this subsidy the rents on one title II property need to be increased 
at least 15 percent before they will pay costs (Hart's first rebuttal to Haskell, p. 
11 and exhibit B). and the total subsidy needed in a post-war year, if tenant in- 
comes fall to the level of 1941, will be 5.76 percent of development cost, or 1 full 
percent more than is available. This would involve a subsidy of $22.30 per 
family per month (Hart's first rebuttal to Haskell, p. 1373). 

It IS obvious that no private builder could compete with properties subsidized 
at such a rate. It would be like a toy manufacturer attempting to compete with 
Santa Claus at Christmas time. 

J. Government Competition With Private Enterprise 

Public housing under the program proposed will be in direct competition with 
private operative building. 

National Capital Housing Authority has repeatedly stated that it supplements, 
but does not compete with, private enterprise. "National Capital Housing 
Authority wishes to reassert its desire to see private enterprise do as much of the 
job as it profitably can and its belief that the field in which private housing has 
operated can be expanded" (p. 1078). "National Capital Housing Authority 
has kept out of the field served by private enterprise, and limited itself to pro- 
viding good housing at rentals for those whom private enterprise clearly cannot 
serve," (p. 1086). "Our policy from the beginning has been whatever is pro- 
vided by private industry, we are relieved of responsibility * * *" (p. 15), 
"It has been the Authority's policy from the beginning to welcome any contribu- 
tion by private enterprise." (1939 Annual Report, p. 2). The recommendation 
of the D'Alesandro committee that "wherever a private builder can fill a com- 
nunity need, he must be permitted to do so" was "in accordance with the National 
Capital Housing Authority's policy and practice" (1943 Annual Report, p. 11). 
"As National Capital Housing Authority has stated many times, it has always 
encouraged private builders to do such a thing as is now proposed" (p. 991). 
"Now, as to who will do it, there we come back to our statement that the more 
private enterprise will do the less would be left for us to do" (p. 187). "So far 
as competition is concerned, the charge does not apply to the National Capital 
Housing Authority. It always has welcomed every contribution that private 
housing makes. Its repeated statement is: 

" 'Public housing should supplement private and, therefore, the more that 
private does in producing good houses at low rents, the less public will have to do.' 

"This has seemed to us a policy statement that not only is in the public interest 
but one that should be eminently satisfactory to private enterprise. For under it 
private housing sets the boundary line and takes for itself all that it can do well 
and profitably" (p. 126). 

The plain meaning of these statements would seem to be that, if private enter- 
prise is now prepared to do the whole job, then there will be nothing left for public 
housing to do. But National Capital Housing Authority has qualified its invita- 
tion to private enterprise in a way which would leave National Capital Housing 
Authority a monopoly over a huge field. For it "welcomes" only "all that the 
private builders will do well without Government subsidy" (p. 183); it leaves open 
"the market which is apparently open to private enterprise operating at a profit, 
without rental subsidies" (p. 1079). 

How large, then, is the field National Capital Housing Authority insists upon for 
itself? Housing for all families making less than $2,000: "There is tacit accept- 
ance that in the District of Columbia private enterprise cannot build for families 
with annual incomes less than $2,000. Need for the Authority's service, therefore, 
extends from that level down to the level of those who need public or private 
assistance" (p. 24). Indeed, it somewhat leans toward $2,400 or $2,600 as its 
upper level (p. 157). Public housing advocates seem agreed that "nearly a third 
of the population has incomes normally too low for them to pay for the full cost 
of decent housing" (p. 1110). There were over 51,000 families in Washington 
with incomes under $1,600 in 1940 (p. 1206). 


It should be obvious that a governmental agency which proposes to supply a 
commodity to a third of a communitv's families is going to be competing with 
the private enterprise which has previously supplied all of the commodity. 

As it is, however, public housing is enabled to compete with private enterprise 
housing in the low income field only by means of subsidy. This follows from the 
demonstration that its rents must be higher if the properties are to pay their way. 
Any program of public housing, therefore, would necessarily involve Government 
competition with private enterprise at the expense of the taxpayer. 

Since private enterprise can build, maintain, and manage housing at a lower 
cost, there would seem to be no reason left for the erection of additional housing 
iby National Capital Housing Authority, unless that reason be a desire to socialize 
the industry in the United States second only to agriculture. 

Is it any more logical to conclude that, because the lowest income group needs 
better housing, the United States Government should build, own, and manage it — 
than it would be to likewise conclude that because the same group is underfed, 
underclothed, and receives an inadequate amount of fuel the Government should 
therefore go into the businesses of farming, clothing, manufacturing, and mining? 
And this even if the Government might conclude it could farm, manufacture, or 
mine at a lesser cost than private enterprise? 

Fortunately, because private enterprise can build and manage at a lesser cost 
than can the Government, we do not have to rest our case on the plea that the 
American way of private enterprise must be preserved, even if it should cost the 
Government something to do so. 

Furthermore, the builders ask only that Congress grant the right of eminent 
domain and give tenants less assistance than is required under any existing or 
possible Government building-owning-managing Dlan — and they are willing to do 
the job. 

K. Pledges by Builders To Build Low-Cost Housing 

At the February 28 hearing Senator Tydings, in view of the opposition of the 
.operative builders to an expanded National Capital Housing Authority program 
.and their testimony that they could do the job better themselves, asked: "Would 
it be too much to ask if you could submit to this committee a statement signed 
by the builders that they would obligate themselves to undertake it, as to what 
they would do, what houses they would build, and what they would rent for, 
.-after they were built?" (p. 264). 

On March 31, 1944, immediately after Mr. Warren's presentation of the 
■private enterprise plan, pledges were presented by responsible local builders 
who agreed to build a total of 23,680 low-rental housing units under that plan in 
the first 6 years after building is permitted under Government regulations (pp. 
613-616). Since National Capital Housing Authority estimates that there are 
20,000 substandard houses currently in need of replacement (pp. 17, 18), these 
builders' pledges constitute an offer to do all the building necessary to replace 
the slums. 

When commitments were asked from private builders for war housing, they 
obligated themselves to build 13,000 units— and built 27,000 (p. 617). This 
fact of itself certainly creates a strong presumption that the present pledges 
will be kept. 

Financing pledged at the same time is ample. The Perpetual Building Asso- 
ciation pledged $1,000,000 a year when the plan was in an early stage, and now 
plans to make considerably more available (p. 618). Some of the District of 
Columbia Building and Loan League members, including the Perpetual Building 
Association, will make available a minimum of $3,000,000 for the first j'ear, 
•"almost unlimited funds are available for lending purposes from the Federal 
Home Loan Bank of Winston-Salem, N. C," and it is to be expected that when 
the program gets under way many more institutions will become interested in 
the financing of these projects (p. 578). This financing is to be at rates of 3H 
to 4 percent for up to 33 years on 90 percent of the value of the properties (p. 
578). This financing is the most advantageous ever offered by public or private 
sources in the District of Columbia. 

National Capital Housing Authority has expressed doubt that the present 
interest of private builders in slum reclamation will continue after more profitable 
business can once more be resumed (p. 1100). Complaints have been frequent 
throughout the hearings that, since private builders have never before under- 
taken such a program, there is no reason to believe they will go through with it 
BOW. These are reasonable points to raise, but they can be answered with 


First, the private builders have never had the power of eminent domain, and 
without that power it is impossible to clear slums (p. 581) . It is not economically 
possible in many cases to pay the fair market value of slum propert.y, demolish 
the buildings, and then put up low-cost housing (p. 581). Private builders have 
never been able to build within the means of the very lowest income groups for 
the same reason that public housing has never been able to house them without 
subsidy — because their incomes are too low for them to be able to afford even the 
very lowest rents that must be charged for proper housing. And private builders 
have at last been able, through the consistent downward trend of interest rates 
and an extension of the amortization period, to reduce financing charges very 
considerably (p. 586). Lack of the power of eminent domain, the necessity of 
paying full "fair market value" where the improvements were to be demolished, 
and lack of advantageous financing — these have always heretofore made it im- 
possible for private builders to attempt slum reclamation on any considerable 
scale. With these difficulties overcome, private builders will be able to do the 
job they wish to do. 

Their continued interest is also assured. Aside from the interest in keeping 
their promises which may be expected of a group of highly reputable businessmen, 
and aside from the continued interest in reclaiming the city's slums which is 
natural to men who have had so large a part in recent years in building the city, 
there is the perhaps more convincing reason that it will continue to be a wise 
enterprise from a financial standpoint. After an organization of reasonable size 
has iDuilt only a fraction of the higher-priced houses it is able to build, it reaches 
the point where, because of the tax structure, there is little incentive to build up 
to its capacity. In the houses to be built under the present plan, on the other 
hand, the money can be plowed back in and a good equity created (p. 587). 
Allowable deductions for depreciation by the Bureau of Internal Revenue makes 
the investment an attractive one from a tax point of view, even though the 
percentage of return is low. Assuming, as we are quite safe to do, that the tax 
structure will not change radically in the immediate future, then we can be sure 
that there will be compelling practical reasons for a continuance of interest by 
builders in the present program. However, if the Government is to compete with 
private enterprise in building low rental housing both private financing and 
other private enterprise will be scared away because private enterprise must in 
fact be on a self-liquidating basis and the Government operating under non- 
repayable grants need meet only maintenance charges. 

Mr. Wilkes. Now, the second point I would like to make is this: 
I had never engaged, prior to this housing inquiry, in presenting any 
matters before congressional committees, and while I had represented 
the local builders for a number of years, since about 1929, I asked 
that they get someone who had done that kind of work, and, through 
circumstances which you would not be interested in, a day or two 
before the hearing, the job fell on my shoulders, and I got the best 
builders, from the point of view of character and reputation and 
financial ability, in my office for a bull session on Sunday, and I said 
to them substantially this: "I have gone over the plan and there isn't 
as much profit in your plan as builders have been getting, and I want 
to know whether j^ou gentlemen are actually interested in doing this 
building after the war is over and you can get materials." 

Mr. Alorris Cafritz, who is and for some years has been our largest 
builder and a man who is very responsible in every way, was the first 
one of the group of seven— we went around the table — and he said: 

I will be interested for these reasons. In the first place these locations are 
downtown locations which are prime. Builders have never been able to get any- 
thing like this in the history of building. If the land cost can be reduced to a 
fair use value, the buildings will always stay rented and you will have a very — 
a prime investment from the point of view of having no vacancies to be concerned 

Secondly, if public housing stays out of the picture, you can get financing to 
finance that on a very liberal basis. Just a few years ago, builders financed on 
trusts which matured in 3 or 5 years. Today the building associations run them 
up to 12 or 15, some of them 20 years. 


We went to the building and loan associations, and they agreed, 
and the testimony is in the record and referred to in my statement 
here, they agreed to make $3,000,000 a year available at the lowest 
rates ever available in the District. I will read from the statement of 
Clarence E. Keefer, president of the District of Columbia Building 
and Loan League: 

Local building and loan associations are prepared to loan money on low-rental 
housing such as is proposed to be erected under the plan submitted by the Home 
Builders' Association at rates of interest from S]^ to 4 percent and for an amortiza- 
tion term up to 33 years upon a basis of advancing 90 percent of the value of the 
properties. Funds during the first year would be available to the minimum extent 
of $3,000,000. 

It is my sincere belief that as these projects get under way more institutions will 
be interested in assisting in the financing of this type of housing and, therefore, 
considerably more funds than mentioned above are likely to be available. 

Senator Ellender. Was that promise made on the basis that you 
clear these lots that I speak of, near the Capitol, and let the city of 
Washington pay a part of the charge? 

Senator Taft. And sell the lots to the builders for the same thing 
you would have to pay for a lot in Anacostia? 

Mr. Wilkes. It was not tied down to any location but the plan 
contemplated the building of two types of buildings: One, those located 
in the slum areas, the parts of the cleared areas not reserved for schools, 
fire stations, and parks. 

Secondly, the building of new buildings to accommodate part of the 
people who had to be moved to somewhere around the periphery of 
the built-up sections. 

Now, Mr. Cafritz further said this: 

I can do two or three Ijlocks of this building a year without interference with 
the volume of business which I do in my office, because the type of building is 
simple, and with one good superintendent and one good foreman I can just add 
him onto my pay roll in my office, and with a minimum amount of supervision I 
can do that kind of a job. It is the simplest type of building that there is. 

Senator Taft. Who is going to own these houses? Are you pro- 
posing to sell them? Is someone going to rent them, or what? 

Mr. Wilkes. It would be proposed to either lease them — and we 
would not recommend either particularly — leased on long-term basis 
or owned by private enterprise. 

Senator Taft. What do you mean by "private enterprise"? 

Mr. Wilkes. Private individuals. 

Senator Taft. The people who live in the houses or who rent the 

Mr. Wilkes. This is all rental housing. The houses for sale, we 
believe have been adquately taken care of in this area and I beheve 
throughout the United States by private enterprise. 

Senator Taft. Are these builders going to put their money in? 

Mr. Wilkes. The building associations will put in 90 percent and 
the builders 10 percent, and the builders will own the houses. 

Senator Taft. You think builders tliemselves will invest in rental 

Mr. Wilkes. Tliey have. Yes. Builders here have built more 
rental housing units in the last 4 or 5 years than our public agencies 

Senator Buck. How much equity, 10 percent? 


Mr. Wilkes. No; under existing financing they have to put in, if 
financed by the building and loan association, more than 10 percent. 
If financed by insured loans of F. H. A., m some instances I understand 
it has been less than 10 percent. 

Senator Taft. Don't they sell those houses as fast as they can? 

Mr. Wilkes. No, Senator; unecjuivocally no; because, coming to 
my last point that Mr. Cafritz brought out, a builder who has at- 
tained any success very rapidly gets up into the upper-income brackets 
and he gets into a position where it is much more important for him 
to build up an estate in rental properties than it is important for him 
to engage in the business of building houses for resale and paying an 
income tax on, not the one-quarter of the capital gains but the total 
capital gains, because that is his business. 

So that actually in the last 6 or 7 years builders have retained a very 
substantial part of the rental housing which they have built in the 
metropolitan area of the District of Columbia. And throughout the 
country, Mr. Cortwright tells me, that conforms to my understanding. 

Senator Taft. Do you think that is true throughout the country? 

Mr. Cortwright. Yes, Senator Taft. Th^y have constructed at 
least 400,000 units for rental, and the great bulk is owned by the 
builders and they do not want to liquidate it. They would rather 
have that monthly income. We have learned that only during the 
war. That was the result of a requirement that a very substantial 
part of our housing be built for rental. 

Senator Ellender. Does that condition exist only during the 

Mr. Cortwright. We were pushed into it, but we have learned 
the advantages of it. 

Senator Ellender. My guess is that about the end of the war they 
are going to start unloading. 

Mr. Cortwright. If I may say so, that wiU depend entirely upon 
the income-tax situation. 

Senator Ellender. Well, I doubt that there will be reduction. 

Mr. Cortwright. Well, we will hang onto it, then, sir. 

Mr. Wilkes. Senator, this matter of unloacling the matter as to 
which there is a difference of opinion. Actually, immediately follow- 
ing World War No. 1, people felt there was going to be a tremendous 
exodus from Washington. There was a housing shortage here for 
some years thereafter, and building costs went up after World War 
No. 1, and we suffered very little. 

In conclusion, may I just make this final observation? I would 
like to leave a copy, a summary, which I believe is attached to my 
statement, which I would like to have incorporated in the record, and 
I would like also to leave for the use of the committee's files, a com- 
plete copy of the testimony taken before Senator Burton's committee. 
If the private builders are given the implementation of eminent 
domain, which, in the District of Columbia, I think, would be constitu- 
tional — it has been decided both ways in court in various sections of 
the country. 

Senator Taft. You cannot give that to the private builders. 

Mr. Wilkes. No, if a Government agency will acquire for the 
purpose of obliterating slum conditions, land which is resold for the 


purpose of rehousing a part of that population, I sincerely believe 
and submit on the record that private enterprise, with the existing 
available financing will, for the first time, get into the field of pro- 
ducing new housing for those in the lower-income groups, in the very 
low income groups, and as soon as that is done and a surplus is created 
among other things the worst of the slums are going to become almost 
valueless and I further believe and submit on the record, that the 
net cost to the Government, be it National or local or State, will be 
substantially less if public housing be done away with completely and 
if the land be sold under a competitive bid basis with rent control for 
a period of time to be determined by a Government agency. The 
talk about slums will be reduced to action and reality. 

I believe the job will be done, and if it is done, there is no 
doubt in my mind on the record of the Burton hearings that it can 
be done at a very substantially less cost than it has been or ever will 
be done under any system of Government building. 

Senator Ellender. You are speaking of the District of Columbia? 

Mr. Wilkes. Yes; but I believe the District of Columbia is gen- 
erally typical of everything excepting the alley condition which we 
have here. I know I have just been in your city of New Orleans once, 
and I know you have many different problems there. 

Senator Ellender. Yes; and no matter if a depression does strike 
the country, Washington does not suffer as much as outside com- 
munities. You have a lot of people here whose salaries remain 
virtually the same, but when depression strikes the country it is like a 
cyclone, not only in New Orleans, not only in Shreveport, but in 
Dallas, Fort Worth, and Mobile, and other places. 

I can visualize what will happen within 3 or 4 years after the war 
when people get all the refrigerators and automobiles they want and 
we get back to normalcy. 

Mr. Wilkes. Then give them some new housing and put them 
to work. 

Senator Ellender. I hope it does not occur, but there is no doubt 
in my mind that we are going to have a lot of people receiving wages 
as low as those that were received prior to the war. I cannot, for the 
life of me, see how private industry could provide adequate dwelling 
houses for persons receivmg as little as $500 to $700 per year. 

Mr. Wilkes. Where do they live now, Senator? 

Senator Ellender. I am talking about pre-war. Now they have 
better facilities. 

Mr. Wilkes. Pre-war they lived in hovels. 

Senator Ellender. Of course. That is what I am saying. We 
want to get them out of those hovels. 

Mr. Wilkes. Well, it is inevitable that somebody pay the cost. 
Is it going to be paid under private enterprise or public housing? 

Senator Ellender. If private enterprise can and will do the job, 
I want it that way. That is why I said this afternoon it is my honest 
opinion that everybody mterested in housing, be it public housing or 
what not, should get together and make a sincere effort to provide 
adequate housing for all people in a community. Let those people 
work out a plan. Let them make the suggestion, and if it can be done 
from private funds, through private enterprise, let's do it that way. 
That is what I want. 


Mr. Wilkes. Well, we subscribe just 100 percent to that. 

Senator Ellender. Fine. 

Senator Taft. What I chiefly doubt about your plan — it may be 
these builders will build these $3,000 houses but we had one survey 
showing that everybody is planning to build $7,500 houses practically, 
and I do not know. Maybe the District of Columbia builders will 
do it. I think you will have to do a good deal of organization to do it. 
I hope so. I do not know that that will quite meet the problem but it 
would go a long way toward meeting it if houses were available at 
$3,500 or $3,600. 

Senator Ellender. I think evidence was produced at some other 
hearings which gave figures along the line of your suggestion. As I 
recall it gave us a picture of a small house that cost about $3,600? 
That was without many facilities that should have been in it. 

Your low cost of $3,600 would include the land, but not all facilities, 
and if you add them all together the total cost would be greater. An 
investor would have to get probably as much as 10 percent on his 

On $3,600 it would be 10 percent of that, $360, divided by 12, 
which would be $30 a month. 

Do you see? 

You cannot tag a $360 yearly rent to a person receiving $500 oe 
$600. You must give him a rent commensurate with his return.. 
You can readily see that the amount of subsidy pales into insignificance 
in contrast to the amount that you would have to put up so as tO' 
permit a private investor to allow equally low rents. 

The man getting $700 a year can hardly pay more than $8 to $10 a 

With houses built, as you have said, for $3,600 with a charge of $30 
a month rent it would mean you would have to subsidize the difference 
betv^-een $10 and $30 or $20 per family. I am sure that would cost 
the taxpayer much more than it is now costing under public housing. 

Mr. Wilkes. I must respectfully say that I cannot see it at all. 

Senator Ellender. Well, you are going to see it later on because 
it will be demonstrated to you. Mark what I say. 

Mr. Wilkes. There is only one answer, I submit, and that is, 
that the financing is upon a theoretical life of the building. They 
start off by saying it is a 60-year life. But when the financing is 
analyzed it is analyzed on the basis of there still being 20 percent of 
the building left after 60 years so they are really financing it on a 
75-year amortization basis and we had Mr. Lewis T. Brueninger, a 
local builder and banker, analyze the figures carefully, and it is based 
upon an amortization of 75 to 106 years. 

Senator Taft. They want to reduce it to 45 now; I mean that is 
their application. 

Mr. Wilkes. Yes. Now if they get a $100,000 loan and it is 
amortized over 100 years they have to collect rent for amortization 
purposes of only $1,000 a year. 

If it is amortized on a 20-year basis they have to collect $5,000 a 
year. Now anj^one with any experience knows that whereas in a 
city there are such houses 100 years old, if you could take a photo- 
graph of any area in the city 100 years ago and count the houses still 


existing at the end of 100 years, there would only be perhaps one or 
two in that area. So the fallacy is perfectly apparent. 

Now the second reason they say they can outstrip private enter- 
prise is that they get a theoretical interest at the going Treasury rate 
of 2 percent, and nobody else can get 2 percent money. Now we 
have not advocated that 2 percent money be made available to 
builders, but if you pass that 2-percent money on to a builder, it 
means that if he is paying 4 percent by private enterprise and he 
pays 2 percent to a builder, his interest costs, which amount to a 
substantial part of the rent dollars collected, is cut in half. 

Incidentally, the 4-percent interest that is paid to John Smith, who 
holds a first mortgage or a first trust, gets into the income tax spiral 
and part of that goes back to Uncle Sam. Whereas, when the money 
is borrowed directly from Uncle Sam, Uncle Sam gets none of it back. 
It is all going out. You cannot escape it. I submit this, that if their 
cost is less under private enterprise to build and to manage, the cost to 
the taxpayer is going to be less. Furthermore 

Senator Ellender. Now you are basing your figures on this 
high cost in Washington. I do know that condition does not exist in 
many other localities, that cost of administering that you pointed out. 

Mr. Wilkes. I will have to give you an answer only based upon 
reasonable conclusion, and not of any personal experience, and that is 
not worth much. I do not believe it is possible for the Government 
to build anywhere on the average at 75 percent, at less than 75 percent 
of the cost of private enterprise. 

Senator Ellender. The thing that you confuse is that it is not the 
Government that is building. It is private authorities that are 
created through State laws within every State in the Union, and they 
resort to the same people for building those houses as a private con- 
tractor does. They advertise bids and I presume that is what any 
contractor would do, I am talking about the building costs. 

Mr. Wilkes. Yes, but the rent is paid to the Government. The 
Government is in the rental business and I am not being facetious, I 
am trying to be very factual. You have to clothe these poor people. 

Senator Ellender. What? 

Mr. Wilkes. Clothe them. 

Senator Taft. Wliat? 

Mr. Wilkes. Clothe them. Would the Government let construc- 
tion out for clothing and distribute the clothing because they can 
distribute it a little cheaper? 

Senator Taft. This is not the same thing. It is a different problem. 

Mr. Wilkes. It is. I concede that. 

Senator Taft. All right; are you through? 

Mr. Wilkes. Thank you very much. 

Senator Taft. The following will be incoprorated in the record at 
this point: 

Letter of February 2, 1945, to Senator Taft from Hon. Marriner S. 
Eccles, Chairman of the Board of Governors of the Federal Reserve 
System, enclosing copy of letter to Senator Radcliffe, dated December 
16, 1944, setting forth specific objections and suggested changes to 
make provisions of S. 756 and S. 757 and S. 1034, acceptable. 

Statement submitted by John Carson, director, Washington office, 
the Cooperative League, U. S. A., outlining a plan for the solution 
of the housing problem. 


Loiter dated January 31, 1945, to Senator Taft, from Harry J, 
Mohiman, secretary of the Cincinnati Real Estate Board, outlining a 
resolution adopted by the members of the board in regard to housing. 

Letter of August 31, 1944, to Senator Taft from Maj. Edmund R. 
Purvis, Washington representative of the American Institute of 
Architects, embodying comments on post-war reconstruction and 
containing a resume of opinions generally subscribed to by the mem- 
bers of the architectural profession. 

Letter of February 3, 1945, from Harold S. Buttenheim, president 
of the Citizens' Housing Council of New York, Inc., transmitting a 
report setting forth the views of the subcommittee of the Citizens' 
Housing Council of New York. 

Letter of January 25, 1945, to Senator Taft from Randolph Bohrer 
setting forth proposal for attracting equity or risk capital to the 
medium rental housmg field. 

Letter dated January 23, 1945, to Senator Taft, from Mrs. Emma B. 
Sw^ggett, Washington legislative representative of the National 
Congress of Parents and Teachers, stating the objectives of thee 
National Congi-ess of Parents and Teachers in regard to housing. 

Letter dated January 12, 1945, to Senator Taft from Mrs. Constance 
W. Anderson, third vice president, the National Board of the Young 
Women's Christian Associations of the United States of America, 
urging appropriate legislation to secure a sound post-war housing 
program for the United States. 

Letter of January 11, 1945, to Senator Taft from Morris A. Mainger, 
secretary of the National Lawyers Guild, transmitting a report on A 
Post-War Low-Rent Public Housing Program, prepared by the 
national committee on social legislation of the National Lawyers 

Letter dated August 18, 1944, from Hon. Frances Perkins, Secretary 
of Labor, to Senator Taft, transmitting a report dealing with aspects 
of the post-war housing problem. 

Letter dated February 7, 1945, to Senator Taft from Anna Lord 
Strauss, President, National League of Women Voters, announcing the 
League's support of the National Housing Agency in an enclosed 

Letter dated February 16, 1945, to Senator Taft from Philip M. 
Klutznick, Commissioner of the Federal Public Housing Authoiity, 
with statement on the additional cost of low-rent projects built on 
slum sites as compared with vacant sites. 

Letter datecl February 21, 1945, to Senator Taft from F. G. Addi- 
son, Jr., Chairman of the Committee on Federal Legislation of the 
American Bankers Association, containing a memorandum on behalf 
of the Association. 

Statement submitted to the Committee by Benjamin C. Marsh, 
Executive Secretary of the People's Lobby, Incorporated, on the 
essentials for low cost housing. 

Senator Taft. The hearings will be closed, except that Mr. Blands- 
ford may be given an opportunity at some time to reply. 

(Whereupon, at 5:15 p. m., the committee adjourned.) 


Board of Governors of the Federal Reserve System, 

Washington, February 2, 1945. 
Hon. Robert A. Taft, 
United States Senate, 

Washington, D. C. 

Dea.r Senator Taft: At the hearings on January 10 of the Sub- 
committee on Housing and Urban Redevelopment of the Special 
Committee on Post-War Economic Policy and Planning, Mr. Fahey, 
Commissioner of the Federal Home Loan Bank Administration, with 
the support of Mr. Blandford, Administrator of the National Housing 
Agency, urged the passage of the bills H. R. 595 and H. R. 594 (which 
have also been introduced in the Senate as S. 179 and S. 180). These 
bills (except for the omission of one point) are the same as S. 756 and 
S. 757, respectively, which were before the Seventy-eighth Congress 
and on which hearings were held in May 1944. In a letter dated 
May 24, 1944, to Senator Wagner, the Board of Governors of the 
Federal Reserve System expressed its opposition to passage of these 
bills. Mr. Fahey and others disagreed with the position we took, and 
in a letter dated December 16, 1944, to Senator Radcliffe, the Board 
discussed the bills in some detail, pointed out the specific aspects 
of the bills to which the Board o Injected, and suggested changes which 
would make certain provisions of the bills acceptable. 

As far as I am aware, no objection has been inade to this second 
letter. I am therefore enclosing a copy of it, and I shall here set forth 
some of its more important points. It may be noted that Mr. Fahey, 
in the testimony referred to above, did not mention any counterpart of 
what was S. 1034 in the Seventy-eighth Congress. 

In H. R. 594 (corresponding to S. 757 in the 78tli Cong.), we have 
no objection to the authorization of Federal savings and loan associa- 
tions to lend on (1) the security of notes alone, if the associations are 
insured against loss under title I of the National Housing Act, and (2) 
home mortgages insured under title II of the National Housing Act 
which have maturities up to 25 years. We have no objection to the 
parallel provisions of section 1 of H. R. 595 (corresponding to S. 756 
in the 78th Cong.) which would permit the Federal home-loan banks 
to make advances secured by such loans. 

We do not believe that the remaining provisions of H. R. 594 and of 
section 1 of H. R. 595 should be enacted. The predominant invest- 
ments of savings and loan associations should be home mortgages, 
and the powers of associations to invest in mortgages on apartment 
houses and other business properties should not be extended beyond 
their present scope. 

Section 2 of H. R. 595 makes an appreciable change in the basis on 
which the Federal Home Loan Bank System may issue debentures 
to the public. At present, the amount of debentures outstiinding ?nay 
not exceed the amount of advances from the banks to their members 
which are secured by mortgages of a type defined by Congress. The 
proposed change would perjnit debentures to be issued for a much 
larger amount and for much broader purposes by including in the 
debenture base all Government obligations owned by the banks, 
whether held as part of their reserves or not, as well as advances to 
members secured in anyway whatever. The provisions of the 
present law give the Federal EEome Loan Bank Syste7n adequate 
access to investment funds to permit it to perform the functions 


which it was established by Congress to perform. We feel, therefore, 
that section 2 of H. R. 595 should not be enacted. 

Section 3 of H. R. 595 authorizes the Secretary of the Treasury 
to purchase obligations of the Federal Ho7ne Loan Bank System and 
of the Federal Savings and Loan Insurance Corporation with certain 
limitations on amount. We have no objection to the stated purpose 
of this section, but we do object to the broad terms in which the 
proposed legislation is couched. We have therefore suggested that the 
purpose of the section and the conditions under which it may be used 
be clearly defined by Congress. 

The broad proble?ns at which this proposed legislation is aimed are 
important, and the Board has no desire to see them ignored. We do 
not believe, however, that the legislation offered is desirable for the 
reasons set forth in some detail in our letter of December 16. 

Your subcommittee is holding hearings with the purpose of devel- 
oping a Federal housing policy and program for the post-war period. 
To my mind, the basic task of a housing policy or a housing program 
should be to bring our housing supply up to decent standards for the 
middle and lower income groups, and to make possible a continuous 
bettering of the housing available for all income groups at the lowest 
possible cost. If, after the transition period, when men and materials 
are available, we are to establish really good housing standards in a 
reasonably short time, and if residential building is to contribute its 
share to full employment after the war, then all the activities associ- 
ated with residential building will need to be at levels far above any 
we have known before, and will have to be sustained at these high 
levels without the wide fluctuations to which building has been subject 
in the past. 

Strictly from the point of view of the provision of housing, fluctu- 
ations in residential building are bad for two reasons: First, they 
mean that we are operating at less than capacity, and thus are ob- 
taining less housing than we could have; and second, irregular opera- 
tions give rise to costs which could be avoided if operations were con- 
tinuous. If we are to obtain the volume of building which Mr. 
Blandford has testified we need (and I should agree that our need is 
at least as great as he has shown) at costs which people can bear, 
we must eliminate the wide fluctuations in residential building. 

How to obtain continuous building of houses at the high level 
required is a question which will require a great deal of study, and 
measures Will have to be adopted by the Federal Government as well 
as by State and local authorities and by private individuals and 
groups. I should like to emphasize that the question must be faced 
as a question of providing housing. Programs designed to raise 
national income, prevent unemployment, and maintain a sound credit 
structure will make it easier for us to obtain the quality of housing 
which we can have; but the problems in the housing field are suffi- 
ciently difficult and individual to require special attention. At the 
same time, the measures adopted to stimulate the provision of housing 
must be compatible with the smooth functioning of the economy, 

The bills sponsored by the Federal Home Loan Bank Administra- 
tion are aimed at some of the problems of financing housing. The 
main fault I have to find with those provisions of the bills objected 
to by the Board of Governors is that, in the field of housing finance, 
they look, basically, to making institutions developed to meet one 


kind of need meet quite a different kind; and in the field of credit 
generally, they would weaken the controls of credit policy which the 
Nation has built up over the years. 

The bills, if enacted, would permit Federal savings and loan asso- 
ciations to participate much more in the mortgage financing of rental 
housing. I believe any comprehensive housing program must give 
greater emphasis to rental housing than has been given in the past, 
but I do not feel at all confident that rental housing can be provided 
soundly if it has to rely on financing techniques which have been 
developed for owner-occupied housing. Kather than try to ma'ke it 
possible for institutions such as savings and loan associations and 
commercial banks to provide more mortgage financing for large rental 
projects, I think we should try to work out new financing devices 
more closely adapted to the needs of rental housing. One of these 
needs seems to be much more equity capital than there has been in 
the past. This may mean that different kinds of institutions, enter- 
prises, and techniques such as limited-dividend corporations, and 
yield insurance should be encouraged, although 1 am not prepared 
now to make recommendations for legislation on these subjects. 

The bearing of these bills on control of credit policy is not remote. 
Investment in housing is long-teim investment, and individuals should 
not be induced to engage in it under the impression that their invest- 
ment is liquid. liquidity cannot be obtained for investments in 
institutions such as savings and loan associations unless either the 
institutions themselves follow a policy of investing a large poition of 
their assets in short-term loans, or the Government or central bank 
gives a commitment to rediscount or buy any mortgage loan offered 
to it. Savings and loan associations cannot follow a policy of liquid 
investment and still perform their function. A sound credit and 
fiscal policy cannot be carried out if there is a Government or central 
bank commitment to turn mortgages into cash, but H. R. 595 is a 
step in the direction of such a commitmait. 

Because a housing policy and program must be framed in response 
to the special problems of housing and, at the same time, the measures 
adopted to meet these problems must be integrated as closely as 
possible with the operations of other parts of the economy, I should 
like to see the National Housing Agency established as a permanent 
Federal agency, but with somewhat different and more extensive 
duties than it has had during the war. It should be responsible for 
correlating the activities of the Federal agencies which have already 
been developed, but it should do much more than this. It should be 
responsible for studying housing problems, with the assistance of all 
interested parties, particularly State and local authorities, and for 
developing solutions which can be put into effect by existing agencies, 
or can be proposed to the appropriate legislative bodies. Both in 
formulating programs for the consideration of Congress and in 
carrying out programs agreed upon, the agency should work closely 
with other agencies of Govermnent to assure that measures taken 
for the improvement of housing conditions are consistent with meas- 
ures which must be taken in other parts of the economy. In saying 
this, I do not suggest that other agencies, such as the Federal Reserve 
System, the Treasury, and the Social Security Board should fashion 
or veto housing programs. I do mean to say that if we are to do the 
job of bringing our housing up to what it should be, measures will be 


needed which will impinge at many points on areas for which many 
different agencies have responsibilities to Congress and to the Nation, 
A National Housing Agency with the duties I have sketched very 
briefly could do much to avoid conflicts, not only among housing 
agencies themselves, but also between the housing agencies and other 
executive agencies. 

Sincerely yours, 

M. S. EccLEs, Chairman. 


December L6, 1944. 
Hon. George L. Radcliffe, 

United States Senate, Washington, D. C. 
Dear Senator Radcliffe: You have kindly permitted us to file a reply to 
Mr. Fahey's statement dated August 7, 1944, in which he attacks the position we 
took in our letter ot Senator Wagner of May 24, 1944, opposing the passage of 
the bills S. 756, S. 757, and S. 1034. We still believe that it would be unwise for 
Congress to enact these bills in their present forms. However, after careful 
consideration of Mr. Fahey's statement and a reexamination of the entire matter, 
we wish to set down specific objections to the present bills, to indicate those 
purposes with which we can agree, and to suggest changes which would make 
some of the provisions acceptable to us. 

S. 757 and section I OF S. 756 

Under existing law, a Federal savings and loan association iray not (1) make 
loans for the improvement or repair of homes except on the security of a mortgage; 
(2) make loans on homes located more than 50 miles from the association's liome 
office; or (3) make an aggregate amount of loans on real estate other than homes 
in excess of 15 percent of its assets. S. 757 would permit a Federal savings and 
loan association (1) to make loans for the improvement and repair of homes on 
the security of notes alone, provided they are insured under the National Housing 
Act; (2) to make loans on homes located more than 50 miles from its home office 
under the 15-percent-of- assets limitation (in addition to the existing authority to 
lend on business property under the 15-percent-of-assets limitation). More 
importantly, however, S. 757 would exempt any loan insured under the National 
Housing Act (as now- drawn or as hereafter amended) from the 15-percent-of- 
assets limitation and the 50-mile limit. 

We are willing to withdraw our previous objections to (1) the proposed au- 
thority for Federal associations to make repair and modernization loans which 
are insured under title I of the National Housing Act, on the security of notes 
alone; (2) the proposed provision permitting Federal associations to make loans 
on homes beyond 50 miles under the 15-percent-of-assets limitations. Similarly, 
we have no objection to the corresponding provisions of section 1 of S. 756 insofar 
as they would authorize Federal home-loan banks to discount loans made under 
these provisions of S. 757, so amended. Also we should have no objection to the 
provisions of section 1 of S. 756 insofar as they permit the home-loan banks to 
accept as collateral for advances under section 10 (a) home mortgages insured by 
the Federal Housing Administration with maturities up to 25 years. 

We do not believe, however, that the remaining provisions of S. 757 should be 
enacted. Savings and loan associations have traditionally been local thrift and 
home-financing institutions, gathering investment funds of individuals from the 
local community and lending them out to home owners and prospective home 
owners within the local community. This is clearly the basic function which 
Congress intended Federal savings and loan associations to perform, although it 
permitted them, as a matter of operating flexibility, and to meet unusual situa- 
tions, to engage in other lending activities within well-defined limits. 

We believe this element of flexibility is proper and useful, but if operations now 
permitted as exceptions to the rule should become the general rule, the basic 
function described above would be fundamentally altered. We feel, therefore, 
that the loans made on properties outside the association's locality (i. e., beyond 
50 miles) should remain within the 15-percent-of-assets limitation. 

We also believe that the financing of large-scale rental housing should continue 
to be subject to the 15-percent-of-assets limitation. Such financing is essentially 
different from the financing of homes for owners and prospective owners. The 
borrower, in the case of rental housing, is not a home owner. He is an investor 

91183 — 45 — pt. 15 8 


in a business enterprise just as is the hotel owner. Thus the financing of large- 
scale rental housing is essentially business financing, which it was never contem- 
plated savings and loan associations would undertake. The Federal Home Loan 
Bank Board has, we think quite properly, recognized this fact, because, although 
the present law would permit Federal savings and loan associations to make any 
nonhome loan within the 15-percent-of-assets limitation, the Board, by regula- 
tion, has imposed severe restrictions on the rental housing loans which they inay 
make. It has limited such loans to 50 percent of appraised value, except in the 
case of small apartments (5 to 12 families) for which the limit is 60 percent, even 
though they are insured under the National Housing Act. 

For these reasons we feel that the blanket authorization of Federal savings and 
loan associations to lend any amount anywhere on insured mortgages, which is 
contemplated by S. 757 and section 1 of S. 756, should not be enacted. 

SECTION 2 OF S. 756 

The purpose of section 2 of S. 756 is to increase the amount of money which 
the Federal home-loan banks may borrow in the money market by widening the 
range of bank assets on the basis of which debentures may be issued. The law 
as it now stands restricts the amount of debentures which the System may issue 
to the amount of advances to members secured by loans of the types prescribed 
by Congress in section 10 (a) of the Federal Home Loan Bank Act. Thus, the 
power of the home-loan banks to obtain funds in the money market is geared to 
the volume of the loans of the member institutions secured by loans of the best 
type; namely, loans which qualify under section 10 (a). It seems obvious that the 
present provision furnishes the Home Loan Bank System with borrowing capacity 
more than adequate to enable member institutions to meet the demand for such 
loans in communities where share accounts are insufficient. Within the limita- 
tion which relates debentures to capital, the home-loan banks can now issue 
debentures on a one-for-one basis for the entire amount of 10 (a) loans rediscounted. 
In what way could a demand arise which could not be met under the present pro- 
vision? Only if member institutions should wish to rediscount other types of 
paper (or obtain unsecured advances) in considerable volume. Such other paper 
would include mortgage loans on business properties, apartment houses, and other 
nonhome properties, as well as loans made on the security of share accounts. It 
seems apparent that Congress did not intend that such paper should form the 
basis for obtaining additional funds in the market. With the possible exception 
of loans on the security of share accounts, this is a type of financing that should 
be held within the 15-percent-of-assets limitation, as alreadv pointed out herein, 
and therefore that should not be encouraged by giving such paper, when discounted 
at home-loan bank, the same access to market funds as is enjoyed by 10(a) paper. 
In fact, the power to include such other paper in the debenture base would have 
the inevitable effect of eliminating the relative desirabilitv of loans under section 
10 (a) which are clearly the most appropriate type of loan for mutual thrift and 
home financing institutions. 

The proposed amendment would also include in the debenture base of the 
System all Government obligations owned directly by the Federal home-loan 
banks. This provision would permit Government obligations, including those 
held as part of the banks' reserves, to be counted in the debenture base. 

The present law in our opinion is overgenerous in providing that required 
re.serves may be invested in earning assets (the reserves of commercial banks must 
be in cash and those of the Federal Reserve banks in gold or gold certificates) 
and the proposed amendment would go even further by allowing the reserves to 
be again multiplied by forming a base for the issuance of debentures. 

There is nothing in' the present law which restricts the power of the System to 
raise money to peTform the functions it was established to perform; namely, to 
provide a reservoir of funds on which member institutions can draw when the 
demand for sound home-mortgage loans in their communities exceeds the amount 
of share investment. Without issuing debentures, the banks can make advances 
out of their own capital, as well as from deposits they may have from member 
institutions which have more share capital than mortgage loans. When demands 
on the banks exceed these resources, the System may borrow from the money 
market the entire amount of section 10 (a) advances from the banks to their mem- 

Bearing in mind that Federal savings and loan associations are forbidden by 
law to accept deposits and that the holder of a share in such an institution should 
not expect the same liquidity as the owner of a deposit in a commercial bank, it 
seems obvious that the Federal home-loan banks should not need to raise funds 


on the basis of loans other thaij the types described in section 10 fa) of the Federal 
Home Loan Bank Act. The most likely use for such funds would be to make 
unsecured advances to member institutions to enable them to meet demands for 
share withdrawals — an operation which is clearly inconsistent with the nature 
of share accounts and the uniform charter provisions of Federal associations 
governing withdrawals. 

We object to section 2 of S. 756, therefore, on the following principal grounds: 
First, because it would broaden the base for debentui-es in such a manner as to 
encourage lending by member institutions of types which are inappropriate for 
local mutual thrift and home-financing institutions; second, because, by including 
paper not conforming to section 10 (a) as well as Government obligations owned 
directly by the Federal home-loan banks, whether as part of their reserves or not, 
it would make available to the banks far more funds than they need in order to 
perform their functions; and third, because it is desirable that the reserves of the 
Federal home-loan banks, which are already invested in earning assets, should 
not be used as a basis for further generation of credit. 

The argument that the Federal home-loan banks have not participated as fully 
in the financing of the war as they would if Government obligations could be 
included in the debenture base is not convincing. The Treasury has said re- 
peatedly that it does not want institutions to borrow money in order to purchase 
Government bonds. 

SECTION 3 OF S. 756 

Section 3 of S. 756 contains two proposals which must be considered separately: 
The first authorizes the Secretary of the Treasury to purchase obligations of the 
Federal home-loan banks or the Federal Home Loan Bank System in amounts not 
to exceed three times the total of the capital stock, reserves, and surplus of the 
Federal home-loan banks; the second authorizes the Secretary of the Treasury to 
purchase obligations of the Federal Savings and Loan Insurance Corporation, 
with a corresponding limitation on amount. 

Since Mr. Fahey states that the authorizations granted by this section are to 
be used only in emergencies, it seems to us that the legislation should be worded 
so as to indicate this purpose. The unqualified authorization now contained in 
the proposal implies (despite the discretion lodged in the Secretary of the Treasury) 
that general support of the obligations of the Federal Home Loan Bank System 
is to be given by the United States Treasury. We feel that no such implication 
should be given.' On the other hand, there is merit to the suggestion that it would 
be undesirable in the public interest for home-loan banks to be unable to meet 
maturing obligations due to a temporary emergency. We have no objection, 
therefore, to a provision permitting the Secretary of the Treasury, if he determines 
that the market situation warrants such action, to retire from the market such 
maturing obligations as the System cannot redeem without undue sacrifice and 
giving him power to negotiate with the Federal Home Loan Bank Board such 
terms and conditions as he feels to be desirable for the protection of the Treasury 
in connection with such action. 

With regard to the second proposal, the law under which the Federal Savings 
and Loan Insurance Corporation operates now provides that insured institutions 
shall pay premiums, which shall cease when the reserve of the Corporation 
reaches 5 percent of the insured risk, but the Corporation is authorized to assess 
each insured institution additional premiums equal to the amount of all insurance 
claims and operating expenses. (The required insurance premium and the maxi- 
mum annual assessment are each one-eighth of 1 percent of the insured accounts 
and creditor obligations of the insured institutions.) These provisions would 
indicate that the Congress contemplated that the premium would be used to 
provide the reserves and that the assessment would be used to pay losses and 

However, the Corporation has never exercised its right to assess, with the result 
that, in effect, insurance losses and operating expenses have come out of the 
reserve. At the end of the fiscal year 1943 the reserve was only slightly more than 
one-half of 1 percent of the insured risk, or one-tenth as large as Congress deter- 
mined the reserve should ultimately be. 

We feel that, if the Treasury is to guarantee the ability of the Corporation to 
meet its insurance contracts, it should be called upon to do so only after the 
Corporation has in good faith used the facilities already furnished by Congress 
for providing adequate reserves, as set forth below. 

We should have no objection, therefore, to a measure which authorized the 
Secretary of the Treasury to purchase oljligations of the Corporation provided 
that (1) the Secretary determines that a reasonable market for the Corporation's 


obligations does not exist; (2) the obligations piii;phased by the Secretary shall 
bear interest at a rate which, in the judgment of the Secretary is a fair rate, having 
in mind the Corporation's normal market; and (3) the Corporation has already 
placed in effect a program of crediting to the reserve each year a sum sufficient 
to build up its reserve to 5 percent of the insured risk within a period to be set 
by Congress, but preferably not more that 10 years. 

SECTION 1 OF S. 1034 

In bis support of S. 1034, Mr. Fahey says that the effect of the provision waiving 
dividends due to the Home Owners' Loan Corporation from the Savings and Loan 
Insurance Corporation would be to grant the Federal Savings and Loan Insurance 
Corporation free use of its capital as was done for the Federal Deposit Insurance 
Corporation when dividends from Federal Deposit Insurance Corporation to 
the Treasury were eliminated. 

Congress did provide the Federal Savings and Loan Insurance Corporation 
with its capital free of cost. It directed that the Home Owners' Loan Corporation 
acquire the entire capital stock of the Insurance Corporation by exchanging Home 
Owners' Loan Corporation bonds for Federal Savings and Loan Insurance Corpo- 
ration stock, and that the money paid as interest by Home Owners' Loan Corpo- 
ration on its bonds be returned to Home Owners' Loan Corporation by Federal 
Savings and Loan Insurance Corporation as dividends. The Home Owners' Loan 
Corporation has paid $3,000,000 to the Federal Savings and Loan Insurance Corpo- 
ration each year since 1934, but since 1935 the Federal Savings and Loan Insurance 
Corporation has paid no dividends to Home Owners' Loan Corporation. Instead, 
it has placed $3,000,000 each year in a special reserve for contingencies, which now 
amounts to $27,000,000. Section 1 of S. 1034 would remove the Insurance Corpo- 
ration's lialjility to Home Owners' Loan Corporation for this $27,000,000 and 
would transfer this amount to the reserve which Federal Savings and Loan Insur- 
ance Corporation is required by law to build up. The Home Owners' Loan Corpo- 
ration would thus be forced to bear a loss of $27,000,000 which is not properly 
chargeable to its operations. 

We are in sympathy v.ith the suggestion of the Secretary of the Treasur.v that a 
uniform policy be adopted for the treatment of public money used by Govern- 
ment corporations. Since the Home Owners' Loan Corporation is in process of 
liquidation and has already called the bonds which were issued in exchange for the 
stock of the Federal Savings and Loan Insurance Corporation, Congress might 
well direct the Secretary of the Treasury to purchase the stock of the Federal 
Savings and Loan Insurance Corporation from the Home Owners' Loan Corpo- 
ration, and make whatever rules it deems best for the reimbursement of the Treas- 
ury in the future. 

We see no good reason, however, for the waiving of the dividends which have 
been accrued contrary to the clearly expressed intent of Congress. Since insured 
institutions stop paying insurance premiums to Federal Savings and Loan Insur- 
ance Corporation as soon as the reserve reaches 5 percent of the insured risk, the 
effect of such a gift by Congress to the reserve of the Federal Savings and Loan 
Insurance Corporation would be to relieve the insured institutions of the obliga- 
tion to pay premiums amounting to the $27,000,000, plus interest for a number 
of years. 

We do not believe that Congress should make such a gift to private lending 
institutions at the expense of the Federal Treasury which will bear any losses 
\\ hich Home Owners' Loan Corporation shows on liquidation. 

SECTION 2 OF S. 1034 

The reserve which Congress has said should some day reach 5 percent of the 
Federal Savings and Loan Insurance Corporation's insured risk was, on June 30, 
1944, after 10 j-ears of operation, only 0.57 percent of the insured risk. Section 2 
of S. 1034 would reduce the insurance premium due from insured institutions by 
one-third, and would consequently slow down the rate at which the reserve is ac- 
cumulated. Transfer of the dividends due Home Owners' Loan Corporation to 
the reserve would, of course, raise the ratio of reserve to liability, and might ad- 
vance the date at which the full reserve might be reached. This should not, how- 
ever, divert attention from the fact that the income available for reserves would be 
reduced substantially, and, in a period when losses were high, would be sadly 

Mr. Fahey points out that the right of the Corporation to assess insured institu- 
tions for losses and operating expenses is retained in S. 1034 (although the maxi- 
mum rate of assessment is also reduced by one-third), and argues that this power 


could be used to meet- larger iosses. Apart from the fact that the Corporation 
has never yet used this power of assessment, it is doubtful that assessment after 
]arge losses have started would be effective in yielding the amount of revenue that 
would be required (since the amount of assessment for any one year is limited) 
or could, in such a period of widespread strain, be conveniently paid by the insti- 
tutions. Indeed, it is contrary to all insurance principles to attempt to assess the 
insured after the risk insured against has materiahzed. 

Mr. Fahey argues that the risk insured by the Federal Savings and Loan Insur- 
ance Corporation is about the same as that insured by the Federal Deposit Insur- 
ance Corporation, and that therefore the premiums should be similar. He takes 
issue with our statement that Federal Deposit Insurance Corporation's risk is 
lower because there is a considerable cushion between the Federal Deposit Insur- 
ance Corporation and its insured risk in the form of the capital, surplus, undivided 
profits, and reserves, of a commercial bank to which there is no counterpart in 
the institutions insured by Federal Savings and Loan Insurance Corporation. 
He maintains that the savings and loan associations have similar capital accounts 
and that the ratio of these accounts to total assets is about the same for institu- 
tions in the two insurance systems. 

If we assume that Mr. Fahey is correct in saying that there is a cushion be- 
tween the Federal Savings and Loan Insurance Corporation and its insured in- 
stitutions similar to the cushion which protects the Federal Deposit Insurance 
Corporation, the comparison between the two should be based on the insured 
accounts of the institutions and not on their total assets. The capital accounts 
of institutions insured by the Federal Deposit Insurance Corporation amounted 
in 1942 to almost 25 percent of the insured accounts, while the capital accounts 
of institutions insured by the Federal Savings and Loan Insurance Corporation 
amounted to only 9 or 10 percent of its insured accounts. In other words, a 
comparison would show that the cushion in the case of the Federal Deposit In- 
surance Corporation is over 2^2 times as great as in the case of the Federal Sav- 
ings and Loan Insurance Corporation. 

It has been asserted (by Mr. Kreutz of the National Savings and Loan League, 
for example) that the risk assumed by the Federal Savings and Loan Insurance 
Corporation is less than that of the Federal Deposit Insurance Corporation be- 
cause the former insures only the ultimate safety of share accounts and makes no 
attempt to insure their liquidity. Under the procedure which Federal Savings 
and Loan Insurance Corporation has adopted for meeting insurance claims, 
however, liquidity is in effect insured. The Corporation pays cash to operating 
institutions for share accounts which they issue to holders of insured accounts in 
liquidating institutions, but whether the holder of the transferred account obtains 
cash immediately is apparently not within the direct control of the Corporation, 
although to date, institutions have apparently been ready to permit withdrawals 
on demand. Under this procedure the Corporation will be able to meet its in- 
surance contracts in time of stress only if it has adequate cash or other liquid re- 
sources, and we feel it cannot have these resources unless it builds its reserves 
more quickly than it has built them up to now. 

For these reasons, therefore, we are opposed to the passage of S. 1034 and all of 
its provisions. If the law at which it is aimed is to be amended, we feel it should 
be by the addition of a requirement that the reserve of 5 percent of potential 
liability be built up by a given date. 

We have made suggestions which, we think, make some passages of S. 756 and 
S. 757 acceptable in the public interest. For the remainder of the bills, we feel 
as we did on May 24, 1944, when we said: 

"The Board is in sympathy with what it understands to have been the original 
objectives of the Federal Home Loan Bank System whereby Federal savings and 
loan associations and similar institutions would supply the need for local mutual 
thrift and home-financing institutions, and Federal home-loan banks would act as 
reservoirs of funds for the accommodation of their member institutions. The 
Board believes that the enactment of these bills would represent a material de- 
parture from these objectives. On the one hand, high dividend rates to share- 
holders plus the insurance of their investment in such shares would tend to 
attract funds far beyond those incident to local mutual thrift and home-financing 
programs. On the other hand, broadened powers would offer investment outlets 
for such funds equally beyond the scope of the original objectives. Thus, their 
enactment would constitute a step in the direction of establishing a separate and 
complete banking system with an opportunity to compete for ordinary banking 
deposits on favored terms." 
Sincerely yours. 

M. S. EccLEs, Chairman. 


Statement to the Senate Committee on Housing by John Carson, 
Director, Washington Office, The Cooperative League, 
United States of America 

Mr. Chairman, one of the most important stories on housing in this 
country is being tokl right now, rather it is being enacted or hved in 
the Walnut Groves Mutual Housing Corporation in South Bend, Ind., 
and in the Greenmount Mutual Housing Corporation of Dayton, 

The "cost of operation" for a house in Walnut Groves is only 
$5.19 a month; in Greenmount it is only $5.14 a month. Just a few 
miles distant from Walnut Groves is a public-housing authority 
project. The "cost of operation" of a house there is more than $10 a 
month. The cost of operation in Walnut Groves and Greenmount is, 
I think, less than any cost for a public-housing project and perhaps 
less than for any competitive profit housing project. 

These two housing projects are important because of their financial 
success. But they are far more important as guideposts which 
point to the solution of our housing problems. The story they tell is 
the old story that people are fully competent to manage their own 
affairs and that they can solve their own problems. The story is 
that of demxocracy at work. These are, in fact, cooperative housing 
projects where the people have assumed responsibility of manage- 
ment because they are becoming owners. 

The story of rural electrification and of R. E. A. is a story to which 
we can turn if we are sincerely interested in solving the housing 
problem. We can establish a government organization for housing 
such as R. E. A. was and is. Not so many years ago, the competitive 
profit electrical industry ignored the problem of rural electrification 
because it seemed impossible of solution. Then we adopted the rural 
electrification law and its author, the late Senator George W. Norris, 
wrote into it the provision that loans could be made for rural electri- 
fication to the competitive profit electrical industry, to political sub- 
divisions, and to cooperatives. He told me he feared "the Power 
Trust" would take the loan capital and get control of rural electric 
lines. He hoped that townships and counties and public power dis- 
tricts might borrow and build lines. He was an ardent advocate of 
cooperatives and he wished they would develop but he said he had no 
thought that they would. 

After R. E. A. was established, our cooperative leaders had to 
plead with the R. E. A. Administrator to recognize that the law 
provided for cooperative developments. The Administrator was not 
opposed to cooperatives but he was incredulous that they could be 
helpful. He did open the door to cooperatives and that was about all. 
What happened? The problem was solved. Cooperatives took 
about 95 percent of all loans made by the Government. The people 
assumed responsibility and organized and did a job which the elec- 
trical industry had avoided tackling. 

There is a lesson in the R. E. A. story for us, right here. This 
housing problem can be solved by the people who are most concerned 
with it because they must have housing. We are not going to solve 
it for them. Government agencies are not going to solve it by impos- 
ing plans and projects on the people. I wish, as a new world and a 
new age dawns on us, that we could become honestly humble and thus 


intelligent and that we would admit that society, or government, is 
weakened and destroyed by attempting to manage and control the 
lives of people. Big business and big finance did succeed in ruling the 
people for a long time. But that worl^, the world of competitive 
profit capitalism, began to have its death rattles in 1929 and it has 
been in convulsions ever since. Then we turn to the state. 

"When a man becomes senile and insane, his friends put him in an 
asylum," remarked A. E. Russell, the great Irish philosopher and 
advocate of the cooperative movement. "When a people grow deca- 
dent and imbecile, they place fehemselves in the hands of the state," 
he added. 

I am bold enough to outline a plan for solution of the housing 
problem and it is as follows: 

1. Establish a Mutual Housing Administration in the National 
Housing Agency and give to it authority and responsibility similar to 
that given to the Federal Housing Administration and the Public 
Housing Administration. In other words, give it rank and prestige. 

2. Give the Mutual Housing Administration authority to make 
loans as did the R. E. A., to political subdivisions, to cooperatives, 
and if you wish to consolidate the Federal Housing Administration 
with it, it might have authority to make loans to the competitive 
profit housing industry. I assume, however, it would be preferable 
to permit F. H. A. to continue in its field which is that of serving,, 
almost exclusively, the competitive profit industry. 

3. Give to the Mutual Housing Administration the responsibility 
for administering the projects and loans to an extent necessary to 
protect the Government's investments, and no more authority than is 

The people will then do this job for you. They will develop a plan 
which will meet the conditions in the small towns and another plan 
which will meet the conditions in the larger cities. They have done 
the job here and there. They are doing it in Walnut Groves and 
Greenmount. But let me list a few other examples of success: 

Apartment house development. — The Amalgamated Cooperative 
Apartments in New York City house 920 familes. They are owned by 
the people. They are managed by a democratically organized coopera- 
tive. There are no finer apartment buildings. There is no apartment 
project which will compare with this for "management success." 
When witnesses come before you, as they have, and tell how impossible 
it is to develop apartment housing in New York City, show them the 
Amalgamated projects. 

Housing development. — The Dayton Mutual Homes Co., Inc., of 
Dayton, Ohio, houses some 380 families. It is a cooperative develop- 
ment. It is so successful the cooperative members can sell their 
"rights" at very large profit. I an^ told these houses were built at 
some 12 to 15 percent saving in initial cost. Just outside Chicago is 
another small cooperative development where the saving was 12 to 
15 percent. 

St. Paul and Minneapolis .—CoopersitiYe housing projects in these 
cities resulted in giving to cooperative members very excellent housing 
facilities for a monthly cost of $25, to $40. 

Penn-Craji, Pa.; Chapel Hill, N. C; lona, Idaho. — Cooperatives in 
these smaller communities built housing through contributions of labor 


by members who were directed by employed skilled workmen. Thus 
they reduced the cost and money investment. 

Mr. Chairman, we are grateful for this opportunity to appear here 
and to fulfill an obligation .we have to the public interest. Our co- 
operative organizations are criticized quite often for not "telling their 
story to the world." As Congressman Jerry Voorhis said, "Coopera- 
tives offer the greatest single encouragement for the preservation of 
democracy in the world." He also criticized cooperatives for not 
publishing their story. 

We are not here to ask any special privilege for cooperatives. We 
do insist that our Government agencies should not discriminate against 
cooperatives, as they do at present. We insist they should give to 
cooperatives encouragement similar to that given to the competitive 
profit housmg industry by the Federal Housing Administration. W^e 
are here to insist that any housing program developed must be directed 
to helping people to help themselves and must concern itself with help- 
ing the people to acquire ownership of their houses. 

We are here to insist, also, that where the Government insures mort- 
gage loans the interest rate on those loans should not be higher than 
would be the interest rate the Government would have to pay, plus a 
very small service charge. Therefore, we believe the interest rates 
now fixed are too high. 

The Cooperative League U. S. A., which I am representing here, 
appears before you in a very fortunate position. The league is the 
educational arm of the consumer-purchasing cooperative movement 
in this country. We estimate there are at least 2,500,000 families 
affiliated with these cooperatives, or in other words, 10,000,000 per- 
sons. And I sincerely believe that is a conservative figure as coopera- 
tives are now developing so rapidly it is difficult to keep a record of 
the progress. As our religious and educational and labor and farm 
organizations are becoming zealously interested in the promotion of 
cooperatives, the progress will be even more rapid. 

We are fortunate because we represent the consumer, and as the 
consumer is the public, we represent here the public interest. The 
Swiss have a saying that "consumer cooperatives incarnate the public 
interest." They do just that. 

Our league, for example, has among its members some organizations 
with large sums of investment capital which is available for the hous- 
ing industry; has also organizations as members which own timber 
tracts and sawmills and other producing organizations; organizations 
in which and through which millions of consumers express their desires ; 
and there are many thousands of members of organized labor affiliated 
with these cooperatives. We represent these diverse interests and we 
can do so because we represent the consumer, or the "public interest." 

Let us look for a moment at the class, or group factors in what is 
described as the "housing problem." 

Investors: We have large sums of investment capital which must 
be used, exercised, or it will wither and die. This wealth is owned or 
controlled by those who will not venture into the housing field unless 
the cloak of govermnental protection, or insurance of loans, is thrown 
around the wealth. 

Consumers: We have millions of consumers who need homes. 
They are, for the most part, in a less-fortunate class of people who have 
been bled so white by the competitive profit system that they camiot 
qualify as safe risks for mortgage loans. 


Housing materials: Housing materials have been controlled, in 
large part, by corporations and monopolies and for the purpose of 
increasing the price that consumers must pay, if they wotild buy. 

Labor: Our workers are burdened with unemployment or periodic 
employment and hence they must have a high daily wage in order 
that they may get an annual existence income, only. 

I thmk you will notice that a thread runs tlu'ough this pattern and 
that it is marked "the law of scarcity." It is the law of the com- 
petitive profit system. Those who have want to make what they 
have as valuable as possible by making it scarce. 

Consumer cooperative organizations wliich are interested in people 
and not in profits invoke and compel the application of the law of 
abundance. We are interested in the maximum of production and 
the maximum of distribution and hence we are proposing a condition 
which will make a market for loan capital, which will provide em- 
ployment instead of unemployment and which will give the consumer 
houses at a cost he can pay. 

As I turn specifically to the housing problem, I want to emphasize 
that consumer cooperative organizations are parties to a great crusade 
to reestablish ownership in the hands of our people. We know that 
ownership and democracy and freedom are correlatives. We know 
also that tenancy and dictatorship or stateism are correlatives. We 
insist, therefore, that in every housmg program offered in a democracy, 
there must be a reasonable opportunity for the occupants of the 
houses to acciuire ownership. 

Our friends here, of the competitive profit industry, will insist that 
they also are interested in home ownership. I am willing to believe 
that they are. But I wish they would look at the facts which prove 
that tenancy, and that irresponsibility which goes with tenancy, have 
become marks of our American life. Ownership of homes in cities 
has become little more than a mirage. 0\\aiership of our farms by 
occupants of the farms is only a small percentage of farm values. 
Ownership of productive tools has passed from our people into the 
hands of the absentee owners and their managers. I recall to you 
the words of Bishop A. J. Muench, Catholic bishop of Fargo, N. Dak., 
who told a conference at Notre Dame University that the world was 
in the midst of a political revolution because the people had been 
deprived of ownership of productive property. 

Consumer cooperative organizations are the most effective ma- 
chinery devised to redistribute ownership among our people. They 
have proved their efficacy in many foreign countries. They are 
proving it in this country. 

The statement that the competitive profit system compels tenancy 
and unemployment may be attacked. But there can be no refutation 
of the statement that tenancy and unemploj^ment and poverty have 
developed in association with the competitive profit system. 

If you think these are radical statements, I refer you to a very 
conservative authority again. Kev. Wilfrid Parsons, S. J., in his 
interpretation of the famous encyclical of Pope Pius XI, the encyclical 
called Quadragessimo Anno, said the Pope called for "an order wholly 
contrary to our present capitalistic order for society." The world is 
being forced to turn from it and it has one of two choices, either that 
of our cooperative economy, or that of stateism in some form — fascism, 
nazi-ism, or communism. We are very conservative in the best sense 


of the word "conservative" when we appear here to plead for your 
interest and cooperation. We are here to conserve. 

Mr. Chairman, I think we must divide the housing problem into 
three parts, and these are rough divisions. For the purpose of this 
discussion we might think of one group of families with incomes of 
$1,500 to $1,800 a year and less. We might think of a second group, 
families with incomes of from $1,500 or $1,800 to $3,000. And then 
we would have a third group of those families with incomes of more 
than $3,000. I am dealing, firstly, with the families in the second 
group — from $1,500 to $3,000 — because it seems to me we must begin 
with the group which is in need but which has some measure of eco- 
nomic strength left and develop a plan w^hich can then be modified to 
reach down into the less fortunate groups, and also can be made 
useful to the more fortunate groups. 

Several years ago, Mr. Chairman, when I was associated with 
Senator James Couzens, we devoted a great deal of time to study of 
the housing problem. As you may know. Senator Couzens eventually 
contributed about $380,000 to the Government and for the develop- 
ment of a housing project which he hoped might be used as a labora- 
tory. In all of those studies of the housing problem, the one fact 
which stood out starkly and relentlessly was that the "insecurity" 
of the wage worker, the ever present threat of unemployment, was the 
ogre which destroyed interest in home ownership. There are few, 
perhaps no actions which are so destructive to society and to human 
welfare as are the actions associated with foreclosure of mortgages. 

In the study and work done through Senator Couzens' contribution, 
I encountered Col. Lawrence Westbrook, then with the Works 
Progress Administration. He became interested and directed the 
development of the housing project in question. He continued his 
interest and his study and eventually he presented us with a "mutual 
housing program" which, I think, was merely an adaptation of the 
programs used in the most successful housing developments in Europe. 
I wish the committee would call him to testify here. 

I am not going to deal exhaustively with the "mutual housing 
program." You have heard of it, undoubtedly. Briefly, the proposal 
invites the consumers to organize, to select their architects and plan- 
ners, to obtain credit assistance from the Government, and then to 
build their houses. Their organizations have the responsibility of 
managing the project through democratic processes, and of making 
certain that the Government loans will be repaid. The Govern- 
ment would retain supervisory authority until repayment of the loan 
was assured, or until refinancing was possible. 

The program is markedly similar to the plan developed for rural 

I think every student of housing is agreed that the families with 
incomes of $1,500 to $1,800 a year, and less, must be assisted through 
what is known as public housing. They are entitled to decent housing 
facilities. In fact, we all are entitled to the protection we would 
get through assurance of decent housing facilities for our less fortunate 
people. The menace of slums and subslums is too great. 

I think, however, the mutual housing program which would be 
directed firstly at the families with incomes ranging upward to $3,000 
could be developed to offer opportunity to the less fortunate groups. 


If we had the mutual housing program under way, we could experi- 
ment through giving, for example, responsibility to some of the less 
fortunate groups and inspiring an interest in ownership. 

The plan provides for elasticity of treatment. Families with 
incomes of more than $3,000 might pay an initial or down payment of 
10 percent or more of the house. Families in the second group might 
pay 10 percent or less; and the least fortunate economic groups might 
be encouraged to acquire housing facilities as they paid their rent. 

Mr. Chairman, I suspect that some of my friends will insist that the 
existing Public Housmg Administration can be used to encourage 
and to administer a mutual housing program. Many of these officials 
are my friends. I admire them for their conscientious interest in 
getting decent housing for our less fortunate people. But it would be 
unfortunate if the mutual housing program were continued as one of 
the children, and something of a foster child, of the Public Housing 
Administration. I know my friends will object when I suggest that 
their long-established convictions about public housing might preju- 
dice them a wee bit against the mutual housing program. But, 
nevertheless, I must insist that I am afraid they have been a bit cold 
to mutual housing. I am afraid that they must be, because there are 
contrary philosophies involved here. Those who are steeped in 
public housing think with favor of State or public ownership and 
control. The advocates of mutual housing earnestly advocate a 
program of getting ownership and control back into the hands of the 

It is absolutely essential, therefore, that a mutual housing adminis- 
tration be established and that its responsibilities and obligations 
shall be fixed and clear so that a mutual housing program can rise or 
fall according to its accomplishment. 

Mr. Chairman, I suspect also that some of my friends will insist 
that cooperatives can obtain from the Federal Housing Administration 
all the assistance and encouragement now given to the competitive 
profit industry. But that is not so. Cooperatives are discriminated 
against, and it is obvious that they will be as long as they must deal 
with F. H. A. 

Let us look at the facts. When our housing legislation was adopted 
about a decade ago, the Senate bill recognized specifically the right of 
cooperatives. I was told by the highest authority that the cooperative 
provision was stricken out in conference and that it was necessary to 
sacrifice the cooperative provisions in order that some housing legis- 
lation might be gotten through the Congress. The very plain impli- 
cation in the statements made to me was that certain interests did 
not want cooperatives given any consideration. 

The F. H. A. was organized. It was largely manned by recruits 
from the competitive housing industry. It became their organization. 
And it still is. I am not complaining about that, not complaining 
that the competitive profit industry has had this assistance from 
government. But I do insist the cooperatives are entitled to similar 

Now, it will be asserted that cooperatives have had mortgage loans 
insured by F. H. A. That is true, in some instances. But it is true 
also that cooperatives have had great difficulty in impressing the 
F. H. A. officials. Usually, the cooperative managers face one objec- 
tion and then another and in many instances they are finally worn 


down and out. One representative of a cooperative housing group 
which recently obtained F. H. A. assistance remarked, "We did not 
object so much when they threw the book of rules at us, but we did 
object when they threw it at us page by page." 

In fairness to F. H. A. and its ofhcials, let us look at the facts and 
appreciate how difficult it is for them to deal favorably with coopera- 
tives. F. H. A. officials are obligated to protect the Government's 
investment, or insurance. They must be commended for protecting 
it. They have been trained to think of the marketability of the house, 
or its sales value and that is the determining factor. 

But the marketability or sales value is not so important in coopera- 
tive housing. Cooperatives are not interested in speculation or 
speculative profits. They are not dominated by an interest in the 
sales value of the house. They buy houses to make them homes and 
permanent homes. Cooperatives develop that stability in the econ- 
omy which permits wage earners to be interested in permanency of 

The cooperative buyer or builder, therefore, desires a house or home 
which expresses in some degree his interest, his personality. He may 
want a house with much window space, a house or flat roof, a house 
of functional design. 

But the F. H. A. evaluator, trained through experience in selling 
houses, thinks ofia neighborhood which has become accustomed to 
the square-box gable-roof house, for example. He would be entirely 
right in believing that that kind of a house would have greater market 
appeal and more sales possibilities. He would frown on the coopera- 
tive house, as he has done repeatedly. 

Again, there are two philosophies which are in conflict. The aver- 
age F. H. A. administrator is controlled by the sales value or the 
liquidability of the house. The cooperative member is controlled 
by his desire for permanency of home and all the values which go with 

Therefore, I think that if the Congress does not wish that coopera- 
tives shall be discriminated against, the Congress must provide them 
with insurance protection such as F. H. A. now gives and that pro- 
tection must be given through an organization other than F. H. A. 
It could be given through a mutual housing administration. 

Mr. Chairman, the Administrator of Public Housing has described 
to this committee the tremendous task ahead of the Government in 
disposing of war housing. I do not want any unworthy housing 
pushed off on the less fortunate. But where the housing is worthy, the 
mutual housing plan and program will offer the greatest opportunity 
to the Government to salvage as much of the Government's invest- 
ment as is possible. 

I am not an authority as to what interest rates should be established 
for mortgage loans. I do know, however, that the wages that capital 
or investment money can get today in a free market are so low they 
are much less than the interest rates fixed through F. H. A. insurance 
procedures. If the Government is expected to insure these mortgage 
loans then it is obvious that the Government agency has an obliga- 
tion to make certain there is no profit or "fat" in the interest rate. 
It must not exceed what the Government would pay for the money 
plus a small service charge. I think F. H. A. has an obligation at 
all times to justify to the public, and in the public interest, the interest 


rates it wishes to have fixed. wSome of my friends insist that a rate 
of 3% percent is the highest that can be justified for insured loans. 

Mr. Chairman, I am concerned witli the law which creates the 
Federal Home Loan Bank system. I am afraid the law and the 
iidministrative interpretations of it also discriminate against cooper- 
ative building and loan associations. We had an application, for 
example, for the establishment of a cooperative building and loan 
association in one of our States. A report on the application was 
sought from the regional offices of the F. H. L. B. system and the 
report was there was sufficient home loan bank facilities in that city 
to accommodate the people. That was true, perhaps, and yet it was 
entirely untrue. There were no facilities in that city for the coop- 
erator who wanted to participate in a cooperative building and loan 
association. And a cooperative building and loan association oper- 
ates entirely dift'erent from the manner of operation for the average 
building and loan, or rather, it would. The cooperative buildmg and 
loan would be motivated entirely by the usefulness of the money 
and would be concerned with keeping interest charges as low as 
as possible. It would be democratically controlled, one member 
having one vote, and proxy voting being excluded. 

I think we must amend the law to make certain that cooperative 
building and loan associations can be developed. 

Mr. Chairman, I have listened to much of the evidence presented 
here and I have read the transcript on other portions of the evidence. 
I have noticed the expressions of concern by members of the com- 
mittee over the march of stateism, or state domination of our society. 
I have listened to use of the phrase "free enterprise," much of it I 
fear in mockery of the only thing the phrase can justly mean in a 
democracy and that is "freedom for the people, or the consumer." 
And I have been a bit disheartened by what I think is a lack of 
concern over the rapid decadence of our society and the causes of 
that decadence. 

We are interested in solving this housing problem. We know how 
it can be solved and that is by getting authority and I'esponsibility 
and freedom of enterprise back to the people. We have tried to 
outline a program for solution of the problem. We shall be very 
much interested in any program offered which insures a reasonable 
opportunity for the people to acquire ownership of homes. 

The Cincinnati Real Estate Board, 

Cincinnati, Ohio, January 31, 1945. 
Hon. Robert A. Taft, 

Chairman, Housing Committee, United States Senate, 
Senate Office Building, Washington, D. C. 
My Dear Senator: At the recent annual meeting of the Cincinnati Real 
Estate Board, members present unanimously adopted a resolution disapproving 
any further housing to be erected by the Federal Government, and endorsed the 
principles contained in the following resolution as prepared by the housing com- 
mittee of the board composed of Walter S. Schmidt, chairman; R. Gordon Tarr, 
Warren E. Richards, Myers Y. Cooper, C. Dean Poage, Douglass G. High, and 
Robert Poysell: 

1. That improved housing in the Cincinnati area is needed and is a first essen- 
tial for the better living of our people. 

2. That as has been consistently our position, we favor a program for the tear- 
ing down of dilapidated housing and the redevelopment of blighted and out- 
moded areas. 


3. That immediately tliis war is over there must be united community action 
for constructive liousing betterment, into which must be put the same energy 
and dynamic force used in the creation of instruments of destruction; better 
housing is primarily a community problem and must be solved from within. 

4. That methods of action must be in accord with those principles upon which 
our national life is founded, and that no traffic should be had with unsound ex- 
pedients which violate those principles, the more dangerous because they have 
a certain humanitarian appeal. 

5. That private enterprise can handle such redevelopment — -and more economi- 
cally than Government — provided it has the cooperation of, and certain assistances 
from, local. State, and Federal Governments, and there be cooperative action for 
the reduction of cost through the adoption of large-scale scientific methods, les- 
sened interest rates, helpfulness from public authority — Federal, State and muni- 
cipal — and cooperation of labor in eliminating practices that add to cost. 

6. That while the lower one-third of our population cannot pay the economic 
rents of new housing without subsidy, yet it is philosophical!}' unsound for Govern- 
ment in its desire to improve living conditions directly to build and operate 
housing, thus becoming landlord to its own citizens; that such procedure is politi- 
cally dangerous and that extension of this program is a discouragement to thrift 
and industry and to the ideal of home ownership, which is one of the chief marks 
differentiating ours from most of the older civilizations. 

7. That a complete, soundly conceived plan for the redevelopment of our cities 
has not as yet been evolved, and that we pledge ourselves to explore all proposals 
designed to this end and to cooperate with those other thoughtful persons and 
organizations studying the problem. 

8. That present State enabling acts do not confer upon municipalities and land 
commissions within communities authority adequate for the acquisition of large 
areas which should be acquired and redeveloped, and that we are in favor of such 
legislation and propose, in conjunction with other interested bodies, to submit 
proper enabling acts. 

9. That it is further the fact that present State laws place undue restrictions 
on private corporations formed for the purpose of supplying housing at moderate 
cost with limitations on corporate earnings, and that we propose to work for the 
liberalization of laws governing corporations of this character which are in the 
public interest. 

10. That in line with our recommendation these many years that such action 
be taken, we heartily endorse the program now in process for the preparation of 
a master plan for Cincinnati and its environs, and urge those charged with the 
responsibility of preparing this plan to proceed energetically and expeditiously 
so that there may be in hand a complete and comprehensive program, stimulating 
public and private works for the immediate post-war period ; that such plan should 
have the objective of making our cities more convenient and desirable places in 
which to work and to live, of stabilizing them, and of throwing up guards against 
those factors that have resulted in their recently accelerated deterioration. 

We sincerely hope that your committee will give favorable consideration to our 

Yours very truly, 

The Cincinnati Real Estate Board, 
Harry J. Mohlman, Secretary. 

The American Institute of Architects, 

Washington, D. C, August 31, 1944- 
Senator Robert A. Taft, 

Chairman, Subcommittee on Housing and Urban Redevelopment, 
United States Senate, Washington, D. C. 
My Dear Senator Taft: In reply to your request of June 6 for a presenta- 
tion to your Subcommittee of the views of [the American Institute of Architects 
on post-war housing and urban redevelopment, I hope that your committee will 
find the following comments helpful. They embody not only comment from our 
committee on post-war reconstruction, but a resume of opinions which the writer 
believes are generally subscribed to by the members of the architectural profession. 
The writer will he glad to discuss them in further detail, at your convenience, 
with your committee or staff. 

This statement follows generally the form of the outline submitted with your 
letter of June 6, with added collateral comment which we believe to be pertinent 
to your study. 



1. We do not attempt to quote at lengtl; the statistical data and the various 
estimates of future construction already available to the committee from both 
Federal and reliable civilian sources. We are inclined to conservatism in esti- 
mates for the future, believing that the pent-up demand for homes will rise above 
the National Association of Real Estate Boards' estimate of 300,000 per annum, 
but that, at least for several years after cessation of hostilities, shortages of 
certain key materials (such as lumber) and of manpower will hold construction 
volume below the 1,250,000 estimated by the Producers' Council and others. 
We believe the most important volume of residential construction is in the mod- 
erate-cost ($3,000 to $8,000) field, not only because of the volumes reported sta- 
tistically, but also because such construction (excepting public housing) is gen- 
erally carried out by relatively "small business" — contractors and operative 
builders — is wideh^ distributed throughout the country in both urban and rural 
districts, and contributes a collateral stimulation to the economy by sustaining 
a demand for the wide variety of simple articles necessary to equip afresh such 
new homes. 

2. V e have accepted as axiomatic that violent fluctuations of activity are 
inevitable so long as there are fluctuations of the general economy. Prices of 
land, and building costs, are low when the economy is at a low ebb and inevitably 
rise with prosperity, whereas individuals building for themselves or speculators 
building for quick sale, choose to operate on a rising, rather than on a falling 
market. We believe that technological developments, such as unit preassembly, 
will effect some economies in building costs, but we do not believe that these will 
be as general or as spectacular as recent advertising has suggested. If the human 
leopard could change his spots — if the sellers of land ana buildings would accept 
a "use value" rather than a speculative value, often grossly inflated for the 
quality of the property — a degree of leveling off' of residential rents and prices 
might be achieved; we conceive of this as too much to expect of our traditional 
form of enterprise. We believe these costs are inevitably tied in with the psy- 
chological elTects of the general economy, national and local. 

3. The 1940 housing census is of great value statistically, but its importance 
will decline rapidly, if it is not repeated or rechecked more often than on 10-year 
intervals. Unquestionably it has shown the shockingly widespread existence of 
a great volume of housing unfit for halntation and of a further volume much 
below the now generally accepted ideal American standard, as well as a general 
shortage of homes to meet demand. Interpretation of the causes, and of why> 
when, and by whom such bad conditions should be remedied have varied very 
widely with the special interests of the interpreters. May we suggest a few of the 
basic causes: 

(a) Urban plan patterns developed in past generations for uncrowded and 
slow-moving life, seem unattractive under present conditions. The pros- 
perous move to new developments, leaving growing decay in the old. 

(b) The general mental attitude toward ownership of land, fixed in the 
period of national- and industrial expansion, ignores present facts of urban 
stabilization and retrogression, and still hopes for speculative profits through 
commercial and industrial expansion within old url^an limits. Hence, 
ruthless exploitation of debased properties, and of their occupants, is still rife. 

(c) Haphazard residential developments, unrelated to regional planning^ 
and often never completed, continue to disturb stable values — 

and may we note a few of the panaceas offered — 

(a) By "the houses" — A huge public-housing program, to clear slums and 
house the slum-dwellers and other low-income groups: Federal, as well as 
local, subsidy for construction and operation. 

(b) By "the homebuilders" — No public housing; municipalities to con- 
demn slum properties (at "present values"), clear and resell to private 
operators (at "use values") who wiil construct homes to be sold as usual, 
or to be rented to the underprivileged at rents sustained by "welfare assist- 
ance" to tenants. The subsidy is less obvious, but real. 

(c) By "other elements" — Extensive repair and remodeUng of existing 
structures, to put low-income groups in reclaimed, rather than in new housing. 
A subsidy is expected here also. 

In general, all those interested in residential construction seem to want to do 
it in their own way, without interference or direction, but with Federal cash on 
the barrel head. We believe that this is a manifestation only of the preliminary 


moves toward a program in which a substantial degree of unanimity can be 
achieved among intelligent men, provided the Congress will assist by letting it 
be known, for the chastening of bureaucrats and private enterprise alike, that — 

(a) The objectives are (1) to house all Americans decently, but not neces- 
sarily all of them in new houses, (2) to provide employment through the 
construction industry's normal activities, but not through abnormal "made 
work" projects which cannot be justified by a genuine need other than the 
mere creating of jobs. 

{b) The principal burden must be borne by private enterprise, which must 
approach the problem realistically, without the expectation that public funds 
will "bail out" all broken-down real estate, or subsidize an assured profit for 
every operator; projects whose size, location, and character affect the public 
interest must be subject to public control, preferably local; Congress will 
permit the injection of Federal funds for construction, and Federal direction, 
only when and where it is conclusively shown that private industry and local 
public effort cannot operate. 

In common with all men of good will, who support our traditional "private 
enterprise system," I believe that architects generally look forward most hope- 
fully to private interests constructing a far greater voluine of housing in the 
future than in the past. Unfortunately, however, except on relatively few group 
projects, the promoters and builders of houses in this field have not generally 
recognized the importance of trained professional advice in planning, so that too 
many of their projects compare unfavorably in attractiveness, in contribution 
to public welfare, and sometimes in quality, with those constructed under public 
sponsorship with professional advice in planning. It is to be hoped that as views 
on this subject broaden with time, the judgment and skill of architects may be 
able to exert their good influence more generally on the artistic and physical 
qualities of private construction. The real competency available in our profes- 
sion for- this task is ever ready to ofl"er not only complete services for a fee, but 
consultation in the public interest, with thoughtful and sound advice. 

4. Study of war housing will provide certain technical conclusions, largely of 
what should not be done in peacetime, which will be valuable guidance on future 
programs. It is most important that Congress maintain an inflexible position 
with respect to the disposition of war housing, that it (a) be disposed of in accord- 
ance with local needs in each case, (b) be disposed of in a manner which will not 
break the market in either housing or materials. 

5. In our opinion the most serious problem in the outlook for the post-war 
period is, What will be the condition of the construction industry when that period 
opens? The construction industry is one capable of amazingly rapid and great 
fluctuation in capacity, as has been proven during the war. This is, however, 
dependent on it being able to keep intact the nuclei of organizatiop on which 
expansion can be built. With the virtual completion of the war construction 
program, including even war housing, there is grave danger that the industry 
may not be able to maintain even that minimum of key personnel on which it 
can build its organization for a generally predicted post-war annual program of 
10 to 15 billion dollars of residential building. It is fully realized that war pro- 
duction requirements dictate the present restrictions on the use of both materials 
and manpower, but these restrictions should be progressively relaxed whenever, 
and wherever, war demands permit. The mortality of small builders is already 
great — it will become greater, and many larger concerns will suffer the same fate, 
if present restrictions on civilian construction are maintained for another 12 
months. We believe the Congress will be wise to support those in the War Produc- 
tion Board who favor prompt progressive relaxation. 


Completely detailed information and analyses of results under this heading 
are available to you from the various interested Federal agencies, and from your 
very able consultants. We will therefore comment only briefly on some collateral 
aspects of the subject. 

Various enactments from 1932 to 1938 had as their primary objective the salvag- 
ing of mortgages on farms, homes, and other properties, or the making possible 
of financing of such properties at a time when private financing institutions were 
in sore straits. In this the agencies have undoubtedly succeeded in carrying an 
important element of the American way-of-life through a most critical period. A 


secondary objective — to provide employment in construction and thereby stimu- 
late prosperity — was less successfully met, probably because the relative capacity 
of the construction industry to take up the slack of employment in this manner 
was overestimated, and because the machinery was both slow to start and slow 
moving in action. 

Direct Federal participation in housing, under the Housing Division of Public 
Works Administration, the United States Housing Authority, and the Federal 
Public Housing Authority, had as its original primary objective the clearing of 
slums and the construction of decent housing for the underprivileged — a demon- 
stration by the Federal Government of patterns of procedure and design which 
it was hoped would be generally followed by local effort. The degree of success 
attained has been the subject of much public debate, often specious, but lacking 
candor on both sides. The truth is considerably clouded by the shift of emphasis 
to the later emergency objectives dictated by the war. In the view of the American 
Institute of Architects the demonstration was, on the whole, successful, but we 
believe it could have been more so had it been characterized by less detailed direc- 
tion from Washington, and less of an attitude, on the part of Federal officials, 
of distrust of local desires and of the abilities and motives of the members of the 
architectural profession who took an interest in it, both as protagonists and as 
designers. A secondary objective to provide employment suffered in the annerm 
mentioned above. 

\\ e are generally of the opinion that the basic demonstration oridnally 
undertaken by these Federal agencies has been a very illuminating chapter in 
the development of the principles and procedures of mass housing, and even of 
urban replanning, but that results, thrown out of focus by the war, are in danger 
of being misinterpreted. Except for the national importance of housing condi- 
tions created by war abnormalities, housing conditions to be dealt with by public 
effort are primarily local problems. Even though it may be demonstrated that 
it be necessary that Federal funds continue to participate in public housing, in 
order that housing may not languish, the design and administration of such hous- 
ing should be local, without unreasonable check-reining from Washington. Archi- 
tects have been conscious of a tendency in the Federal Pubhc Housing Authority, 
perhaps normal to bureaucratic operation, to insist upon standardization in 
minutiae of design often at serious variance with local desires and requirements. 
It is to be hoped that where able architects are available locally (or nearby), 
designing be placed largely in their hands, in order that the best use may be 
made not only of their talents but of their familiarity with, and intense interest 
in, local conditions and desires. It is to be hoped that whatever may be the 
extent of future participation of Federal funds in public housing. Federal direc- 
tion be limited to advice and the minimum of control necessary to prevent waste- 
the principal direction being left in the hands of local liousing authorities. 



1. In July 1943 the National Committee on Housing issued a statement of 
principles, Recommendations for the Disposition of Federal V ar Housing, 
which was incorporated in a bill, S. 1607, now postponed. This statement has 
the approval of the American Institute of Architects. \^ hile it is felt that 
present law accomplishes substantially the end desired, it is strongly recom- 
mended that the Congress keep before it the principles above-mentioned, and 
permit no relaxation in favor of less sound procedures at the behest of special 

2. In theory, placing all agencies dealing with housing under one head is 
logical, but in practice this has not been completely accomplished (under war 
conditions Army, Navy, Maritime Commission, and Defense Plant Corporation 
have done certain housing more or less independently) nor has it completely 
eliminated a certain amount of work at cross-purposes by various subdivisions 
of tlie National Housing Agency. \\ e are inclined to the belief that the entire 
picture should be reexamined with a view to framing new legislation which would 
combine the various functions on loans and mortgages, and would bring under 
one head all Federal housing construction for civilian use, not on naval or military 
reservations. New legislation should define various degrees of Federal partici- 
pation in local housing and specifically limit the extent of Federal control. Our 
general feeling is that public-housing activities should be localized as far as 

91183— 45— pt. 15 9 


3. We do not feel particularly qualified to comment on the activities of those 
agencies primarily concerned with savings, loans, loan insurance, and similar 
financial aspects of home construction. The American Institute of Architects has 
cooperated with and supported the operations of the Federal Housing Adminis- 
tration in its. intention to raise standards of construction of homes and to 
safeguard investors in them. The Federal Housing Administration operations 
throughout the past 10 years have very definitely succeeded in raising standards 
of home construction and we believe that this agency is universally approved 
by those who operate with it. Our only regret with regard to it is that, in its 
days at least, its attitude toward architects was often one of dispensing charity. 
We believe it could have achieved even better and quicker results in its operations 
had it consulted the profession on a genuinely professional basis. 

Enlargement on the above comment, and on that voiced under heading TI 
above, may be relevant here. Everv profession has its charlatans, but they do 
not characterize the profession. The architectural anilities available among 
private practitioners are of the highest order and, with few exceptions, are of 
far higher quality than those to be found among Fec'eral employees. In full 
consciousness of this, the architectural profession generally has become impatient 
and resentful of the attitude, too often met in the Federal agencies concernea 
with housing, of suspicion of the motives, and distrust and belittling of the 
abilities, of the private architects taking part, or seeking to take part, in the 
housing programs. The American Institute of Architects advocates most strongly 
congressional influence to promote — 

(a) The appointment in the agencies of administrators whose backgrounds 
give them genuine knowledge and understanding of construction fas well as 
"social") problems and of the function and worth of competent arthitectural 
advice; and 

(b) The complete elimination of political influence in appointments for 
technical services, both within the agencies and in the selection of private 
architects for the design of projects, so that such appointments may be 
made only on the basis of technical competency, rather than for less worthy 

Architects as a group have had more intimate dealings with the Federal Public 
Housing Authority than with any other agency concerned with housing. I 
believe I express the general opinion of the architectural profession when I 
suggest that this agency has gone too far in setting up, and in insisting upon 
general rather rigid adherence to, standards of design, suitable in some areas, 
not so in others. Part of this process may be due to war demands, part to 
natural development of centralized authority and to the self-importance and 
captiousness of minor officialdom; the process was in progress, however, prior 
to the incidence of war conditions. An organization such as the Federal Public 
Housing Authority must be maintained, if Federal public housing is to be con- 
tinued, but in our opinion its operations should be well-defined and be restricted 
to fact-finding and to dissemination of information and advice on housing. It 
should not be permitted to usurp or to overrule the functions of local authorities 
and of local designers better qualified to solve local problems. 

4. It is our belief that the many obstacles to more widespread improvement in 
housing "boil down", in last analysis, to two fundamental questions: 

(a) How to overcome the disparity between cost of construction, or rents, 
and individual family incomes. 

(6) How to overcome unrealistically inflated land costs. 

The first is inevitably tied to the general national economy, its relative height 
and its stability. A chart attached hereto indicates the magnitude of the problem 
related to housing of low-income families. We would be presumptuous to suggest 
a panacea for this ill, yet we are unwilling to accept as the only solution a colossal 
expenditure of Federal funds for housing every needy family. We believe that 
private enterprise must be encouraged to do a greater part than ever before in 
the area in which it can operate at a fair, if small, profit; that local governments 
be assigned the responsibility for cleaning their own stables, by their own efforts, 
in their own interest; that Federal participation be limited to when and where, 
and only where, other efforts genuinely made are hopelessly inadequate. The 
fundamental cure will be a resurgence of American independence. Let the Con- 
gress encourage that. 

The second has been touched on earlier in this letter. It involves a battle with 
acquisitive human nature. Land costs, especially at the centers of old cities, are 
absurd and seldom bear any relation to true use values. To use such land (at $1 


to $5 per square foot) for housing, inevitably leads to crowding on the land. 
Again, we offer no panacea, yet are unwilling to accept the thought that "some- 
one", Uncle Sam perhaps, owes the owners of such land their own estimates of its 
value. I believe that only long and arduous education will mitigate this picture. 
Leadership, even moral leadership, from the Congress would do much to help 
modify the instincts of the human animal. 

Reduction of building costs has been referred to earlier in this letter. I believe 
that all elements of the construction industry are earnestly attempting to achieve 
reductions wherever possible. We do not anticipate changes of sufficient magni- 
tude to materially affect the housing position. 

PubUc housing' is being bitterly opposed by "home builders" on the ground of 
the subsidies necessary to prodce and maintain it. These opponents do not admit 
the existence of "subsidies" in their own housing operations, yet they are very 
largely dependent upon provision at the expense of the public or the utility com- 
pany of streets, water, sewer, light and other utility and public-service installa- 
tions and activities. There are important instances in which these installations 
have been made, at the behest of private interests which have never used them, 
in many square miles of virgin territory where ill-conceived developments have 
been abandoned. Such operations undertaken in ignorance of, or in spite of, 
intelligent regional planning, can but constitute a general burden of increased 
cost upon housing. The Congress can do much, psychologically and tnancially, 
to encourage the good planning which can prevent such waste. 

The cost of operating and maintaining an individual home or a group of houses 
is very definitely influenced by the quality of the materials and the methods of 
construction by which they are created. Manufacturers of materials, some 
builders, many architects and engineers devote a great deal of time and study to 
the perfection of, and selection of, long-lasting products and methods. Study 
and analysis and advice in this field as applied to housing might be considered a 
proper function of a Federal agency concerned with housing. 

On fixed charges and profits we have no comment to offer. 

Within the corporate limits of cities, there is very little evidence that equity 
funds will be available due to the uncertainty of what the city ultimately will be 
and the lack of concerted movement by the citizens to create better and more 
stable conditions. It is a fair statement that there is very little equity money 
available for in-town construction, because of the fact that the cities are in such 
condition as to make the investment of capital very uncertain. Encouragement 
of intelligent planning in metropolitan areas could change this picture quickly. 

The intermittent character of construction operations is due to (o) the general 
economic picture, nationalh' and localh^; (6) climate. 

The first has been commented on above. As to the second, construction is 
genuinely controlled by climate in these sections where extremely cold weather 
actually prohibits building during from 2 to 5 or 6 months of the year; the cost 
of modern methods of overcoming cold weather would, generally, be prohibitive 
in residence construction. In milder sections, lack of continuity of construction 
is probably due to long-established habit-of-mind — to the mere fact that sap 
rises in tne spring. Perhaps this can be overcome by a general campaign of 
education and encouragement. Labor has a real and important stake in this 
problem; witness their agitation for a yearly wage for construction. The high 
hourly rates necessary to give construction mechancis even a modicum of the annual 
income to which their skills should entitle them, is one of the factors tending to 
keep high the costs of homes. I am confident that the architectural profession 
will support every soundly conceived method of improving this situation. 

I believe restrictions on construction operations fall into three classes: 

(a) Those due to legal controls, such as zoning ordinances and building 
codes, and negatively, perhaps, to pusilanimous use of the pohce power in 
the public interest. 

(b) Those due to restrictive price agreements and the like. 

(c) Those due to activities of organized labor, such as limitation of ap- 
prenticeships and basicly unreasonable jurisdictional determinations. 

Zoning is prettj' intimately tied up with the broad planning referred to earlier 
in this letter; active and intelligent planning will soon iron out unreasonable 
zoning difficulties. Codes are in serious need of modernization and the American 
Standards Association together with many important elements of the construc- 
tion industry, including the American Institute of Architects, are already engaged 
in a campaign with this in view. 

We believe that existing law is sufficient to control the price situation men- 


Curing the obvious ills of labor habit as it affects construction is a large order. 
We believe it will take place naturally as labor comes of age; we begin to hope 
that its adolescence has been hastened by the war. 

The whole tax structure of the country should be overhauled at the Federal, 
State, and local levels. With respect to local taxation, the fact that most of the 
revenue for cities comes from real property taxes is a real danger to our communi- 
ties. Examination of the portfolios of real-estate brokers in many of our cities 
will indicate the serious condition existing with respect to taxes on real property. 
This should lead eventually to a wholesale demolition of much undesirable prop- 
erty, which would ultimately permit the fuller utilization of land and the creation 
of new structures in less crowded surroundings, thus insuring better light and air 
to the occupants. 

This organization is not yet prepared to make specific recommendations for 
desirable legislation. As mentioned previously in this letter, it is opposed to the 
thought of huge P^ederal appropriation for federally owned and operated public 
housing, except perhaps as a last resort in economic depression, or for Federal 
redemption of worn-out real estate. It is in favor of Federal encouragement of 
local planning — of local courage in the use of the police power for condemnation 
of unsafe and insanitary buildings and for intelligent zoning and land use control. 
It conceives that this encouragem.ent should be by way of a general reconstruction 
of the tax system, rather than by grant of funds, in order that local initiative may 
be revived, along more public-spirited lines than in the past. It hopes that the 
power and prestige of your committee m^ay be able to succeed, where so many 
others have failed, in putting before the public the truth about public housing, so 
that the problems involved in this term may be judged in the light of fact rather 
than by cliches snatched at random from the welter of invective and counterclaim 
which lias characterized the suViject since its beginnings. 

The American Institute of Architects and its many individual members who 
have real knowledge of housing are ready to cooperate with you in every way 
which may be helpful in clarifying the history of its past and in charting its course 
for the future. Please call on us. 
Very sincerely yours, 

D. K. EsTE Fisher, Jr., 
Washington Representative, American Institute of Architects. 

Citizens' Housing Council of New York, Inc., 

New York, N. Y., February 3, 1945. 
Mr. Meyer Jacobstein, 

Special Committee on Post-War Economic Policy and Planning, 
Senate Office Building, Washington, D. C. 
Dear Mr. Jacobstein: In reply to your letter of February 1, ^\Titten at the 
request of Senator Taft, enclosed is a copy of a report prepared by the subcom- 
mittee of the Citizens' Housing Council of New York, which sets forth its views 
on housing. 

This report was prepared at the request of Senator Taft and submitted to him 
in October 1944. We believe it has had the consideration of the subcommittee 
and should like it incorporated into the official record of the public hearings. 

We are sending, under separate cover, seven additional copies for the members 
of the Subcommittee on Housing and Urban Redevelopment. 

We should appreciate receiving copies of the hearings as soon as they are 

Sincerely yours, 

Joseph Obendorff. 
(For Harold S. Buttenheim, President.) 


Views of Citizens' Housing Council of New York Submitted at the 
Request of the Subcommittee on Housing and Urban Redevelopment 
OF THE United States Senate Committee on Post-War Economic Policy 
and Planning 

a. organization of the federal agency 

(1) All housing and urban redevelopment functions should be consolidated in a single 
permanent agency. 

As a wartime measure, all the Federal agencies concerned with the housing 
and home-financing program are consolidated liy Executive order into the Na- 
tional Housing Agency. There are many reasons why this pattern should con- 
tinue in the post-war period. The Congress should consolidate all housing and 
urban redevelopment functions in a single permanent agency, rather than estab- 
lish separate agencies for particular functions. 

First, coordination of related activities will be more effectively developed 
if managerial responsibility is concentrated in the hands of a single agency with 
power to effectuate consistent policies as to the entire housing and urban redevel- 
opment program. Although the program will include various technically dis- 
tinguishable activities, ttieir focus must inevitably be in the carrying out of a 
general over-all program as defined legislatively by the Congress. Coordination 
at the top is essential to assure that administratioii of the different activities will 
be animated by this single objective. A single agency can prevent one or another 
activity from getting out of line with the congressional i)rogram more effectively 
than can the individual heads of autonomous agencies. 

Second, the establishment of a single agency responsible for executing all aspects 
of the program will reduce the likelihood of jurisdictional disputes among the 
administrators of the various activities. This reason needs little elaboration. 
Experience has, indeed, demonstrated the importance of avoiding duplication and 
overlapping for effective administration of closely related programs. In a pro- 
gram so vital, economically and socially, to post-war reconstruction, it is imperative 
to create an administrative pattern which will so far as possible stimulate the 
teamwork and efficiency essential to the realization of congressional policy. 

Third, tb.e Congress can more certainly hold a single agency accountable for 
the correct and efficient implementation of its program than it can a number of 
independent agencies. Failure or success in carrying out the })rogram will, there- 
fore, be more quickly and more specifically apparent. Again, the Congress will be 
more capable of assessing accurately the achievement of the purpos(^s of its 
program if the program as a whole can be viewed as a coordinated administrative 
operation. Congressional action to modify or extend the j^rogram will thus be 
based upon a broad perspective of the entire field of housing and urban redevelop- 
ment rather than upon judgments as to the efficiency of single segments of the 

Fourth, the creation of a single agencj" with over-all responsibility for adminis- 
tering a national housing and urban-redevelopment program will facilitate effec- 
tive executive supervision. It is becoming increasingly important to correlate all 
separate functions and activities within such a broad field as this at the executive 
level. Only then can there be any assurance that the President can deal precisely 
and energetically with the ultimate issues of administrative policy for which 
he is finally responsible. 

None of the foregoing should be construed as a recommendation of centralized 
administration at the national level of the details of local programs. Quite the 
opposite seems, in fact, the more desirable pattern. There should be a maximum 
of flexibility in administration from the standpoint of Federal-local relations. 
Delegation to local housing authorities of power to plan, construct, and operate 
housing and redevelopment projects, w'thin the national standards established 
by congressional sanction, should be implemented in the statute. 


(S) The agency should be known as ike Department of Housing and Urban Redevel 

opment, or by a similar name denoting its function. 
(S) The agency should be headed by a single administrator rather than a board. 

Good administrative practice requires a single responsible executive for any 
enterprise. The only occasion for a board to act as the head of an agency is the 
need of deliberation or representation of different interests in the performance of 
quasi-judicial or quasi-legislative functions. Even in such a case the board should 
act thiough a single responsible executive under its supervision. In this case the 
general policies should be laid down in the act by the Congress and the judicial and 
policy-determining aspects of the agency's administration will be no more serious 
than those of any regular department of the Government. 

With a single administrator there can be no "passing the buck" in the develop- 
ment and execution of a program. Expeditious action will not be blocked by 
clashes of personality or the necessity of corralling votes for each decision. Com- 
peting claims of different aspects of the program will be decided on a uniform 
basis instead of by jockeying for position. The President, the Congress, and 
the public will be able to hold a single person responsible for results and to improve 
the situation by the simple expedient of getting a better man if the vital public 
service intended is not being efficiently rendered. 

(4) The agency should be an executive department with representation on the Cabinet. 

The strategic and enormous needs and possibilities of a program of housing 
and urban redevelopment in our post-war economy demand that the administrator 
of the program have the status of a Cabinet officer. This is a program that will 
be heard from. It is bound to have great significance in the economic recon- 
struction of the country after the war, both immediately and permanently, and 
its importance in terms of social policy is far reaching. 

There are many specific advantages to be gained from the presence of the 
program's administrator in the Cabinet. For example, it would facilitate the 
President's and the Nation's understanding of the congressional program of post- 
war reconstruction as an integrated whole. In addition, it would provide unusual 
and useful opportunities for an exchange of ideas among other members of the 
Cabinet whose responsibilities are related to the program. 

The status of the agency as an executive department and the Cabinet status 
of its administrator, or Secretary, would serve to bring home to the public and to 
all agencies of Government a realization of the importance of the program of 
housing and urban redevelopment, 

{5) The administrative sections of the statute. 

Legislation should not incorporate detailed provisions as to either administra- 
tive structure or operating techniques. These elements of effective administra- 
tion can, however, be enhanced by a clear definition of legislative objectives and 
by broad statements of the administrative functions to be performed. 

A single law encompassing all Federal functions of housing and urban redevelop- 
ment would of course be the ideal legislative pattern. To this end, the Congress 
may well consider the consolidation of all related laws in this field. With respect 
to such a general housing and urban redevelopment statute, it will be important 
to establish clearly the over-all public policy which the statute is designed to 
serve. Such a statement of policy should include reference to all aspects of the 
congressional program. It should be drafted in terms broad enough to grant 
the administrative agency the necessary powers, and precise enough to give it 
direction in the performance of its functions. 

The major functional divisions of activity should also be specified in the statute 
as follows: 

T. Public housing. 
II. Financing and insurance. 
III. Urban redevelopment. 

The character and limits of each function might well be defined in the statute 
with the framing of details of administrative organization and procedure delegated 
to the administrator. 


It would be wise to state clearly the allocation of existing agencies (powers, 
personnel, property) to each of the foregoing functional divisions established as 
follows : 

I. Federal Public Housing Authority. 
II. Federal Home Loan Bank System, Federal Savings and Loan Associa- 
tion, Federal Savings and Loan Insurance Corporation, Home Own- 
ers' Loan Corporation, Federal Housing Administration, RFC Mort- 
gage Company, Federal National Mortgage Association. 
III. (No existing agencies perform this function). 


The Federal program of aid for low-rent housing, whereby subsidy is provided 
in some form to make up the difference between the rent required to meet aU 
charges and expenses and the rent the rehoused family can afford to pay, was 
inaugurated principally as an emergency measure. The program had its be- 
ginnings in 1933, when the Public Works Administration was given public housing 
functions at least as much for the purpose of increasing construction to alleviate 
the depression, as for the purpose of meeting the needs of low-income families. 
In 1937, however, the public housing function of Government was established on 
a permanent basis in the United States Housing Authority, which later became 
the Federal Public Housing Authority of the consolidated war agency, the Na- 
tional Housing Agency. 

The Federal Government has had a decade of successful experience with slum 
clearance and public housing. There has, of course, been resistance by certain 
private real estate interests. This resistance has recently crj'stallized into specific 
proposed substitutes for the public housing program, notably the issuance of 
relief in the form of rent certificates to slum dwellers. Such a proposal obviously 
would not clear the slums; in fact; it would entrench them, by speedily enhancing 
their profit. Tremendous Federal outlays would simply be siphoned into the 
pockets of the slum owners, without the building of a single new decent home. 
In addition, families otherwise self-supporting would have to subject themselves 
to the humiliation of applying for rent relief. Such proposed alternatives, upon 
analysis, bring into even sharper focus the merits of the current housing formula. 
The only sensible view is that the Federal Government's tried and proven program 
of aid to low-rent housing under the United States Housing Act should be main- 
tained and developed to adequate proportions. 

(1) Additional appropriations by Congress are essential. 

As of December 31, 1942, $759, 101, 000 of the $800, 000, 000 appropriated by 
the Congress for low-rent housing and slum clearance was committed by con- 
tracts with local housing authorities. Senate Introductory 591 (76th Cong., 
1st sess.) would have provided an additional appropriation of $800,000,000. 
On the basis of census figures and other reliable data, the present accumulated 
need for publicly assisted rental housing mav be estimated as in the neighborhood 
of at least 3,000'000 units over a decade. Thus an appropriation of $800,000,000, 
which might at present prices and prewar income levels provide at most 200,000 
dwelling units, would be minimal for commencement of the post-war program. 
Actually, the estimated needs warrant the appropriation of a far greater amount, 

-{2) The United States Housing Act should be amended — 

(a) To modify the requirement of "equivalent elimination" of substandard dwellings 
as a prerequisite to the construction of federally aided housing units. — The present 
"equivalent elimination" provision of the LTnited States Housing Act, whereby 
new housing units must be matched, one by one, against the elimination of existing 
substandard units, is not keyed to a broad concept of slum clearance. It would 
be far more consistent with the objective of the program to demolish or rehabil- 
itate an entire predominantly substandard area, even if there happen to be fewer 
dwelling units in the particular substandard area than there will be in the related 
new project. Moreover, an "area clearance" approach, rather than a "spot 


elimination" approach, would have the advantage of facilitating land assembly 
for redevelopment by private as well as public groups. Slum clearance can and 
should accomplish not only new low-rent housing, but also public recreation 
places and other public uses, new housing for higher income groups, etc. 

(fe) To remove the statutory limit on construction costs and substitute the discretion 
of the administrator. — As now written, the statute prescribes stated dollar limita- 
tions on construction costs. The presence in the statute of this rigid ceiling 
results in inefficiencies and in distortion of the statutory objectives, •inevitably 
there are fluctuations in the level of costs from year to year, of which the present 
formula can take no account. Moreover, the scale of building costs varies not 
only from year to year but also from one part of the country to another at any 
given time; this, too, is ignored, under such an inflexible formula. 

The hardships are made more acute by the way in which the limitations are 
written: $1,000 a room and $4,000 a unit, while for the comparatively highly 
populated districts, the ceilings are respectively $1,250 and $5,000. This works 
a hardship on large fainilies, as it puts a premium on the construction of small 
units. Moreover, small municipalities are at a decided disadvantage when adja- 
cent to large areas, as their construction costs will usually be the same as for the 
latter; while their permissable construction costs under the statutory fonnula 
will be considerably less. 

All the above inequities should be remedied by the elimination of the present 
provision of fixed limitation for construction costs. Adequate protection is pro- 
vided by the provision, now in the statute, that costs shall not be higher than for 
comparable private construction. The specific standards of construction costs on 
public-housing projects should be left to the discretion of the administrator. 

c. To remove the present limitation upon the amount which may he advanced for 
housing in any one State. — As States vary in the density of their populations and in 
their economic wealth, so do they vary in their need for Federal assistance for 
housing. Therefore, the systeni of allocation should be a flexible one. A formula, 
if one is to be prescribed, should be determined by the administrator and should 
be limited only by a provision that distribution of the fund shall be on as wide a 
geographical basis as is feasible. 

(S) Provision should be made for families for whom private enterprise cannot profitably 
build unaided and who do not qualify for subsidized housing. 
The ceiling of public housing should be the floor of private housing. Under 
present law, a large number of American families may be described as "forgotten 
families" — forgotten, for private enterprise cannot profitably build for them, yet 
they do not qualify for subsidized housing. Their plight should be given con- 
sideration. One way of meeting their needs would be through the establish- 
ment of a revolving fund from which loans at low interest rates could be made 
for this purpose to (a) municipal housing authorities and (b) private, cooperative, 
or mutual home ownership groups adequately regulated by law, especially as to 
rents, profits, and dividends. 

(4) War housing constructed under the Lanham Act should be made available to local 
housing authorities for use as low-rent dwellings, with certain safeguards, as 

Much of the Lanham Act housing could be used for low-income families now liv- 
ing in substandard areas. The act should therefore be amended to permit local 
housing authorities to acquire such housing without specific approval by the Con- 
gress by lease, purchase, or otherwise, to be administered as low-rent projects 
where the need for such projects exists. 

The mechanism of specific approval by the Congress in each instance, now 
prescribed by the act, casts upon the Congress an undue burden of taking evidence 
in a multiplicity of individual cases. The statute should, however, define general 
standards for the guidance of the administrator, as follows: 

I. If the housing is of durable quality and soundly planned but, because of 
wartime restrictions, lacking in certain amenities and facilities required of public 
housing, conveyance to the local authority should be conditioned upon the making 
of the necessary improvements. 

II. If the housing is of temporary quality, an authority should be permitted to 
acquire it only if (a) a need is demonstrated for interim housing pending new 
construction, and (b) a contract is entered into, at the time of such acquisition, 
for the development of a project of which a plan for the demolition of the tem- 
porary housing within a specified period is made a part, in order that new slums 
should not be created. 



In the early thirties, when a serious real-estate collapse accompanied by wide- 
spread foreclosures was tlireatened, hearings were inaugurated in Washington 
with a view toward devising legislation which would adequately deal with the 
crisis. Out of the propcsalo then renewed for a home-mortgage discount system, 
the Federal home-loan banks were born, in 1932. This system was designed to 
provide reserve credit facilities for all types of long-term home-financing insti- 
tutions. In practice, membership has been confined largely to savings and loan 
associations, both federally and State chartered. 

The Federal Home Loan Bank System proved unable to stem the wave of fore- 
closures, however. According!}', as a frankly emergency device, the Home 
Owners' Loan Corporation was created in Juno of 1933, to purchase nonfarm 
mortgage loans on the sole criterion that the home owners were threatened \\ith 
loss of their properties through foreclosure. The lending function of Home 
Owners' Loan Corporation was suspended in 1936, after the Corporation had done 
a spectacular job of providing relief through the purchase of upwards of a million 
mortgages, and it has since been engaged exclusively in an orderly liquidation of 
its holdings. 

Thereafter, in 1934, on the model of the Federal Deposit Insurance Corporation, 
insuring deposits in commercial banks. Congress created the Federal Savings and 
Loan Insurance Corporation to insure savings in thrift and home-financing institu- 
tions up to $5,000 for each investor. The insurance functions of Federal Savings 
and Loan Insurance Corporation continue. 

All of the foregoing agencies operate under the direction of the Federal Home 
Loan Bank Administration. 

Side by side with theTederal Home Loan Bank Administration has been another 
system of housing mortgage finance, the Federal Housing Administration. Fed- 
eral Housing Administration was established in 1934 to introduce liquidity into 
the mortgage market and to encourage the revival of residential repair and con- 
struction, and its method has been the Federal insurance of private credit. It 
has had considerable influcence on credit terms and housing standards, in both of 
which fields its contribution has been good. Furthermore, Federal Housing 
Administration has been instrumental in stimulating additional investments by 
banks and insurance companies in the mortgage field. 

While the Federal Home Loan Bank Administration is based on the development 
of responsible local institutions specializing in mortgage lending. Federal Housing 
Administration looks only to the security of the individual mortgage irrespective 
of the type of institution making the loan. Thus there are the present two 
systems of housing mortgage finance, each with its own approach to the problem 
of providing Federal aid to the mortgage market. 

(/) The -pattern of these two simidtaneous systems of housing mortgage finance — the 
Federal Home Loan Bank Administration and Federal Housing Administra- 
tion — shoidd he studied for possibilities of greater uniformity in standards and 
perhaps unification of administrations. 
Inevitably certain conflicts have resulted from the existence of two systems of 
Federal aid to the mortgage market, oi:)eraJing on wholly divergent approaches. 
The entire matter of Federal aid in this field is ripe for study. Once governmental 
policy is clarified, unification of the Administrations with its attendant efficiencies 
might be desirable. Any such study and revision should accomplish reduction in 
financing costs both directly and as a result of the simplification of methods. 

(S) Federal policy shoidd favor the enforcement of loans on the basis of security 
ivithovt insistence on deficiency judgments. 
To promote a more just and stable system of home mortgage finance, the Gov- 
erimient should formulate its policies and extend its aid on the basis of the security 
of the property in question, so that the individual will not be pressed for a pei'sonal 
deficiency judgment, except in cases of waste or fraud. Thus Federal Housing 
Administration, as a condition of making good its guaranty, might require of the 
insured institution that it waive its rights under State law and not enter a defi- 
ciency judgment. 

(S) The law shoidd he liberalized for the relief of home owners ivho have defaulted in a 
single payment due to circumstances beyond their control. 
It frequently happens that homeowners who have been regular in their payments 
are obliged, due to circumstances beyond their control, to default in a single pay- 
ment and thereby are faced with foreclosure. The harshness of this situation 
Bhould be alleviated, particularly in view of the extensive protection which is 


afforded mortgage holders under present legislation. Provision might, for 
example, be made for a grace period of 1 year, during which the default could be 
cured and the mortgagor restored to his rights. It might be considered desirable 
to leave such matters to the discretion of the administrator. Again some waiver 
of rights under State law would V^e involved. The act should be amended in any 
event, however, for greater flexibility in recognition of this need. 

(4) The obtaining of mortgage loans for large-scale rental housing should be facilitated. 
Large-scale rental communities operated undei a single management are recog- 
nized as having many advantages. For example, (a) such communities can more 
effectively prevent repeated blight; (b) there is an increasing need for rental 
homes to permit freedom of movement of labor during the period of readjustment 
of industry; and (c) the demand for rental housing is shown by the fact that more 
than half of the urban families now rent rather than buy their homes. 

In spite of the desirability of large-scale rental housing, it has been easier to 
obtain Federal Housing Administration guarantees on loans for individual houses 
for sale than for the large-scale development. This policj^ should be modified. 

(5) To contribute to lowered interest rates on mortgages. 

(a) The statutory maximum for interest rates on mortgages receiving Federal aid 
or insurance should be reduced. — The present statutory maximum for interest rates 
on mortgages on individual homes receiving Federal Housing Administration 
guarantees is unnaturally high, in the light of the going Federal rate of interest 
and even in the light of the maximum rate permissible under Federal Housing 
Administration regulations. The statute now provides for a permissible maxi- 
mum cost to the borrower of 6 percent (including a 1-percent premium charge), 
and in special cases 7 percent. The statutory figures should be reduced to bring 
them more in line with the reality and the needs of the national housing situation. 

(6) The effective maximum interest rate should be substantially lowered by adminis- 
trative regulation.- — A reduction in interest rates on mortgages would bring home 
ownership within the reach of many more millions of American families than are 
presently served. On the other hand, the protection and stability that the Federal 
Government has brought to the mortgage market in the past decade, through the 
Federal Home Loan Bank System, the Federal Housing Administration, and other 
agencies, have been of untold benefit to mortgage holders. Thus in the national 
interest and as a modest payment for these extraordinary advantages, mortgagees 
may well be required to reduce their interest rates substantially as a condition of 
receiving Federal aid or insurance. 

(c) The market for the purchase of Federal Hoxising Administration mortgages 
should be broadened. — In practice, operation under the Federal Housing Adminis- 
tration is assuming a narrow character, with banks and some insurance companies 
dominating the market for the purchase of Federal Housing Administration 
mortgages. These institutions have been tacitly hewing to unvarying interest 
rates. Every effort should be made to broaden participation so that interest 
rates will be forced down naturally through ordinary processes of competitive 
enterprise. The present rigid character of the market should be broken. 

{6) There should be wider institutional participation in the Federal Home Loan 
Bank System. 
The Federal Home Loan Bank System was created originally to service all 
types of long-term home-financing institutions, yet in practice, membership has 
been confined largely to savings and loan associations. The Administration 
should strive to extend participation to all tj^pes of institutions. 

(7) Early liquidation of Home Owners Loan Corporation mortgages should not be 

Proposals for a forced, immediate liquidation of the mortgages now in Home 
Owners Loan Corporation's portfolio must be firmly resisted. The Government 
has put itself to considerable expense in this program. There is no reason why it 
should suffer a loss when it can accomplish an orderly liquidation. 

(8) The time within which veterans may obtain favorable loans for home building' 

should be extended. 
Under the G. I. law as presently written, the returning veteran, to qualify under 
its favorable home-financing provisions, must have the contract for his loan exe- 
cuted within 2 years after his discharge or after the end of the emergency, which- 
ever is longer, but in no event more than 5 years after the end of the war. Two 
years seems to be an unreasonably short time within which to expect veterans 
to have found themselves once again established in community life. The period 


should be extended thus allowing more time for home buying on a conservative 
basis and at fair prices. 


The Citizens' Housing Council of New York rates the redevelopment of slums 
and blighted areas as of outstandmg urgency and difficulty among the many 
problems facing the cities of the United States. This problem of urban decay 
exists irrespective of the need for publicly aided low-rent housing, and there is 
general agreement that it cannot be adequately solved without some degree of 
Federal aid. 

The major difficulty encountered by private enterprise in attempts to reclaim 
substandard urban districts is the assembly of adequate areas at prces which will 
make such reclamation economically feasible. Once this hurdle is surmounted, 
there remains for local government the probhsm of effective control over the 
redevelopment, in the public interest. 

Bills now before Congress and proposals advanced by various individua's and 
groups throughout the country attempt solutions to these problems. Loans or 
grants for land assembly are proposed under widely varying conditions as to sub- 
sidy and repayment and as to approval by a Federal agency of local planning and 
redevelopment procedure. In our opinion, some of these provisions would involve 
too great a temptation for the payment by the Federal Government of highly in- 
flated property values; and in some cases there would be a degree of control over 
local planning and action so extreme as to infringe sound principles of local govern- 
ment and to prevent reasonable speed in post-war reconstruction. We fully recog- 
nize, however, the importance of conformity of redevelopment plans to carefully 
prepared master plans of the respective communities, and urge that such con- 
formity be encouraged to the greatest extent possible. 

The two principal bills now before the Congress, S. 953, introduced by Senator 
Thomas, and S. 1163, introduced by Senator Wagner, contain seeds of what we 
would regard as a good Federal bill. The following proposal, in the opinion of 
our special committee on Federal aid to urban redevelopment, takes the best from 
both, avoids their shortcomings and supplies their omissions, and in general is 
preferable — especially as to its fiscal features — to any of the plans heretofore 
publicly advanced. 

Federal loans for land acquisition. — This plan envisages loans by the Federal 
Government, to local housing or land authorities or to municipalities, for acquisi- 
tion of slums and blighted areas. The Federal subsidy should not exceed the 
interest paid by the Federal Government on the money loaned. The loans would 
have as their security the land thus acquired; they would be sufficient in amount 
to cover the entire acquisition cost of the real estate in such substandard areas, 
but no part of demolition or redevelopment cost. If the Federal loans were with- 
out interest to the municipality and were amortized at the rate of 2 percent 
annually, the Federal loan would be retired over a period of 50 years. Thus the 
Federal subsidy would involve only an annual appropriation to cover not more 
than the low Federal rate of interest on the purchase price of the redevelopment 
site. As this would diminish one-fiftieth each j'ear, the average term of the sub- 
sidy would be only 25 years. At the end of the 50-year amortization period, title 
to all land in the redevelopment area would be free of Federal lien. If, however, 
the Congress should refuse to provide interest-free loans for urban redevelopment, 
the amortization period or tne annual payments would have to be increased cor- 
respondingly — with a lessening of the inducement for municipalities and local 
enterorise to undertake urban redevelopment. 

Compare the Thomas bill (S. 953), providing for loans repayable with interest 
at 1 percent out of a pool composed of rentals and other revenues from the munici- 
pality's redeveloped areas, such payments of all revenues to continue for an 
indefinite period until the obligations to the Federal Government are satisfied; 
and the Wagner bill (S. 1163), providing loans secured by the land acquired and 
repayable within a period not to exceed 99 years at a rate of interest to be deter- 
mined by the Federal agency. In contrast to these two proposals, the induce- 
ment to undertake urban redevelopment under the plan herein set forth is 
adequate, the amount of the subsidy is clear, and the term within which the loan 
is repayable is definite and reasonable. 

The plan in practice. — Under this plan the local authority would have a real 
incentive, when sites were selected for redevelopment, to acquire them by pur- 
chase or condemnation on the lowest possible terms, thus minimizing its financial 
obligation to the Federal Government and permitting disposition at low cost for 
public or private redevelopment. 


Part of the land acquired would normally be leased or sold to private developers 
for home ownership, medium- or high-rent housing, or business or industrial use, 
and part sold or leased to the city or other public body for pubhc housing, recrea- 
tion, or other public purposes. For other than public proiects, we strongly favor 
the method of leasehold prescribed by the Thomas bill (S. 953), as giving more 
adequate control to the municipality over future uses of the land, and conserving 
for the community any future increments in land values in the redevelopment 
areas. The limitations of public sentiment and local financial practices are such, 
however, that we recommend sale or lease, with the municipality making leasehold 
arrangements wherever it can. While the Wagner bill (S. 1163) makes dis- 
position possible by either sale or lease, it does not favor the leasehold arrange- 
ment. The law .should be so drafted as to encourage municipalities to proceed 
by lease. 

Where arrangement is by sale, developers should, of course, be subject to care- 
fully drawn restrictions to run with the land as to use, density, open space, etc. 
The evils of individual small-lot ownership, which in the past have made con- 
trolled neighborhood development impossible, should not be repeated. 

It would be manifestly inequitable and a threat to the soundness of the rede- 
velopment program to permit acquisition of subsidized sites by private developers 
for use as high-rent dwellings or business or industrial purposes at the same cost 
at which sites were made available for public purposes, such as parks, low- and 
medium-rent housing, etc. The local housing or land authority should estimate 
land values for individual parcels to the best of its ability bj^ reallocating with 
an eye to future use and spreading over the entire redevelopment area or areas 
under its control, as replanned and rezoned, the total purchase or condemnation 
price at which such area or areas were acquired for redevelopment. These 
reallocated land values would be the basis for sales in individual cases, or for 
rental charges where the leasehold system was used. 

It should be contemplated that developers unrestricted as to rents or profits 
would pay full taxes in future on both land and improvements. 

Thus it can be seen that the city's financial participation in the urban rede- 
velopment program might consist of (1) the lease or purchase by the municipality 
of parts of the area for playgrounds, sites for public buildings or other municipal 
purposes; and (2) partial tax exemption or direct municipal subsidy to public 
housing authorities, or, under special conditions, to redevelopment companies 
controlled as to rents, profits, etc., such tax limitation or subsidy to continue for 
only as long as is necessary to insure the scale of rents desired by the city. 

If the urban redevelopment program is not considered in conjunction with a 
public housing program, its object may be defeated, as esdcted families from the 
slums and blighted areas would invade and overcrowd surrounding areas, thus 
creating serious personal hardships and new problems of urban decay. It is a 
"must" concomitant of the urban redevelopment program that the Federal 
Government require, as a condition of Federal aid, that eviction of tenants for 
demolition of existing buildings shall take place only to the extent that suitable 
housing accommodations, reasonably convenient as to location, are available in 
the city for displaced families at rents comparable to those they have been paying. 
Where' feasible and consistent with sound planning and community needs, 
preference in use of the redeveloped area should be given to low-rent housing 

How the -plan might work. — Following are some examples of how this plan might 
work, assuming a blighted area of any number of acres which could be bought or 
condemned for $1,000,000; this sum to be loaned by the Federal Government on a 
50-year amortization basis, without interest. The local authority's obligation to 
the' Federal Government would be an annual amortization payment of $20,000 
for 50 years. The cost to the Federal Government would involve at most the 
going interest rate on $1,000,000 of Federal serial bonds with an average life of 25 
years, which interest might be met out of current Federal revenue. 

(a) Sites for schools and other public buildings, playgrounds, and other com- 
munity facilities needed in the area might be secured by the city partly in exchange 
for land in the area already in public ownership plus unneeded interior street space 
made available bv the redevelopment plan. If such sites were not adequate the 
citv might buy, sav, $100,000 worth of land from its land authority. The pay- 
ment could be amortized (without interest) at 2 percent ($2,000) annually for 50 
years, after which the city would have full title. 

(6) If a public housing project was needed in the area, a similar plan of install- 
ment purchase might be worked out between the local land and housing authorities. 
Let us assume that $200,000 worth of the land in the area were to be thus rede- 
veloped for public housing. 


(c) Then let us assume the remaining $700,000 worth of the redevelopment area 
to be needed for medium- or high-rent housing and business and industrial pur- 
poses. This could be offered to private corporations on a leasehold basis at the 
exceedingly low rate of 2 percent per annum, the corporations (if unrestricted as 
to rents and profits) to pa}* full taxes to the city both on the land and future 

If all of the land, could be disposed of by a combination of (a), (fe), and (c), the 
land authority's annual revenues would total the full amount needed to meet its 
annual payments to the Federal Government, and at the end of the 50-year 
amortization period the title to all land in the area would still rest in the city 
(or its lane' or housing authority). If for any parcels to be developed on the lease- 
hold basis a higher rental than 2 percent could be obtained by competitive bidding, 
the excess would be used to reduce the amortization period below 50 years. 

(d) If, however, local opposition to the leasehold plan was so strong as to 
prevent redevelopment on that basis, the land authority might sell some or all of 
the above-mentioned $700,000 worth of land for private redevelopment. The sale 
might be at the full reallocated price at which it was acquired by the land author- 
ity, but payable in installments, without interest, at not less than 2 percent 
annually for 50 years — or any higher percentage that could be obtained by com- 
petitive bidding. 

(e) If, even on these very favorable terms, some of the land were to remain 
unsold or unleased, the land authority might decide to dispose of such remaining 
portions bv cash sale with competitive bidding. Assume that land in the area 
valued by the land authority at $200,000 were "thus sold for $100,000. The land 
authority would invest that sum, say in serial bonds of its own city, and use the 
interest and principal to help meet its annual amortization to the Federal Govern- 
ment. The principal by itself would repay the Federal Government $100,000 of 
the original $200,000 land cost and the interest would be available for part of the 
payment on the other $100,000. Suppose the bonds brought a 2y> percent inter- 
est rate. The interest on the $100,000 invested would, average 1}^ percent for 
the 50- year period, leaving an average of five-eighths of 1 percent on $100,000 to 
be met by the city (or the land authority). This would mean an actual cost to the 
citv of only $750 per annum for 50 years to repay the Federal Government for this 
$200,000 worth of land, and, under the conditions outlined above, this would be 
the only part of the entire $1,000,000 original loan which would not be self- 
supporting either in cash or in property received by the city. 

(/) Let us assume, however, that instead of the conditions outlined in the pre- 
ceding lettered paragraphs, the local land authority was up against a much worse 
combination of circumstances affecting its ability to make its amortization pay- 
ments to the Federal Government. Suppose, for example, that the public 
spaces in the redevelopment area were already so ample that the city would not 
wish to purchase or lease any of the land; suppose, too, that there would be no 
public housing project to be built in the area, and that the only means of redevelop- 
ing the neighborhood would be through the sale of the land at one-half of its cost 
price to private builders for housing, commercial or industrial purposes. The 
land authority having spent $1,000,000 of Federal funds to acquire the rede- 
velopment area, would realize only $500,000 in cash. If invested in city or 
Federal 50-year serial bonds drawing as low as 2 percent interest, these bonds 
(bringing in an average of 1 percent interest for 50 years) would yield in principal 
and interest an average of $15,000 of the $20,000 due annually to the Federal 
Government. This would mean that the local land authority (or the city) 
would have to provide an average of $5,000 annually for 50 years to pay off the 
Federal loan. The city, however, would benefit much more than that amount 
by having brought about the clearance and redevelopment of a substandard area; 
and as the private developers would pay full taxes on their land and improvements, 
the city's dwindling tax receipts in this sick area would become the much more 
substantial tax revenues of a healthy neighborhood, from which the city could 
readily meet the land authority's $5,000 annual deficit. It would take only a 
2-percent tax on $250,000 of new assessments to do it. 

It is assumed, of course, that before entering into any urban redevelopment 
project, both the municipal and national officials concerned would sound out local 
construction, real estate and financial interests sufficiently to be reasonably sure 
that redevelopment would actually take place and with benefits exceeding any- 
cost which the city might have to shoulder. 



Chicago, January 25, 194-5. 
Randolph Bohrer's proposal for attracting equity or risk capital to the medium 

rental housing field. 
Hon. Robert A. Taft, 

Chairman, Subcommittee on Post- War Housing, 

United States Senate, Washington, D. C. 

My Dear Senator Taft: A great deal is being heard about the gravity and 
extent of the post-war housing problem, and the importance of reviving the con- 
struction industry to provide jobs. 

Government officials, labor leaders, realtors, builders, planners, lending institu- 
tions, and civic organizations are cooperating to develop acceptable solutions. 

From these broad sources much good thinking may be expected, although it 
might seem that too little has been heard from an indispensable element in the 
creation of taxpaying rental housing for the large middle-income group; namely, 
the owner of risk or equity capital. 

A huge reservoir of savings assures an ample supply of private funds for well- 
secured mortgages, but it does not follow that equity funds on a large scale are 
going to be as readily available. 

First, it is almost certain that such new housing will cost more than housing 
built before the war with which it will come in competition; second, experience 
suggests that economic maladjustments following the war may cause a high 
vacancy rate within a few years; and, third, careful investors realize that the great 
technological advances resulting from the war may soon render obsolete the 
housing constructed to ease the shortage. 

Unfortunately, no formula has been devised to reduce building costs overnight, 
nor is it probable that investors can avoid losses arising from abnormal vacancies 
when they occur, yet the Federal Government can do much to eliminate the justi- 
fiable fear of loss through premature obsolescense. 

During a period of very rapid technological changes, the rate of obsolescence 
might outweigh all other considerations in the mind of the long-term investor. 
Obsolescence has always played an important part in the determination of invest- 
ment values of apartment buildings, often exerting more influence than mere 
physical deterioration due to age. 

According to the experts, many developments of a revolutionary character may 
be expected within a few years after the war, although they do not think such 
innovations will be reflected in housing required to meet the existing shortage. 
The demand for new housing is said to be so great that its satisfaction cannot be 
deferred until improved techniques and devices become available, hence it will be 
necessary to carry on much construction by the same methods and with the same 
materials used in the past. 

The crux of the matter is that the long-term investor can obtain no assurance 
that housing built immediately after the war to overcome the shortage may not be 
outmoded in a few years. Present income taxes and those likely to be necessary 
in the foreseeable future offer the owner of equity capital no inducement to assume 
this extraordinary risk, although he might take a different view of the situation 
if he could anticipate recovery of his capital investment in a relatively short 
period, say, 10 years. 

The present annual depreciation rate of 2 to 3 percent allowed for income-tax 
purposes requires 30 to 50 years for the investor to recover his capital — a period 
too long for today's needs. 

The large equity investor who might be satisfied with a modest income is, 
therefore, somewhat hesitant to assume the burdens and risks. 

The Bureau of Internal Revenue adopted the 2 to 3 percent standard some years 
ago when tax rates were substantially lower and the building industry was in a 
less fluid state. The rates are based upon the results of a poll conducted among its 
members by the National Association of Real Estate Boards regarding the esti- 
mated useful economic life of various types of buildings. Changed conditions and 
a broader social horizon indicate the time is ripe for a reconsideration of the 

Faced with the urgent necessity of encouraging plant expansion to speed up 
war production, the Government increased allowable depreciation rates so that 
certain kinds of property could be charged off in 3 to 5 years. The question of 
normal economic life expectancy was brushed aside because the situation called 
for drastic action. 

In the same manner, the Government can relieve the post-war housing emergency 
for middle-income families, by shortening the depreciation period for newly con- 
structed medium rental housing. 


There is nothing in the proposal to encourage the speculative jerry builder, as 
the objective is to induce long-term investment capital to provide for a modest 
return essential, decent new housing for a very large number of families which 
cannot qualify for the subsidized housing planned for lower income families and 
cannot afford the luxury type of housing. 

This proposal could be made operative by a simple amendment to the next 
revenue act, specifying maximum rentals for housing entitled to the higher depre- 
ciation rate. Its provisions would not apply to existing housing. Such legisla- 
tion should safeguard the public interest m ithout imposing burdensome restrictions 
upon the investor. Under an adequate program, the rental market will take care 
of the landlord who does not provide value for the tenant's dollar. On the other 
hand, the kind of investor most likely to be attracted probably would have no 
objection to a certain amount of regulation by some local agency such as the State 
housing board. The limited dividend housing corporation, or some adaptation 
thereof, might become a popular vehicle for such undertakings. 

This proposal will impose no burden upon the Federal Treasury. If 100- 
percent depreciation of buildings and equipment is taken during the first 10 years, 
obviously none can be claimed thereafter. The change need not become perma- 
nent, if not in the public interest after a fair trial, as it would come up for discussion 
and consideration during the passage of every succeeding revenue bill. 

On the positive side, much new building should follow its adoption. The 
housing market will be benefited by the presence of long-term equity funds whose 
owners will be willing to sacrifice some income for security. The large middle- 
income group of families will obtain cheaper and better housing than the speculator 
is prepared to furnish, taking much of the load off the Government, and the social 
benefits may be of incalculable value. 
Yours very truly, 


National Congress of Parents and Teachers, 

Chicago, III., January 23, 1945. 
Members of the Committee, 
Hon. Robert A. Taft, 

Chairman, Subcommittee on Housing and Urban Redevelopm^ent. 
Gentlemen: Two primary objectives of the National Congress of Parents 
and Teachers are (1) promotion of the welfare of children and youth in the 
home, school, church, and communitv; and (2) the raising of standards of home 

The National Congress of Parents and Teachers has in its membership more 
than 3,000,000 men and women working in 18,000 local communities for health, 
home, and family life, juvenile delinquency, recreation and safety. These local 
groups, known as Parent-Teacher Associations, briefly P. T. A., are in every 
State of the United States and in Hawaii, Puerto Rico, and the District of Colum- 

Inadequate housing is detrimental to their objectives. For many years housing 
has been on their study programs, and efforts have been made to stimulate public 
interest, understanding, and support of housing programs for families of low 
and moderate incomes. Inclusion of adequate housing standards in community 
building codes has been urged. 

The board of managers of the National Congress of Parents and Teachers 
adopted last November a post-war planning program which includes adequate 
housing. Support was voted for (1) public housing, (2) establishment of a 
central housing agency, and (3) a program of research. Furthermore, author- 
ization was given to the emergency committee to support such a bill if its pro- 
visions are in line with approved policies of the National Congress of Parents 
and Teachers. 

The National Congress of Parents and Teachers is prepared therefore to accept 
responsibility for participation in planning for housing that will promote the 
w^elfare of children and the family, and urges the Subcommittee on Housing and 
Urban Redevelopment to make recommendations based on factual information 
that will correct the deplorable housing conditions that now exist in many com- 
munities, and pledges active support in those communities for better homes. 
Respectfully yours, 

Emma B. (Mrs. Glen Levin) Swiggett, 
Washington Legislative Representative of the 

National Congress of Parents and Teachers. 


Extract From Booklet Entitled "Low Cost Homes for Millions — Dream 
OR Possibility", by Allison H. Dean, Portland, Oreg. 

Perhaps I shall be accused of "politics" for discussing public housing versus 
private housing in this booklet but it must be discussed since it has a bearing 
on low-cost homes. 

Public housing; that is, housing provided by one group of citizens for the semi- 
charity use of another group of citizens, is pure bunk. The citizens housed in 
the buildings provided for them at the expense of their neighbors become psycho- 
logically warped and branded. They know they are not as good as their fellows, 
and in bravado assume the defensive attitude toward every civic responsibility. 

As greater numbers of the people would be housed at other taxpayers' expense, 
the tax burden on the diminishing solid citizens would become more and more 
unbearable and intolerable, so soon all private ownership and taxpaying would 
vanish and the expenses of the community would be met by levies on income 
and capital. But more important, the greatest American asset, individual 
incentive, would be lost. 

But for this work, the important thing is this: Only by unhampered private 
enterprise, research, development, and the profit incentive can great strides take 
place in great news advances in lower-cost homes. 

In all the history of war housing and in all the years of attempted "slum clear- 
ance" no Government project ever led the way in one single item toward lower 
cost or more house for the money. We would still be riding horseback if we bad 
waited for a Government bureau to decide to invent and develop an automobile 
and the automotive industry. We would still be using smoke signals if we had 
waited for an act of Congress to invent and perfect the telephone and teleiiraph 
and wireless. And millions of our people must go unhoused if they wait for 
Government agencies to invent and develop low-cost homes that they can buy 
and pay for and become independent, free, land-owning Americans. 

One word more: Constant threat of subsidized, tax-free, low rent housing by 
the Government, at the expense of the rest of our people can so stifle industry 
and capital that they may never start the work toward the solutions here discussed. 

The National Board of the Young Womens Christian 

Associations of the United States of America, 

New York, N. Y., January 12, 1945. 
Senator Robert A. Taft, 

Special Comtnittee on Post-War Economic Policy and Planning, 
Senate Office Building, Washington, D. C. 

Sir: The National Board of the Young Women's Christian Association is 
interested in the fact that your committee has been studying the housing needs 
of the country, and is conducting hearings on posi-war plans for housing. 

As a national organization, we have a membership of 600,000 and serve a 
constituency of 3,000,000 young girls and women, in urban and rural communities. 
Our constituency cuts across lines of race, color, creed, and national origin. 

Many of our members are married and many more will marry after the war. 
All of them will want decent, attractive homes in clean communities. Although 
the quality of family life is not solely dependent upon the type of construction 
in which people live, physical surroundings do have an effect upon health, educa- 
tion, and moral and spiritual values of our citizens. 

The national board supports a program which calls for the widest use of our 
resources to achieve full production and full employment. We believe that the 
Federal Government should stand ready to supplement the efforts of private 
industry and local government by providing a program of public works, which 
will include the erection of homes to meet the needs of all people. We believe 
that plans should be made now and legislation enacted that will provide for an 
orderly transition from war to a peacetime economy, and that an important part 
of the plan is the building of decent homes for our citizens. 

Housing should be one of the greatest outlets for reemployment after the war. 
Some cities now have master plans for urban redevelopment, and the successful 
outcome of' some of the plans depends partially upon the help from the Federal 

Employment is only one factor to be considered in these post-war plans. 
Housing is a legitimate end in itself, and is more than a method for providing 
employment, important as that is. 


We are concerned not only with the building of new, additional housing unit?, 
but with the planning and operation of a long-term program of demolition and 
replacement of substandard homes and buildings in the slums and blighted areas 
of our cities. 

The program will have to be on a larger scale than any ever before attempted 
and will call for the coordinated effort of Government (Federal, State, and local), 
private enterprise, and labor. 

The Young Women's Christian Association has more than an academic interest 
in wishing that the Government shall set up in the quickest most efficient way 
machinery to provide adequate housing which is within the income of various 
groups in our population. We have cooperated, on both local and national 
levels, with the agencies that have dealt with the various aspects of housing and 
slum clearance. We have cooperated with other communitj' agencies in inter- 
preting the work of the National Housing Agency. Some local housing author- 
ities grew out of the work of committees initiated by local Yoiuig Women's 
Christian Associations. Through various parts of our organization we have 
helped local communities to meet the emergency housing needs created by the 

We include in our constituency some 50,000 Negroes and several thousand 
members of other racial and national minorities. In any housing legislation that 
is passed the needs of these groups must be taken into account. 

We, therefore, hope that the committee will recommend appropriate legislation 
to secure a sound post-war housing program for the United States. 
Sincerely yours, 

Constance W. (Mrs. Arthur Forrest) Anderson, 

Third Vice President. 

National Lawyers Guild, 
National Committee on Social Legislation, 

New York, N. Y., January 11, 1945. 
Hon. Robert A. Taft, 

Senate Office Building, Washington, D. C. 
My Dear Senator Taft: It is our understanding that the Subcommittee on 
Housing and Urban Redevelopment of the Special Committee on Post-War 
Economic Policy and Planning is now conducting hearings with reference to war 
and post-war housing problems. 

I enclose herewith several copies of a report on "A Post- War Low-Rent Public 
Housing Program" prepared by the national committee on social legislation of 
the National Lawyers Guild. We respectfully request that the report be filed 
with the committee as our written statement and made a part of the record of 
the committee's hearings. 
Yours respectfully, 

Morris A. Wainger, Secretary. 


(A report by National Committee on Social Legislation, National Lawyers Guild) 

The Need for a Post- War HousinCx Program 

Prior to the war, some 40,000,000 Americans lived in 10,000,000 substandard 
dwellings.' Most of them inhabited the slums of our countrv, which consti- 
tuted a standing threat to the national health and welfare. The urgent need 
for clearing these blighted areas and for replacing these dwellings by new decent 
dwellings still exists.^ In addition, the increase in the population, the large 

1 Committee on Education and Labor, U. S. Senate, renort anproving the. United States Housine Act of 
1937; A Citizon's Guide to Public Housin?, Catherine Bauer, p. 15. Former Federal Public Housing 
Commissioner Emmerich, addressing t'^e National Public Housine Conference, St. Louis, Mo., March 
24, 1944, sta'^ed; "Almost 30 percent of the families in urban areas, as sho-vn by the 1940 census, are now liv- 
ing in housine so substandard as to be a threat to t^^eir '"palth and- welfare." In a communication to the 
committee Mr. Alexander L. Crosby, of the National Public Housing Conference, Inc., points out that the 
1940 census showed 18,000,000 (rather than 10,000,000) urban and rural substandard homes. It is note- 
worthy that rural slums, which are usually not included in public housing programs, are often worse than 
urban ■^luras. 

- Mr. Evans Clark, executive director of the Twentieth Century Fund, in the New York Times on March 
20, 1944, summarized a report on t^e housing problem as follo-vs: "* ♦ * the housing stock throughout 
the country was in an extremely deteriorated condition. In urban areas, more than 2.3 percent of all dwell- 
ings had no private baths in 1940 and over 10 percent were in need of major repairs. In the rural communi- 
ties these percontaees were c^^siderably higher and on farms higher still. Of the houses either needing 
major repairs or without private bath, 6,200,000 were in urban areas constituting almost 29 percent of the 
urban supply. Disregarding the lack of private baths in rural areas 4,300,000 houses, representing over 27" 
percent of the rural supply were in need of major repairs." 

9118.3— 45— pt. 15 10 


number of newly married couples, the cessation of normal construction, and the 
suspension of major repairs during the war have increased the need for new 
homes. It is estimated that a sound post-war housing program must cope with 
the need for 15,000,000 new dwellings.* Such a program must necessarily be 
formulated on the practical basis of a plan spaced over a term of years. A 10-year 
plan has been proposed and would appear to be feasible. Such a plan would 
mean a program of construction of 1,000,000 to 1,500,000 new dwellings each 
year for 10 years. 

A post-war housing program is clearly an indispensable part of any program 
for full employment after the war. A program for the construction of 1,000,000 
to 1,500,000 homes each year for 10 years would by itself provide a substantial 
portion of the national income and national employment.* It would, of course, 
provide employment not only for the construction industry directly, but would 
enormously stimulate all capital goods and consumer goods industries. It would 
underpin prosperity for the Nation as a whole. 

Private industry is now planning to provide many of the homes needed, and 
will probably be prepared to start construction within a short time after the war. 
It will provide individually planned private homes selling for $10,000 or more, 
developments of private homes selling between $5,000 and $10,000,5 apartment 
houses with rooms renting for $18 and up, and large-scale project apartments 
financed by insurance companies and others, renting between $14 and $18 a 
room.^ There is a vast scope here for private capital and private enterprise. 

Private industry has not built, and cannot profitably build, new, decent, safe, 
and sanitary homes for people in the lowest income groups at rentals they can 
afford to pay.'' On the other hand, the homes constructed under the United 
States Housing Act have catered solely to these families. In 1940, 7.7 percent of 
the low-rent homes constructed by public housing were occupied by families 
earning less than $500 per year; 32.8 percent housed families earning between 
$500 and $750 per year; 33.4 percent by families earning between 750 and $1,000; 
21.2 percent by families with income between $1,000 and $1,250; and only 4.9 
percent with incomes between $1,250 and $1,500. No low-rent homes housed 
families earning more than $1,500 per year." The families in these income 
groups cannot afford to pay more than $2.50 to $7 per month per room including 
utilities. When they pay more, they do so at the expense of other living neces- 
sities. But private enterprise, even with such governmental aid as tax exemption, 

3 President Harry C. Bates of the Bricklayers, Masons and Plasterers International Union (American 
FederaMon of Labor) in testimony civen before the House Committee on Public Buildings and Orounds, 
February !0, 1944, listed the follovvine as requirements during the post-war decade: B.OOO.ono substandard 
dwellings to be replaced, and the construction of U.'iOOiOOO homes a year. Public Housing (monthly pub- 
lication of the National Public Housing Conference), vol. 10, No. 2, p. 5, February 1944. Commissioner 
John B. Blandford, Jr.. Nation J Housing Agency, addressing the National Association of Housing Officials, 
called for l,Onn,000 to l.SOO.OOO homes each year after the war. Public Housing, vol. 9, No. 12, p. 1, Decem- 
ber 1943. Irving W. Clark, manager of better homos department of Westinghouse Electric & Manufac- 
turing Co., declared "If spread over a 10-year Dost-war Deriod, it would place the annual total housing need 
potential at 1,400,000 homes." (New York City Retailing, December 27, 1943.') Mr. Charles B. Sweatt, 
vice president, Minneapolis-Honeywell Regulator Co., declared "Approximately 1,300,000 new 
will be built each year for at least 10 years following victory." (.N'ew York Times, January 4, 1944.) The 
Twentieth Century fund estimated the housing need for the decade after the war from 820,000 to 1,300,000 
nonfarm units per year. (See report cited footnote 2 supra.) 

* Mr. Eric Johnston, president of United States Chamber of Commerce, testified before the House Public 
Buildings and Orounds Committee on December 1, 1943, stating that construction would not be expected 
to provide more than 10 to 1,1 percent of the total income and employment (New York Times, December 2, 
1943) The Twentieth Centurv Fund report estimates that post-war housing might expend 6 percent of the 
national income of $100,000,000,000 or $6,000,000,000 annually. 

5 [n Survey Graphic, April 1944, p. 197, Loula D. Lasker, of Citizens Housing Council of New York, 
points out: "This (referring to a study made by the Producers Council of a typical $5,000 pre-war house) 
would indicate that the advances to date can be expected to produce a better but not necessarily a cheaper 

8 An example of this is Stuyvesant Town being planned for construction in New York City after the war 
bv Metropolitan Life Insurance Co. 

' Former Commissioner Emmerich further stated in the speech referred to in footnote 1 above "* * * 
Private enterprise on the other hand cannot build decent accommodations to rent for less than $35 to $40 
a month in larger communities, or less than $25 to $30 in smaller places. The facts as to the markets served 
by public and private housing construction in 1940, the last pre-war year, bear out this statement. In that 
year, all of the tenants in public housing were well within the lowest income group in their respective cities. 
Private housing, on the other hand, concerned itself primarily with the upper income third: it built some 
housing for the middle income third, hut provided almost no housing for the lowest third. Indeed, the 
fields of public and private housing are by their very nature almost mutually exclusive and by no stretch 
of the imagination can public housing be said to hinder, impede, or compete with the activities of private 
builders." . 

8 Warren J. Vinton, chief economist of the Federal Public Housing .Authority, 1944 spring meeting of the 
local authorities at the Hotel New Yorker, New York City, on April 12, 1944. 


lias not found it possible to build and rent new housing meeting decent housing 
standards at rents they can afford to pay.^ 

Henry J. Kaiser, perhaps the most celebrated builder in our country, candidly 
admitted this when he pointed out that in the pre-war years "no new homes were 
built for families earning less than 81,000 a year, and adequate housing was con- 
structed for only a fraction of 1 percent of famiUes earning from $1,000 to $1,500 
annually." i" It is the low-income families of our country who cannot look to 
private industry for adequate housing but must depend upon Government action. 
There is thus an appropriate field of action for private industry and an appropriate 
field for Government action. As Mr. Kaiser correctly pointed out, "The under- 
taking is so vast that there must be a joint effort in which the Federal Government, 
cities, municipalities, banks, labor unions, insurance companies, and industry 
can take an active part." '" 

The opponents of public housing nevertheless believe that this is the time to 
launch a concentrated offensive against public housing, designed to prevent a 
post-war low-rent public-housing program. They are determined to prevent the 
formulation and planning now of a public-housing program which can supplement 
private production and provide both full employment and decent shelter for the 
American people. At the hearings recently held before the Committee on Public 
Buildings and Grounds of the House of Representatives (the Lanham committee;, 
the representatives of real-estate organizations presented proposals for a post-war 
housing program which would doom any effective public low-rent housing. 

In this report, we consider (I) the proposals for a post-war housing program 
made by the opponents of the United States Housing Authority low-rent public- 
housing program, and (II) our experience with a public-housing program during 
the pre-war and the war periods. Upon the basis of this examination, we present 
(III) recommendations for a post-war low-rent public-housing program. 

I. The Proposals for a Post-War Housing Program by the Opponents of 
THE United States Housing Authority Low-Rent Public-Housing 

The opponents of public housing have recognized that some Government aid 
must be utilized in building low-rent homes. But they are bitterly opposed to 
the objectives and procedures of the United States Housing Act. Among the 
proposals presented by these groups were those of the National Association of 
Real Estate Boards. The two most publicized proposals advanced by these 
groups are (A) the rent certificate plan and (B) the income tax exemption plan. 

the rent certificate plan 

The rent certificate plan " is offered as a substitute for the United States 
Housing Authority program. Under this plan, the slum occupant would be paid 
a cash dole equivalent to the difference between the amount he can afford to pay 
for rent and the cost of a decent dwelling. 

This plan is unsound because under it no low-rent housing would be built. It 
would merely perpetuate slums and would be a boon to owners of slum property. 
It would require large expenditures by the Government, without appreciable 
social benefit. In addition to the high subsidy required, the expense of admin- 
istering the program would be prohibitive. The result would be: High cost to 
the Government; no low-rent housing constructed; no slums removed; existing 
slums subsidized and perpetuated. 

9 The National Resources Plannins Board, 1940, Housing, the Continuine Problem, p. 29, "State and 
Federal efforts to extend public aid in private housins, through tax exemptions, the exercise of the power 
of emirent domain and loans to limited-dividend housin? corporations, however, have demonstrated the 
difficulties of providing dwellinfrs within the financial reach of the lowest income groups without the aid 
of Government subsidies. It became evident from State and Federal experience that private enterprise 
could not be depended on to provide adequate housing for persons at the low-income levels." 

'O Henry J. ICaiser, Buildina the Future. Survey Graphic, April 1944, p. 199. 

" The rent certificate plan is backed by National Association of Real Estate Boards, the Producers' 
Council, and the Urban Land Institute. Details of plan appear in Public Housing, vol. 10, No. 2, p. 4, 
February 1944. 



The income tax exemption plan '^ was proposed by Mr. Jolin W. Gailbreath, 
president of the National Association of Real Estate Boards. The heart of the 
plan is its provision for income tax exemption for current income used for slum 
clearance and the construction of low-rent housing. All profits up to 6 percent 
obtained for such housing projects would also be exempt from Federal income tax. 
This plan is characterized by its proponents as one that would operate "at no 
cost to the public." 

This plan is highly objectionable: 

1. It is not true that it would, operate "at no cost to the public." In fact the 
"cost to the public" would be a heavy one, for the plan would, reduce the yield 
from income taxes from taxpayers best able to pay and. would place the bur- 
den of making up this deficit in Federal revenue on all remaining taxpayers. 

2. The plan gives complete incojne-tax exemption to the current income and 
profits of those who invest in these projects. This, in effect, would give a cp.pitai 
grant to income taxpayers in the upper brackets. Thus, the taxpayer in the 
75-percent bracket who invested in these projects wculd be investing only 25 
percent of his own money. Because of the tax exemption, the other 75 percent 
would be a contribution by the Federal Government to the investor. Thus, the 
owner of property financed under this plan would have an unfair advantage over 
all other owners of property in the country, who have had to pay for their land 
and buildings with 100 percent of their own money. '^ 

3. The plan would also give complete tax exemption to any income up to 
6 percent derived from investment in these projects. This, in effect, would give 
an annual grant to income taxpayers in the upper brackets. The taxpayer in 
the 75-percent bracket, who would normally retain only one-quarter of a 6-percent 
annual income, would, under this plan, retain the three-fourths which he would 
otherwise pay in taxes. This would be an annual subsidy equal to 4}^ percent of 
the cost of the project. 

4. The plan offers no assurance that the present occupants of slum areas will 
be decently housed at rates they can afford to pay, since there is no specified 
limitation upon the rentals to be charged or the income groups to be served.'* 

Under the United States Housing Act, slum.s have been cleared successfully 
and decent, modern housing has been provided at rents no higher than their 
tenants formerly paid for slum dwellings. This, of course, has involved sub- 
sidies, but the Federal sulisidies are modest in comparison to those proposed by 
the National Association of Real Estate Boards. For a taxpayer in the 75-percent 
brp.cket, the National Association of Real Estate Boards proposes what would 
amount to a 75-percent capital grant from the Federal Treasury. It is note- 
worthy that no capital grants whatever have been given to projects constructed 
pursuant to the United States Housing Act.'^ The only subsidies paid by the 
Federal Government are its annual contributions to low-rent projects prior to 
the war, averaging only 2.8 percent of their cost.'^ In contrast to this, the 
National Association of Real Estate Boards is proposing (in addition to this 
75-percent capital grant) a subsidy to private investors in the 75-percent bracket 
equal to 4}^-percent of project costs each year. 

These, then, are the proposals for a "public housing program" presented by 
organized real-estate groups. They will not result in decent shelte • for low- 
incom.e groups. They ignore the needs of these groups. They merely serve to 
guarantee special advantages to persons in high-income brackets. 

Fortunately, the American people have had the experience of a public-housing 
program which is concerned with the needs of the American people. We will here 

13 Ne*v Yi;rk Herald Tribune, February 27. 1941. 

13 "Realtors Now Offer Plan To Dodge Taxes," in Public Housing, vol. 10, No. 2, p. 4, March 1944. 

» Hugh R. Pomeroy, executive director. National Association of Housing OfTicials, in Survey Graphic, 
April 1944, discusses the rentals to be charged in such developments as follows: "* * • It is not likely 
that rents could be brought down to less than from $28 to $30 per dweUing unit per month. Such rents 
would serve very few if any slum-dwelling families. They would have to seek other slum homes. By way 
of contrast, the average rent in low-rent public-housing projects (before the war) was just under $13 per 
dwelling unit per month." 

15 Sees. 11 (b) and (d) of the United States Housing Act, as amended, Public 412, 75th Cong., authorized the 
use of $30,000,000 for capital grants for any low-rent housing or slum-clearance project which shall in no case 
exceed 25 percent of its development or acquisition cost; an additional capital grant, not to exceed 15 percent 
of development cost, could also be made by the Authority out of unemployment relief funds which the 
President was authorized to allocate to the Authority for that purpose. No Federal grants have been 
made pursuant to these provisions and no appropriations or allocations have been made for this purpose. 

18 Senator Allen J. Ellender, chairman of the subcommittee handling housing legislation of the Senate 
Committee on Education and Labor, addressing the National Public Housing Conference on March 25, 
1944, said, "* * * The maximum annual contribution to achieve low rents permitted under the law is 
about 31-4 percent * * • . But even before the war, by various economies, the annual contribution rate 
has been reduced to about 2.8 percent * * *" (Congressional Record, appendix, March 30, 1S44). 


review that experience briefly, since we believe that experience indicates the 
principles which must underlie a sound post-war low-rent housing program. 

II. The Nation's Experience ^ith a Public Housing Program During 
THE Pre- War and War Periods 


The United States Housing Act was passed in 1937 to promote the general 
welfare of the Nation by providing financial assistance to the several States and 
their political suy:)divisions for the declared purposes of alleviating present and 
recurring unemploj-ment and remedying the unsafe and unsanitary housing 
conditions and the acute shortage of decent, safe, and sanitary dwellings for 
families of low income in urban and rural communities which are injurious to the 
health, safety-, and morals of the citizens of the Nation.'^ At that time, it wa^■' 
estiniated that at least one-third of the population lived in unsafe and unsanitary 

Finavcinl arrangements. — Congress authorized the United States Housing 
Authority, now the Federal Public Housing Authority, to lend $800,000,000 to 
local housing authorities,^^ for the purpose of developing low-rent housing projects 
and to eliminate local slumps. The Federal Government was authorized to lend 
up to 90 percent of the total cost of the projects. 2" At least 10 percent of the 
remaining cost was to be raised by local authorities. 21 As a m.atter of fact, local 
authorities have raised more than one-third of the cost of their low-rent projects 
from sources other than the Federal Governm.ent at an interest rate substantially 
below the interest rate required to be cliarged by the Federal Government on its 
loans. 21 The Federal Government was authorized to make annual contributions 
to bridge the gap between the amounts necessary' to pay fixed charges and expenses 
of operating the projects and the rents that low-income families could aff'ord to 
pay. 22 The annual Federal contribution has averaged 2.8 percent of the cost of 
the projects. 23 Although Congress authorized $28,000,000 annually for this 
purpose, 24 the actual annual contributions paid are substantially less.^^ Locf.l 
communities were required to make annual contributions equal to at least 20 
percent of the Federal subsidies. These were usually made in the form of tax 
exemption of the projects. 2^ 

Slum clearance. — -The law specifically provides that for every dwelling unit 
constructed, one substandard dwelling unit in the community shall be eliminated 
by demolition or compulsory repair. 2^ In some cases, equivalent elimination has 
been accomplished on the project site. In other cases, it has been accomplished 
off the site. Due to the shortage of housing in many areas, equivalent elimination 
has in many instances been deferred imtil after the war. Despite this, however, 

'■ United States Housing Act, as amended, sec. 1. 
1' See footnote 1. 

19 United States Housing Act, as amended, sec. 20 (a). 

20 United States Housing Act, as amended, sec. 9. 

2' As stated above, the Government can lend the local authority not more than 90 percent o[ the cost of the 
project. Therefore, the latter must borrow at least 10 percent from private investors. It is interesting to 
note that many projects have sold from 25 to 85 percent of their bonds to the public. Out of a total of $445,- 
551,000 in principal amount of local housing authority bonds issued as of Seiitember 194.3, $151,993,000 or 
more than one-third, have been sold to private capital, instead of the required 10 percent. Interest rates 
on these bonds have been as low as 1.7 percent. See report entitled "The Public Housing Program for War 
and Pe^ce," prepared by committee on public housing. National Institute of Municipal Law Officers, 
presented on December 2. 1943, at the Hotel Stevens, Chicago, 111. This certainly indicates that the in- 
vesting public deems these bonds to be sound securities and proves that private capital participates in a 
public housing program. 

=2 United States Housing Act. as amended, sec. 10 (a)-(f). 

23 See footnote 16. 

2-' United States Housing Act. as amended, sec. 10 (e). 

25 See 1942 report on the operations of the Federal Public Housing Authority, submitted to Congress as 
part of the first annual report of the National Housing Agency. "The United States Housing Act author- 
ized the payment of annual contributions to local housing authorities to aid them in providing housing 
within the means of low-income families. The Federal Public Housing Authority is authorized to enter 
into contracts for annual contributions aggregating $28,000,000 per annum. As shown by table 6 in the ap- 
pendix (table 6 of appendix not included in these footnotes) the contracts actually entered into provide for 
maximum contribution aggregating $26,718,832 per annum excluding margins of safety approved by the 
President in case of overrims in development costs. The factual contribution paid on any project after its 
first fiscal year is not in general this maximum amount but the amount actually required in that year to 
meet the deficit incurred in providing housing for low-rent projects are running about 25 percent below the 
maximum amount permitted under contracts for annual Contributiras. On war projects (Public Act 412 
converted and Public Act 671), it is expected that little or no subsidy will be required during the war. No 
contributions, of course, are being paid on suspended projects. The amoimt of annual contributions actu- 
ally ppid during the fiscal year endinc June 30, lt42, amounted to .$9,925,891." 

26 United States Housing Act, as amended, .sec. 10 (a).. 
•' United States Housing Act, as amended, sec. 10 (a) 


equivalent elimination accomplished as of December 31, 1943, has been approxi- 
mately 82 percent of the amount required.^s 

Low rentals. — The law also contains provisions to insure the low-rent character 
of the projects.28 Before the war, the family income of occupants of these projects 
ranged from less than $500 up to $1,500 a year. Monthly rentals range from ap- 
proximately $7 to $20 per unit, or an average of about $i2.80 per dwelling. ^Q 

Bvilding costs and plans. — The act limits costs of the projects to $4,000 per 
dwelling unit excluding land, demolition of buildings and nondwelling facilities. 
In cities having a population exceeding 500,000, the cost may not exceed $5,000 
per dwelling unit.^' Actually, the costs excluding land, demolition of buildings 
and nondwelling facilities so far have averaged $3,191 in the smaller, and $3,695 
in the larger, communities. The total over-all cost of new housing developments, 
including land and nondwelling facilities, averaged $4,307 for dwellings in all 

Low-rent projects conform to local customs, and are designed for 60 years' life 
and low maintenance cost. They are of simple but sturdy construction, and con- 
sist of from 2Y2 to 6>^ rooms, the average being 4. Usually, only 30 percent of 
ground area is covered by buildings, provision being made for open space for chil- 
dren's playgrounds and community facilities. 

The actual construction of these projects is not a Government function. Plans 
are drawn by local architects. Construction is by private builders usually em- 
ploying local labor, who are alwaj^s paid prevailing wages. Materials and equip- 
ment are purchased in the open market. Thus, construction is a direct aid to local 

The cost to the Federal Government. — It must be emphasized that, except for the 
small annual subsidy, all the moneys advanced by the Federal Government toward 
the cost of the projects are merely loans to be repaid with interest by amortiza- 
tion over a period of not exceeding 60 years. Thus, these funds are really not 
expenditures by the Government but investments. Interest is paid to the Gov- 
ernment by the local authority on all Federal loans at a rate equal to the cost of 
long term money to the Treasury at the time the loan was made, plus one-half of 
1 percent. The cost of administering the low-rent program by the Federal Gov- 
ernment is covered by the resulting interest profit on its loans.^^ It has been esti- 
mated that the cost to the Federal Government of the entire slum-clearance pro- 
gram will amount to approximately $100 per family per year.^'' 

Number of local housinp agencies. — On November 1, 1937, there were in existence 
46 local housing authorities, and 15 States had enacted adequate ligislation to 
enable them to participate in a Federal public-housing program. Today, there 
are more than 600 local authorities, including rural, county, State, and regional 
authorities, and 39 States have passed legislation permitting participation in the 
Federal program. 

2" Equivalent elimination is required by law in connection with the 117,109 units built under the oridna 
TTrited States Housin? Act (excludine projects built under the defense supplement thereto, Public Act 
671). As of December 1943, 95,538 substandard units had been eliminated in connection with these projects 
accordins to information furnished by the Federal Public Housing Authority. 

2« United States Housina- Act, as amended, sec. 15 (4). 

3" Senator Ellender, in n radio speech delivered March 25. 1944, over Station KRD, St. Louis, Mo., stated: 
"It Freferrinp to Federal low-rent housing] was achieving throughout the country an average rent, without 
utility charges, of $12.79 per family unit per month, serving families vs-ith average annual iacomes, on a. 
national basis of .$832." 

81 United States Housing Act, as amended, sec. 15 (5). 

32 Annual Report of the United States Housing Authority (Nondefense Activities), 1941, p. 35. 

"John B. Blandford, Jr., National Housing Administrator, in a letter dated March 31, 1M4, to Mr. 
Fulton Lewis, Jr.. stated in part: "It should be understood that loans made by the Federal Government 
are being repaid; that the Government is collecting- inteiest on every loan, that this interest revenue now is 
more than covering administrative expenses; that the only expense to the Go'>ernment has been its subsidy 
appropriation which up to Tune .30, 1943. totaled only $24. .".55, 9 19." 

'' The 1942 report of the Federal Public Housing Authority referred to in note 25 shov.'s that for all low- 
rent prrjects owned by local authorities and in lull operation in 1941-42, the average annual cost of Federal 
subsidy for projects with 40,270 dwellings was $8.8.S per month and for a group of earlier projects with fi.%1 
units was $11.11 a month. The weisrhted average is .$9.21 per unit per month, or an annual subsidy cost to 
the Federal Government of $110.52 per dwelling. The forthcommg 1943 report of the Federal Public Hous- 
ing Authority covering operations of projects with 89,240 units in the years 1942-43 shows an annual subsidy 
cost to the Federal Government of $100.80 per family. 


Status of the low-rent housing program as of Dec. 31, 1943 * 

of projects 


mate devel- 
ment cost 

Low-rent projects now in operation 
Suspended projects:* 

(a) Low-rent housins;..- 

(6) Public 671 projects 2 

War- converted low -rent projects... 
Public 671 projects 




105, 532 

24, 684 


50, 888 

$489, 076, 000 

98, 353, 000 

4, 445. 000 

51, 866, 000 

251, 229, 000 


193, ."^lO 

894, 969, 000 

' The figures herein with the exception of those marked with an asterisk are derived from Report S. 131 
prepared by the Statistics Division. National Housing Agency. Federal Public Housing Authority, dated 
January 24, 1944. entitled "Monthly Progress Report of the Federal Public Housing Authority Monthly 
Period ended Dec. 3], 1943." 

2 Public 671, 76th Cong., authorized United States Housing Authority (now Federal Public Housmg 
Authoj ity) to use its authorizations under the United States Housing Act for national defense housing and 
to devote projects already begun or constructed to such pruposes. The act suspended, for the duration 
of the emergency, the requirement of equivalent elimination and the low-rent provisions of the United States 
Housing Act for those projects constructed \\ ith appropriations from this act. It is also permitted the use 
of these funds to construct projects directly instead of operating through local authorities. Only in a few 
cases has Federal Public Housing Authority engaged in direct construction under this act. After the war, 
upon compliance with all the requirements of the United States Housing A ct, these developments will revert 
to low-ient housing projects. 

*The figures herein marked with an asterisk were given to the committee preparing this report by Federal 
Public Housing Authority officials. 


In 1940, when America was called upon to produce huge quantities of war 
supplies, it became evident that additional homes would be needed to house war 
workers. Factories began to spring up overnight on empty fields; airports were 
built in isolated areas; and production centers in already overcrowded cities 
expanded to three and four times their original size. Workers from virtually 
every part of our country went to work in these defense plants. Many were 
accommodated by doubling up in existing homes, and by renting cellars and attics, 
but countless more had no place to live. 

Private industry and war housing. — Private industry built in those places where 
there would be a need for the homes after the war. Where no such need was 
evident, private industry did not build, because private capital could not expect 
to collect during the few war years the entire cost of construction. In the mean- 
time, workers were getting high wages, but could not find places to live. They 
left their jobs and went home. Labor turn-over was high. Factories could not 
meet their schedules. Homes had to be provided. The Government stepped 
in — not to compete with private building, but to supplement it in those places 
where private industry could not or would not meet the need. 

Administrative coordination. — By February 24, 1942, Government war housing 
was being constructed by 16 Federal agencies.^* In order to avoid costly over- 
lapping of functions and confusion, it became apparent that steps must be taken 
to coordinate the housing effort. Consequently, President Roosevelt, by Execu- 
tive Order 9070, issued on February 24, 1942, pursuant to the First War Powers 
Act of 1941, consolidated all housing, publicly constructed or financed under the 
National Housing Agency, and, with few exceptions, assigned the task of con- 
structing Government war housing to the Federal Public Housing Authority, 
successor to United States Housing Authority, and to the other Government 
agencies engaged in the construction of war housing. 

As a result, overlapping and confusion were eliminated. The provision of new 
public war housing has been kept to a minimum. This housing has been provided 
mainly for indispensable in-migrant war workers. Maximum use has been made 
of existing facilities. No public new construction has been undertaken that 
private enterprise could provide. As a consequence of these policies, 50 percent 
of the present war-housing program consists of the use of existing private struc- 
tures, and 28 percent of privately financed new construction. Thus, 78 percent 
of the entire program is the job of private enterprise, leaving only 22 percent for 
publicly financed construction.^^ 

3« Sec address by Senator Ellender, footnote 16 supra. 

'• Information contained in report referred to in footnote 21. 


Avpropriations.— Congress appropriated $1,372,500,000 for war housing under 
the Lanham Act as amended (PubHc, No. 849, 76th Congj.).''' In addition, there 
has been made available for war housing $320,000,000 appropriated for the 
President's emergency fund for temporarv shelter under Public, No. 9, Seventy- 
seventh, as amended; $100,000,000 appropriated under Public, No. 781, 
Seventy-sixth Congress, for Army and Navy housing; about $55,000,000 for 
Defense Home.« Corporation funds; ^s approximately $247,000,000 out of the 
$800,000,000 Linited States Housing Act loan authorization used for Public, No. 
671, projects; and approximately $53,000,000 in war-converted United States 
Housing Act projects. Out of these funds (which total $2,147,500,000) approxi- 
mately $150,000,000 was allocated to agencies other than Federal Public Housing 
Authority, so that the total of all funds available to Federal Public Housing 
Authority for war housing to date amounts to about $1,997,500,000. 

Bvilding costs. — Under the Panham Act, the average cost of permanent family 
dwelling units, exclusive of expenses of administration, land acquisition, public 
utilities, and communitv facilities, may not exceed $3,750, and the cost of any 
individual family dwelling unit may not exceed $4,500 within the continental 
United States. =*» Public, No. 781, contains a limitation of $3,500 for the average 
unit.'*" Public, No. 9 does not prescribe a cost limitation, but as a matter of 
policy and practice. Federal Public Housing Authority usually does not construct 
anv projects at a cost higher than the Lanham Act maximum. 

In the period from March 1, 1942, through March 31, 1944, permanent family 
dwelling units con.structed under Public, No. 849, exclusive of expenses of adminis- 
tration, land acquisition, public utilities, and communitv facilities, averaged 
$3,275 per unit." 

Occupancy of public war housing. — The opponents of public housing have made 
capital of the "great amount of vacancies in Government war projects." This is 
done by pointing to the exception rather than the rule. The truth of the matter 
is that all Federal war-housing projects which have been completed for 3 months 
or more enjoy an occupancy of about 90 percent.^- 

Permanent versus temporary war housing. — Government war housing consists of 
two kinds — permanent and temporary. The Government has followed private 
industry's example, and built permanent dwellings only where it was felt that a 
need for the housing would exist after the war and only where, for one reason or 
another, private industry had failed to build. 

Of the 728,098 war-housing units programmed by all Federal agencies, up to 
January 31, 1944, approximately 196,000, or about 27 percent, are regarded as 
permanent, and consist primarily of family units. An additional 75,000 family 
units, or 10 percent, are classified as demountable — that is, permanent family 
units which could, if there is no post-war use for them, be moved elsewhere. The 
balance of 6.3 percent are temporary units, including family dwellings, dormitory 
accommodations, and trailers. 

37 Public, No. 119, 78th Cong., Julv 7, 1943, authorized the appropriations of .$300,000,000 under the Lanham 
Act, only $157,500,000 of which (included in the total figure of .$1,372,500,000 shown above) has so far been 

3« Pursuant to Public, No. 664, 76th Cong., the Defense Homes Corporation was organized in October 
1940 as a Maryland corporation with a capital stock of .$10,000,000 purchased by the Federal Loan Adminis- 
trator with funds allocated to him from the President's emergency fund which was later reimbursed from 
the first Lanham Act appropriation. The Corporation has also obtained loan funds from the Reconstruc- 
tion Finance Corporation. It provides permanent housing necessary in centers of war activities where 
private capital is not providing such housing and there is expected to be a continuing need for such housing 
after the war. It charges economic rents. Pursuant to Executive Order 9070 the stock of the Corporation 
has been transferred from the Federal Loan Administrator to the National Housing Administrator. Tech- 
nically. Defense Homes Corporation was not made a part of the Federal Public Housing Authority. How- 
ever, the Executive order provided that Defense Homes Corporation and its functions, powers, and duties 
shall t^e administered by the Federal Public Housing Commissioner. 

3» Sec. 1 fb) thereof. 

40 Sec. 201 thereof. 

<' This information was given the committee preparing this report by Federal Public Housing Authority 

*■ Former Commissioner Emmerich, in the speech referred to in footnote 1 above, stated: "In those 
publicly financed war family dwelling projects, which, on December 31, 1943, had been completed for 3 
months or more, the occupancy rate was 92 percent. Permanent projects, built largely in the early period 
of the emergency, were 97 percent occupied and despite large vacancies in some projects serving ordnance 
plants where employment has been sharply reduced, occupancy of demountable units was 88 percent, while 
that of temporary projects was 85 percent. A large proportion of the vacant war housing was being held 
at the request of specific industries to accommodate possible future needs, much as certain types of war 
plants are held as stand-bys. At this point in the war, reserved surplus housing, like surplus bullets, is 
frequently an asset. A striking example of this is the situation at Hampton Roads area, Virginia, where 
we had 9,000 vacant units less than 8 months ago and the curbstone housing specialists immediately began 
viewing with alarm. The Navy was not alarmed, however, for in fact it had asked for housing ahead of 
schedule so that it could put on a vigorous recruiting campaign. That occurred in Norfolk and 7,000 of the 
units have bee i needed and filled since August. The sharp upturn in recruitment could not have been 
accomplished had not the vacant houses been available." 



With reference to the disposal of permanently constructed war housing, section 
4 of the Lanham Act (Public, No. 849, 76th Cong.), as amended, provides: 

"It is hereby declared to be the policy of this title to further the national defense 
by providing housing in those areas where it cannot otherwise be provided by 
private enterprise when needed, and that such housing may be sold and disposed 
of as expeditiously as possible: Provided, That in disposing of said housing, con- 
sideration shall be given to its full market value, and said housing or any part 
thereof shall not, unless specifically authorized by Congress, be conveyed to any public 
or private agency organized for slum clearance or to provide subsidized housing for 
persons of low income: Provided further, That the Administrator may, in his dis- 
cretion, upon the request of the Secretaries of War or Navy, transfer to the juris- 
diction of the War or Navy Departments such housing constructed under the pro- 
visions of this Act as may be considered to be permanently useful to the Army or 
Navy." [Italics ours.] 

Temporary houses in the Federal Public Housing Authority program have 
been built with the particular view of saving time and critical materials, and to 
serve a temporary war need only. An amendment to the Lanham Act authorizes 
the Administrator of the National Housing Agency to remove all temporary war 
public housing as promptly as may be practicable and in the public interest, 
within 2 years after the war emergency. Any exceptions which the Administra- 
tor may find necessary, after consultation with local communities, are to be 
reported to Congress annuall3^ Income from rentals or operation of public 
war housing is to be set aside as a reserve to finance its post-war disposition. ■'^ 

Status of public housing as of Jan. 31, 1944 

Units under management 

Units under development: 

(a) Under contract 

(6) Not under contract 


Total estimated development cost 
Number of projects 

All public war 
housing ' 

620, 251 

77, 558 
30, 289 

72S, 098 



Federal Public 

Authority war 
housing 2 

478, 969 

72, 262 

578. 118 

$1, 837, 627, 000 


1 See Report S. 120 prepared by the Statistics Division National Housing Authority-Federal Public Hous- 
ing Authority, dated Feb. 25, 1944, Monthly Progress Report on All Public War Housing — Monthly 
Period Ended January 31, 1944. These figures include projects constructed pursuant to Public, 671, 76th 
Cong., and are also included in the chart showing the status of the low-rent housing program. Pursuant 
to Public, 671, about 200 projects with some 50,000 units were constructed for war use which are to be con- 
verted to low-rent housing after the war. 

" See Report S. 131 prepared by the Statistics Division National Housing Authority-Federal Public 
Housing Authority, dated Feb. 23, 1944, Monthly Progress Report of the Federal Public Housing Author- 
ity — Monthly Period Ended January 31, 1944. See also footnote 46, supra. 

III. Our Proposals for a Post-War Low-Rent Public-Housing Program 

The foregoing survey of our experience with the pre-war low-rent public- 
housing program and the war-housing program, and consideration of the proposals 
now made by real-estate organizations, leads to the following conclusions: 


The health and welfare of the American people urgently require a housing 
program which will construct at least 15,000,000 new dwellings in the decade 
immediately following the war. 

Such a housing program would substantially contribute to full employment 
and national prosperity. 

Such a program requires not only the largest possible private construction; 
it also requires a low-rent public-housing program. 

The field for a low-rent public-housing program should be the provision of 
adequate housing for low-income groups for whom private industry cannot 
profitably provide decent shelter. 

" Sec. 313. This section was added by sec. 4 of Public Law 119, 78th Cong. 



These proposals would merely subsidize and perpetuate existing slums and 
provide special tax advantages and capital grants to investors and to persons 
in high-income brackets, without providing new housing at rentals within the 
means of the low-income groups. 


We cannot expect a post-war housing program to wait until the termination 
of hostilities. Planning requires time for study of local housing needs, financing 
arrangements, land acquisition, conferences, and discussions with local authorities 
to formulate proper plans. Local housing authorities must have time for the 
preparation of applications, agencies must review these applications, and alloca- 
tions, and allocations must be made. By completing these preliminary steps 
now, a shelf of projects would be accumulated which would be available for imme- 
diate action at the end of the war. To make possible such planning now, funds 
must be provided at once. 


The provision of the Lanham Act establishing the policy that permanent war 
housing be thrown on the market and liquidated, "unless specifically authorized 
by Congress," and prohibiting its use by any public "or private" agency "organized 
for skim clearance or to provide subsidized housing for persons of low income" 
is unsound. There is no justification for junking this social wealth constructed 
with social funds or for disposing of it to private interests without regard to the 
needs of the communities. When communities, where permanent war housing is 
located, determine that there is an urgent need for additional low-rent housing, 
local housing authorities in those communities should be given the opportunity 
and should be helped to acquire those projects for that use. Congress should 
immediately "specifically authorize" the use of such housing for post-war low- 
rent public housing and slum-clearance programs by amending the Lanham Act 
to eliminate the announced policy and prohibition as they affect permanent war 


Temporary war housing presents a different problem since it was never intended 
to be permanent, nor to meet perm.anent h'^using standards. Everyone familiar 
with the problem agrees with the wisdom of Congress in stipulating that temporary 
housing should be removed as soon as possible in the public interest. Certainly, 
this is necessary lest these temporary structures fall into the hands of landlords 
who will fill them with tenants at excessive rentals. This would create additional 
slums and contribute to the further deterioration of our American cities. 


The United States Housing Authority and its successor, the Federal Public 
Housing Authority, have done an excellent job in carrying out the mandate of 
Congress as expressed in the United States Housing Act. Pursuant to this act, 
there have been provided by tested methods, which are both soimd and economi- 
cal, 170,000 decent, safe, and sanitary low-rent homes, which are now serving low- 
rent families or are temporarily occupied by war workers. Substantial as these 
achievements are, what the United States Housing Authority has been authorized 
to do barely scratches the surface of the tremendous housing problem of our 
country. What we have done in the field of public housing was to make a fine 
beginning in the United States Housing Authority. The post-war era, however, 
will provide a real opportunity to furnish decent shelter for all Americans. 

President Roosevelt, in his annual message to Congress in January 1944 made a 
brilliant formulation of a "Second Bill of Rights in which a new basis of security 
and prosperity can be established for all regardless of station, race, or creed." 
Among these fundamental rights is the "right of every family to a decent home." 
Indeed, the achievement of this cardinal right is one of the goals for which the 
present bloody and terrible war is being fought. President Roosevelt has cor- 
rectly declared that the sacrifices and the horror of this war impose upon us the 
sacred obligations to see that out of this war we and our children achieve the 
effective exercise of these rights. 


Our review of American experience demonstrates that the only sound and proven 
plan which can achieve the objective of providing safe, sanitary, and decent 
housing at rentals which low-income families can afford to pay, is the method 
established by the United States Housing Act. Accordingly, it becomes the ur- 
gent duty of'Congress to provide now for the continuance after the war of the 
United States Housing Act. We therefore call upon Congress to enact legislation 
to provide for the continuance of the United States Housing Act after the termi- 
nation of hostilities, and to make such appropriations as will be necessary in the 
meantime to finance all necessary planning and preparation. 

National Committee on Social Legislation, 

National Lawyers Guild, 

Leo J. Linder, Chairman. 

Morris A. Wainger, Secretary. 

Essentials For Low-Cost Housing 

(Statement to Senate Post-War Planning Committee by Benjamin C. Marsh, 
Executive Secretary, People's Lobby, Inc.) 

Low-rent housing and low-priced homes are not practical with the present 
sj'stem of taxing buildings at the same rate as land values; with construction 
workers on an hour or day wage rate, instead of an annual wage; with present 
methods of financing and insurance; and with present monopoly control of building 

Dr. Harold M. Groves, formerly tax consultant in the Treasury Department, 
correctly stated years ago, about the general property tax: 

"As a levy on urban land it is defensible, and there is not much danger of its 
becoming excessive. As a tax upon urban improvements it represents a heavy 
load upon shelter, a necessity of life, which would be expensive enough without 
this extra burden. 

"It seems odd that we should have singled out for especially heavy taxation, 
under the property tax, an interest we now seek to subsidize as 'low-cost housing.' " 

The assessed value of a small home is usually three to four times that of its site, 
and a similar ratio holds for many apartments, which means an embargo on 
adequate housing at low cost. 

Substitution of an annual wage in building construction for hour or day wage 
rates cannot be achieved over night but could be made a condition of Federal aid 
to housing either as loans or grants. 

Financing of housing should be subject to Federal control and should not permit 
second mortgages. 

Before Congress lets fire insurance lapse into unexercised State supervision, it 
should at least establish standards for such supervision and ensure its exercise. 

This committee might appropriately ask Judge Thurman Arnold to resign his 
Federal judgeship and get him restored to his earlier brilliant task in the Depart- 
ment of Justice, enforcing the antitrust laws against combinations of manufac- 
turers and distributors of building materials and supplies. 

The fact cannot be too strongly emphasized that the 2 or 3 years, at least, 
following the end of the war will bring us our humanity uprooted — with millions 
of returned soldiers and workers let out of war industries. 

If Government permits establishment of new enterprises at whim, housing will 
be verj' difficult. 

Logically, housing follows employment; and not employment, housing. 

Major provision of urban housing must await determination by Congress 
whether it will insist upon orderly planning of production after the war or housing 
is to be a camp follower of private irresponsibility. 

The middle way has gone out of the window for a long time. 


The American Bankers Association, 

Washington, D. C, February 21, 1945. 
Hon. Robert A. Taft, 

Chairman, Subcommittee on Housing and Urban Redevelopment, 
Conunittee on Post-War Economic Policy and Planning, 

Washington, D. C. 
Dear Senator Taft: I transmit herewith on behalf of the American Bankers 
Association a memorandum setting forth the part which banking institutions have 
played in the financing of home ownership in the past and their ability to meet the 
needs for such financing in the post-war years. The memorandum also contains 
certain observations with respect to a public housing program in the post-war 
period, particularly with relation to the inflationary aspects of such a program. 

We hope that this memorandum may be made a part of the record of the hearings 
before your committee and that it will receive consideration in connection with 
any recommendations which your committee may make. 
Sincerely yours, 

F. G. Addison, Jr., 
Chairman, Committee on Federal Legislation. 

Memorandum From the American Bankers Association to the Senate 
Subcommittee on Housing and Urban Redevelopment 


The making of mortgage loans has always been an important function of banks. 
State-chartered commercial and mutual savings banks have been actively engaged 
in making mortgage loans for more than a hundred years. This is a natural 
function of banks, in view of the large volumes of savings funds which they hold. 

The amount of savings and time deposits held by national banks. State-chartered 
commercial banks and mutual savings banks, from 1910 to 1944, is shown in the 
attached table No. 1. These funds totaled in 1944 nearly $34,000,000,000 and 
each type of institution held in excess of $10,000,000,000. 

The major portion of these deposits belong to the thrify common people in the 
local communities in which these institutions operate. Little by little they have 
managed by frugality and prudence to accumulate these reserves. Half of the 
accounts have balances of less than $150. Thus, the banks are and have been the 
custodians of a major portion of the savings funds of the American people. 

A considerable portion of these savings funds is invested in mortgages on real 
estate, principally on homes. Table No. 2 indicates the volume of mortgage 
loans held in the portfolios of banks, by types, from 1910 to 1944. During all 
these years the funds invested in mortgages have represented from 20 to 40 percent 
of the savings funds held by banks. 

A survey made in 1940, the last year prior to the war, revealed that 5,001 com- 
mercial banks and 294 mutual savings banks made a total of 308,818 new mortgage 
loans in an amount in excess of $1,157,000,000. 

In 1944 savings and time deposits in banks had reached almost $34,000,000,000. 
Approximately 60 percent of these deposits, or, in round numbers, $20,000,000,000, 
are available for investment in mortgage loans. Thus, the banks are in a position 
to extend credit in the post-war period to encourage, so far as it may be sound 
to do so, the building and ownership of homes in almost every county in the 
United States. 


With respect to a public housing program in the post-war period, the following 
observations, which repeatedly occurred in testimony before the Subcommittee 
on Post-War Housing and Urban Redevelopment, should be emphasized: 

(1) The major task of providing homes in the post-war period, and especially 
the encouraging of widespread home ownership, is a responsibility that must be 
discharged through the usual channels of private enterprise. A public housing 
program should supplement rather than compete with this responsibility of private 



(2) The primary responsibility for the elimination of slums and the improve- 
ment of housing conditions for the lowest-income groups must progressively be 
assumed by local and State governments. The responsibility of the Federal 
Government should consist primarily in assisting and supplementing the efforts 
of local and State governmental bodies. 

(3) In view of the unprecedented size of the Federal Government debt and the 
probable demands which will be made upon the building industry in the imme- 
diate post-war years, the volume of funds made available by the Federal Govern- 
ment for public housing purposes should be given most careful consideration. If 
a program of building public housing of any considerable magnitude should be 
undertaken primarily through the use of Federal funds, a double pressure would 
be exerted in an inflationary direction. Additional Government debt would fur- 
ther expand credit, and additional demands would be created for both labor and 
materials for building purposes at a time when the resources of the building indus- 
try will probably be taxed to capacity. 

The rise in prices of real estate is already giving considerable concern. Any 
upward trends in the cost of building in the post-war years will increase this 
tendency of real-estate prices to rise. 

Demands for the product of the building industry will extend throughout the 
economy in the post-war period. The timing of a program of construction of 
public housing is, therefore, important if it is to be conducted so as to supplement 
rather than compete with private building and avoid an inflationary effect upon 
the markets. 

Savings and other time deposits in banks, continental United States, 1910 to 1944 

Savings and other time deposits 

All banks 

Mutual savings 

State, etc., banks 

National banks 

On or about June 30— 

$6, 835, 000, 000 

7, 963, 000, 000 

8. 404, 000, 000 
8, 548, 000, 000 
8, 712, 000. 000 

8. 807, 000. 000 

9, 4.59, 000. 000 

10. 876, 000, OCO 

11, 535. 000. 000 
13, 040, 000, 000 
15, 189, 000, 000 
23, 134. 000, 000 
24, 696, 000, 000 
26. 091, 000, 000 
28, 413, 000, 000 
28, 479, 000, 000 
28. 220, 000, 000 
24, 281, 000, 000 
21, 126, 000, 000 

21, 753, 000, 000 

22, 614, 000, 000 

23, 464, 000, 000 

24, 492, 000, 000 

24, 626, 000, 000 
25, 081, 000, 000 

25, 750, 000, 000 

26, 149, 000, 000 
25, 487, 000, 000 
28, 775, 000, 000 
33, 795, 000, 000 

$1, 014, 000. 000 
1, 480, 000, 000 
1, 536, 000, 000 
1, 369, 000, 000 
1, 454, 000, 000 

1, 321, 000, 000 

2, 173 000 000 


$3, 459, OCO, 000 
3, 609, 000. 000 
3, 812, 000, 000 
3, 910, 000, 000 

3, 945, 000, 000 
4, 102, 000, 000 

4, 339, 000, 000 
4, 382. 000. OCO 

4, 732. 000, 000 

5. 058. 000, 000 
5, 568, 000. 000 

5, 818, 000, 000 

6. 273, 000, 000 

6, 693, 000, 000 
7, 152, 000. 000 

7, 525, 000, 000 
8. 040, 000, 000 

8, 668. 000, 000 

8, 904, 000, 000 

9, 206, 000. 000 
10, 034, 000, 000 
10. 040, 000, 000 

9, 760, 000, 000 
9, 803, 000, 000 
9, 872, 000, 000 
10, 010. 000, 000 
10, 385, 000, 000 
10, 584, 000, 000 
12, 468, 000, 000 

$3, 024, 000, 000 
3, 260, 000, 000 
3, 368, 000, 000 

3, 348, 000, 000 

4, 364, 000, 000 

5, 532. 000, 000 

6, 668. 000. 000 

7, 255, 000, 000 

7, 687, 000, 000 

8, 767, 000, 000 

9, 337, 000. 000 
10, 993, 000, 000 
10, 963, 000, 000 

7, 283, 000, 000 
5, 453, 000, 000 
5, 452, 000, 000 

5, 873, 000, 000 

6, 265, 000. 000 
6, 794, 000, 000 

6, 876. 000, 000 

7, 003, 000, 000 
7, 272, 000, 000 
7, 494, 000, 000 

7, 294, 000, 000 

8, 405. 000, 000 
10, 082, 000, 000 








2, 336. 000, 000 



2, 776. 000, 000 
3, 463, 000, 000 


3, 677 000 000 


1923 - -- . 

4, 074, 000, 000 
4 686 000 000 


5, 158 000 000 


5, 810. 000, 000 

1926 . . . 

6, 178 000 000 


7, 088, 000, 000 


8 050 000 000 


1930 . 

7, 889, 000, 000 

8, 097, 000, 000 
8, 045, 000, 000 
6, 958, 000, 000 








5, 912. 000, 000 

6, 498, 000. 000 
6, 869, 000, 000 
7,534,000 000 


7, 599, 000, 000 


7 693 000 000 


7, 894, 000, 000 
8 053 000,000 


1942 . 

7, 842, 000, 000 


9 229 000 000 


11, 304, 000, 000 

Source: American Bankers' Association, report on savings deposits and depositors, and annual reports of 
the Comptroller of the Currency. 



Real-estate loans by type of security, by cla'ises of banks, 1939~44 
|In thousands of dollars) 


Total— all banks 





National banks 





Dec. 31, 1039 
June 29, 1940 
Dec. 31, 1941 
Dec 31, 1942 
Dec. 31, 1943 
June 30, 1944 

9,101,693 7,44.5,094 

, 257, 868 
, 373, 003 
, 998, 273 

7, 582, 928 
8, 049, 827 
7, 905, 090 
7, 616, 389 

582, 108 
597. 102 
576, 423 
495, 406 
466, 985 


1, 077, 838 


972, 507 

857, 691 

1, 910, 204 
2, 002, 852 
2, 255, 408 
2, 187, 264 
2, 070, 828 
2, 038, 770 

1, 215, 490 
1, 551, 543 
1, 577, 809 
1, ,546, 794 

232, 126 
234, 456 
222, 813 
197, 252 
173, 770 

462, 588 
485, 927 
481. 052 
350, 264 


State (commercial) banks 





Mutual savings banks 





Dec. 31, 19.39 

June 29, 1940 

Dec. 31, 1941 

Dec. 31, 1942 

Dec. 31, 1943 

June 30, 1944 

2, 353, 348 
2, 648, 233 
2, 556, 836 
2, 447, 717 
2, 40S, 132 

1, 453. 437 
1, 738, 746 
1, 752, 600 
1, 707, 729 

336, 923 
348, 881 
292, 398 
288, 754 

562, 988 
554, 124 
566, 768 
451, 234 

4, 834, 663 
4, 626, 620 
4, 349, 063 

4, 774, 359 
4, 783, 724 
4, 757, 873 
4, 573, 521 

12, 738 

48, 717 
37, 651 
43, 845 
56, 052 


Private banks 





Dec. 31, 1939 
June 29, 1940 
Dec. 31, 1941 
Dec. 31, 1942 
Dec. 31, 1943 
June 30, 1944 

2, 239 




Real-estate loans of all active banks in the United States and possessions, by classes^ 


[In thousands of dollars] 


State (commercial) banks 

Total Farm Other 

Mutual savings banks 

Total Farm Other 

Private banks 

Total Farm Other 

June 4, 
June 23 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 30 
June 29 
June 30 
Dec. 31 
Dec. 31 
Dec. 31 
June 30 

, 1915 
, 1922 
, 1927 
, 1930 
, 1931 
, 1932 
, 1933 
, 1934 
, 1935 
, 1936 
, 1937 
, 1938 
, 1939 
, 1940 
, 1941 
, 1941 
, 1942 
, 1943 
, 1944 

620, 100 
732, 800 
139, 718 
878, 334 
443, 919 
813, 572 
424, 372 

555, 429 
293, 486 
132. 736 
120, 871 
187, 196 
252, 830 
275, 057 
418, 114 
590, 981 
648, 233 

556, 836 
447, 717 
408, 132 

544, 200 
200, 815 
67, 790 
107. 884 
134, 9ti0 
195, 840 
128, 513 
389, 622 
302, 982 
329, 361 
336, 063 
348, 881 
352, 181 
342, 719 
292, 398 
288, 754 

1, 188, 600 
2, 938, 903 

2, 810, 544 

3, 336, 035 
2, 678, 582 
2, 228, 532 
1, 903, 864 
1, 872, 524 
1, 923, 469 

1, 938, 994 

2, 069, 233 
2, 238, 800 
2, 305, 514 
2, 064, 438 
2, 158, 963 

1, 914, 200 

77, 300 

1, 836, 900 

35, 200 
26, 500 

16, 100 

5, 517, 503 
5, 730, 642 
5, 895, 095 
5, 742, 153 
5, 528, 534 
5, 240, 255 
4, 903, 835 
4, 831, 263 
4, 808, 020 
4, 834, 603 
4, 626, 620 
4, 420, 312 
4, 349, 003 

34, 386 
88, 781 
39, 155 
42, 782 
39, 048 
36, 327 
13, 242 
13, 288 
15, 051 
10, 45S 
4, 805 

1, 897, 472 
5, 516, 904 
5, 729, 525 
5, 883, 609 
5, 707, 767 
5, 439, 753 
5, 201, 100 
4, 977, 744 
4, 864, 787 
4, 794, 936 
4, 794, 778 
4, 821, 375 
4, 843, 262 
4, 621, 185 


7, 281 
2, 239 

8, 798 

















10, 40a 

1, 746 

Source: Annual reports of the Comptroller of the Currency. 



Real-estate loans of all active banks in the United States and possessions, by classes, 

1913-44— Continued 

[In thousands of dollars] 


Total, all banks 


National banks 




June 4, 1913 

June 23, 1915 

June 30, 1922 

June 30, 1927_ 

June 30, 1930 

June 30, 1931 

June 30, 1932 

June 30, 1933 

June 30, 1934 

June 30, 1935 

June 30, 1936 

June 30, 1937 

June 30, 1938 

June 30, 1939 

June 29. 1940 

June 30, 1941 

Dec. 31. 1941 

Dec. 31. 1942 

Deo. 31, 1943 

June 30, 1944 

547, 700 
824, 100 
445, 710 
136, 918 
941, 644 
627, 534 
676, 591 
515, 708 
932, 452 
257, 868 
633, 305 
718, 071 
373, 003 
941, 065 
998, 273 

662, 800 
377, 241 
409, 345 
443, 472 
607, 876 
425. 559 

568. 553 
556, 999 

569, 733 
587, 989 
579, 765 
597, 102 
576, 423 
495, 406 
466, 985 

10, 036, 365 
9, 693, 446 
9, 433, 768 
8, 445, 913 

7, 958, 709' 
8, 334, 687 

8, 660, 766 
8, 877, 597 
8, 474, 080 

76, 800 
150, 600 

25, 200 

1, 062, 525 
1, 473, 001 

1, 585, 423 
1, 326, 776 
1, 330, 750 
2, 002. 852 

2, 255, 408 
2, 187, 264 
2, 070, 828 
2, 038. 770 

305, 209 
296, 970 
304, 824 
299, 794 
262, 255 
232, 736 
210, 341 
21.5, 188 
229, 994 
234, 456 
233, 956 
197, 252 
173, 770 

125, 400 

757, 316 
1, 599, 169 
2, 032, 595 
1, 990, 012 
1, 897, 058 

National Housing Agency, 
Federal Public Housing Authority, 

Washington, February 16, 1945. 
Hon. Robert A. Taft, 

United States Senate, WashingtoJi, D. C. 
Dear Senator Taft: In accordance with your request made at the recent 
hearings of the Subcommittee on Housing and Urban Redevelopment, I am send- 
ing you a statement on the additional cost of low-rent projects built on slumsites 
as compared with vacant sites. 

We were also requested to submit a list and a map showing the location of all 
of the public housing under the Federal Public Housing Authority. This list has 
just been completed and I am enclosing a copy. We are working' on the map and 
will let you have it as quickly as it can be completed. 
Sincerely yours, 

Philip M. Klutznick, Commissioner. 

Statement of Additional Cost of Low-Rent Projects Built on Slum 
Sites as Compared With Vacant Sites 

The additional cost of low-rent projects when built on slum sites instead of 
vacant sites is due primarily to higher site costs. This difference in site costs 
results in part from the amounts paid for the existing slum buildings and from 
the cost of demolishing them, and in part from the higher prices per acre which 
must be paid for the land itself. 

_ Local authorities have generally built a larger number of units per acre on slum 
sites than on vacant sites, due to the higher cost of the slum sites and to a feeling 
that a somewhat denser development is appropriate on inlying sites. Because of 
the difference in density on slum sites and on vacant sites a fair comparison must 
be made on the basis of cost per new dwelling rather than on cost per acre. 

The cost per new dwelling of slum sites, including demolition and old buildings 
is, of course, much higher than the cost of vacant land. It is, however, partly 
offset by savings due to the reuse of all or a part of existing site improvements 
such as streets, sewers, water lines, etc. A fair estimate of the additional cost of 
using slum sites is therefore the difference between the actual cost per unit of the 
slum site and site improvements, and the amount which a vacant site and im- 
provements would have cost for the same project. ^ 

For low-rent projects built on vacant sites the actual costs of site acquisition 
and site improvements as a percent of total development cost are shown in the 
following table for cities of various sizes. 



Site acquisition and site improvement as percent of total development cost for low-rent 

projects on vacant sites 

City sizes 

Site acqui- 

Site im- 

Site acqui- 
sition and 

Less than 25,000.. 

25,000 to 50,000 

50,000 to 100,000... 
100,000 to 250,000. _ 
250,000 to 500,000.. 
500,000 and over. __ 

All city sizes 







The average of 15.1 percent for all low-rent projects built on vacant .sites com- 
pares with approximately 12 percent as the valuation p'aced on improved sites 
in large-scale projects insured by Federal Housing Administration, and 13 percent 
and 11 percent as the valuation of improved sites for new one- to four-family 
houses insured by Federal Housing Admini.stration inside of and outiside of metro- 
politan areas, respectively. The somewhat larger percent in public low-rent pro- 
jects is accounted for primarily by the fact that these projects generally install 
complete utility distribution systems in order to permit the purchase of electricity, 
gas, etc., at wholesale rates. 

As a basis for the present study it is assumed that for projects on vacant sites 
15 percent of total development cost is a fair estimate of the cost of site acquisi- 
tion and improvements irrespective of city size. On this basis site acquisition 
and improvement amounts to 17.6 percent of the remaining elements of develop- 
ment cost. For a project built on a slum site, 17.6 percent of the actual costs 
excluding site acquisition and improvement will therefore constitute a fair esti- 
mate of what site acquisition and improvement would have cost had a vacant 
site been used. The difference between this figure and the actual cost of site 
acquisition and improvement will then represent the additional cost for the use 
of a slum site instead of vacant site. 

The additional cost thus computed for low-rent projects built on slum sites is 
shown on the attached table. The average additional cost in all city sizes was 
$800 per new dwelling unit. This varied from $330 in cities below 250,000 up to 
$969 in cities of over "^500, 000. 

It should be pointed out that these figures are somewhat less than the addi- 
tional costs which are apt to be incurred in an enlarged program of slum clearance 
and redevelopment, for two reasons: 

(1) In the program already completed, local authorities sought out the very 
cheapest slums which they could acquire, in order to keep down costs. Further 
acquisitions in slum areas are apt to be more costly. 

(2) In the present program the costs properly chargeable to slum clearance 
were of necessity included in the cost of low-rent housing. In order to keep down 
the unit cost of their projects, local authorities frequently crowded too many units 
onto the sites of former slums. One of the purposes of giving separate subsidies 
for slum clearance and for low-rent housing would be to free local authorities from 
the necessity of overdense redevelopment of cleared sites. It is therefore to be 
expected that projects aided in part by a slum-clearance program will be built at 
lower densities which will, of course, entail an increase in the unit cost attribut- 
able to slum clearance. 

Philip M. Klutznick, 
Commissioner, Federal Public Housing Authority. 
February 17. 1945. 


Additional cost per dwelling unit for use of slum sites instead of vacant sites 

Additional cost per dwelling 

Percent distribution of number of new units, by additional cost and by- 
city size 

All city 

Less than 





and over 

to $200 

$200 to $400 -.. 

$400 to $600 

$600 to $800-, 

$800 to $1,000-- 

$1,000 to $1,200 

$1,200 to $1,400 

$1,400 and over 

Total -._ 

Average additional cost per 
dwelling unit 













National League of Women Voters, 

Washington, D. C, February 7, 1945. 
Hon. RoBEET A. Taft, 

Senate Office Building, Washington, D. C. 
Dear Senator: In view of the expansion of the discussion in the hearings of 
the Senate Subcommittee on Post- War Housing to include problems of adminis- 
tration, we will appreciate your including the enclosed statement in the record to 
present the interest of the National League of Women Voters. 
Sincerely yours, 

Anna Lord Strauss, President. 

Statement of the National League of Women Voters, Washington, D, C, 
TO the Taft Subcommittee on Post-War Housing 

The National League of Women Voters has for many years been concerned with 
government in the public interest. We are perhaps the only one of the national 
women's organizations which has studied and become familiar with principles of 
public administration, so we are in an informed position from which to look at the 
administrative structure for the housing functions of the Federal Government at 
the close of the war. 

The National Housing Agency created in February 1942 has coordinated the 
activities of the 17 different agencies which had been dealing with housing problems 
at the start of the war. Up to this time there had been frictions and competition 
which seriously weakened the effectiveness of the total program. Housing is a 
national problem, and it is important that a unified approach be made to its 
solution. Each of the functions of the 17 agencies, while varying in their 
emphasis, had as their objective the improvement of the American housing situa- 
tion. The coordination, however, made it possible for all the housing policies of 
the Federal Government to form a pattern for the orderly achievement of this 
objective. The National Housing Agency is of wartime duration only. Unless 
legislation makes it permanent before the close of the war, the gains which unifica- 
tion has made possible will be discontinued. 

The League of Women Voters strongly believes that the duplication of effort 
and the clear lack of any central responsibility , which would result from separating 
the housing functions, is not in the public interest. Some who oppose continuing 
the National Housing Agency seem to believe that to abolish the agency will 
mean the end of Federal housing activities. They are opposed to public housing, 
and think this is a good way to weaken Government participation. The fears of 
these opponents, however, do not seem to be well grounded. The reports of the 
National Housing Agency have all indicated a desire to strengthen private 
housing in this country. It would seem wiser to continue this agency, therefore, 

91183— 45— pt. 15 11 


than to subject the housing industry to the uncoordinated influence of different 
agencies and conflicting policies. The advantages of a central place to pin 
responsibility are well proved. There should be a clear channel through which 
Congress could deal with housing, and an equally clear pattern for the relations 
between housing and the Executive. Regardless of one's position on the public 
versus private housing question, the need for a well-administered Federal program 
is obvious. The confusion, overlapping, and antangonisms which competing 
agencies foster are an unwarranted waste of the people's tax moneys. 

Department of Labor, 
Washington, August 18, 1944- 
Hon. Robert A. Taft, 

Chairman, Subcommittee on Housing and Urban Redevelopment, Senate 
Special Committee on Post-War Economic Policy and Planning, 
United States Senate, Washington, D. C. 
Dear Senator Taft: In accordance with the request in your letter of June 6, 
I take pleasure in submitting to you the enclosed report dealing with aspects of 
the post-war housing problem. 

The sections of the report entitled "Housing in Relation to Income," "Disposi- 
tion of War Housing," and "Housing in the Community" were prepared by the 
Cost of Living Division of the Bureau of Labor Statistics. All other sections of 
the report were prepared in the Division of Construction and Public Emploj^ment 
of that Bureau. 

If you desire any further information from the Department supplementary to 
the materials contained in this report I shall be pleased to hear from you. 

The Bureau of the Budget advises that "there would be no objection to the 
submission of the proposed report to the committee with the understanding that 
no commitment would thereby be made as to the relationship to the program of the 
President of each and every one of the recommendations contained therein." 
Sincerely yours, 

Frances Perkins. 


The Roll of Private Residential Construction in the National Economy 

annual volume of private residental construction 

Em.ploym.ent possibilities 

Before the war and the accompanying military, naval, and industrial expansion 
that it necessitated, no other type of construction accounted, year by year, for 
so large a share of the building dollar as housing. In good times private residential 
building ' is responsible for between two-fifths and one-half of all expenditures for 
construction. Even in lean years the proportion has never dropped below one- 
fifth of the total. 

Employment on the site of new privately financed nonfarm housing projects 
over the past three and one-half decades has ranged all the way from nearly a 
million workers in the housing boom of 1925 and 1926 to only about 100,000 under 
the artificial restraints of wartime conservation during 1943. At most, on-site 
private residential construction has accounted for 3.6 percent of total nonagri- 
cultural employment; this was true in the twenties. Most of the time, however, 
house building" has provided directly between 1 and 2.5 percent of all nonagri- 
cultural jobs and the proportion has hovered between 1 and 1.5 percent in the 
recent pre-war years, 1936-40. During these years such important industrial 
groups as stone, clay, and glass products and lumber and timber products ac- 
counted respectively for 1.1 and 1.5 percent of the nonagricultural employment 
total, very near the 1.3 percent average for on-site residential construction. 

But because of the many industries producing the materials and fabricated 
components that make up the completed house — lumber, iron and steel, cement, 
lime, brick, stone, glass, heating equipment, and a multitude of others — the man- 
hours of employment required off the site of construction are actually greater 
than the man-hours required on the site. For the annual average of about 
377,000 workers required at the site of new private residential construction 

1 Includes major additions, alterations, and repairs and covers farm and nonfarm construction. 


between 1936 and 1940, 453,000 were needed off-site to extract, process, fabri- 
cate, and transport the needed construction materials and in administration. It 
is essential, therefore, in estimating the employment flowing from residential 
construction to consider those indirectly as well as those directly employed. 

Estimates ^ made by the Bureau of Labor Statistics covering the period 1909-43 
show that except in the depressed years after World War I and in the thirt'es 
and during the war years 1917-18 and 1942-43, new residential building has 
directly and indirectly accounted for the employment of upward of a million 
workers and in the twentips for considerably over 2,000,000. Between 1936 
and 1940, in fact, house building required, on-site and off-site, about 2.8 percent 
of all nonagricultural workers, considerably more than the stone, clay, and glass 
and the lumber and timber industry groups or the automobile industry, though 
not as much as iron and steel or textiles. In 1929, however, direct and indirect 
employment on residential construction exceeded even the latter and it is likely 
that this was true in the twenties as well. 

On-site and off-site employment together, however, still do not measure fully 
the total amount of employment that flows from residential building. Such 
building affects directly the market for a wide variety of producers and con- 
sumers' goods. For example, new homes frequently mean the purchase of com- 
pletely or almost entirely new interiors from carpeting and furniture to kitchen 
utensils. With every new house built and sold there is demand also for new 
garden tools, storm windows, galvanized pails, fencing, porch chairs, and numer- 
ous other items that are part and parcel of owning and maintaining a house. 
Few occupants of a new residential unit or new house refrain from buying some 
new furnishings — perhaps curtains, a rug, a chair, bedspreads. The effect of 
this area of consumption on employment in the durable and nondurable goods 
industries and on the trade and service industries as well cannot be measured 
directly, but the Bureau's study of consumer purchases made in 1941 shows 
that in that year, the average amount of expenditures made by new home owners 
for home furnishings and equipment was more than twice as much as those made 
by all the other families in the survey. 

Active residential building commonly means use of outlying land, with resultant 
need also for schools, stores, and churches, and for streets, sidewalks, and facilities 
for water, sewer, electric, gas, and telephone service. When current obstacles 
to redevelopment of blighted areas are overcome, in many cases extensive non- 
residential improvements within those areas will likewise be needed to fit the 
new uses of the land. 

Not to be overlooked, in addition, is the fact that the more building trades- 
workers employed, the more money building puts immediately into circulation. 

Finally, residential construction is one of the prime movers in the economy. 
While purchase of clothing and other semidurable and nondurable consumer 
goods is largely a function of current consumer income, purchase of a new resi- 
dence — a costly consumer durable good — calls for credit expansion and utiliza- 
tion of savings. For these reasons residential construction may be a generator 
of increased consumer expenditures and cause for a rising level of general business 

Fluctuations and their ejects 

It is obvious from a review of the foregoing analysis that when residential 
construction falls off, credit tends to contract and consumer expenditures tend to 
decline. With the falling off in residential construction not only is employment 
in the construction industry adversely affected, but also employment in a wide 
variety of durable and nondurable goods industries and in the trades and services. 
It is of utmost importance, therefore, that it be pointed out that of all kinds of 
construction, residential building fluctuates the most violently with the times. 
In 1925 about 700,000 more construction site workers on new residences were 
employed than in 1920, but by 1933 and 1934, 875,000 had been let go. It is not 
unusual for this section of the construction industry to show between one year 
and the next employment fluctuations of 100,000 workers and at times 200,000. 
Curtailment between 1941 and 1942 reduced employment on residential building 
by considerably over 300,000 workers. It is especially significant that over the 
years 1929-33, from the break to the depths of the great depression, whereas total 
nonagricultural employment fell off a fourth, site employment on new private 
residential construction decreased by as much as five-sixths. 

Employment on residential building fluctuates more than total nonagricultural 
employment. In prosperous peacetime years it comprises a much greater propor- 
tion of all new construction employment and of total nonagricultural employment 

» See table 3. 



than in depression years. In bad times residential construction employment tends 
to fall off more than other nonagricultural employment. Whereas employment 
on the site of residential building decreased from 2.2 to 0.4 percent of total non- 
agricultural employment between 1929 and 1934, employment on textile mill 
products increased from 3.8 to 4.5 percent of the nonagricultural total, automobile 
manufacture remained the same at 1.7 percent, and iron and steel and stone, clay, 
and glass lost only three-tenths of a percental point, dropping respectively, from 
3.9 to 3.6 and from 1.3 to 1.0. 

Analysis of these extreme fluctuations in residential building employment and 
of the importance of residential building in the national economy leads inevitably 
to the conclusion that the extremes experienced in the past will have to be kept 
within limits and comparative stabilization introduced in order to prevent serious 
derangement to a large part of the industrial structure. 

Actually, the wide fluctuations in residential construction, not only from period 
to period, but from year to year, and even from season to season, reveal strikingly 
the capacity and flexibility of the industry, features that can be capitalized upon 
in the post-war period for achieving steady, full employment. But it should be 
cautioned that construction employment, though considerable, is but a fraction of 
total employment, and though its ramifications in the national economy are 
extensive, it cannot be looked upon as a panacea through which alone the rough 
going of reconversion can be smoothed and full employment may be achieved. 

Table 1. — Construction expenditures in continental United States, 1915 to 1943 * ' 

[Millions of dollarsl 

Function and ownership 


Private construction 

Public construction 



farm) 3 









Other public 


































































4, 158 

















































1, 656 





















9, 572 














10, 476 










1, 056 




















4, 289 











1928 - - 

10, 803 














10, 668 

8, 257 





































1, 323 




3, 578 











































3 542 















5, 119 





























































5, 053 














11, 163 









1. 543 





1942 - 

1943 - 

13 486 







10, 372 





















1 The estimates include expenditures for new construction and major additions and alterations, but 
exclude except for farm construction, expenditures for maintenance and work-relief construction. 

a Estimates from 1915 through 1938, except for farm construction, from Bureau of Foreign and Domestic 
Commerce series Construction Activity in Continental United States. 

3 Includes major additions, alterations, and repairs. , ,^ „ , . • i^ , -o ,-„„ rr « 

4 Farm construction from 1915 through 1941 estimated by Bureau of Agricultural Economics, U. S. 
Department of Agriculture. ... ■ ^ 

5 Mainly river, harbor, flood-control, reclamation, and power projects. 

« Includes water-supply, sewage-disposal, and miscellaneous public-service enterprises. 

Source: Bureau of Labor Statistics, Construction and Public Employment Division. 



Table 2. — Expenditures for private residential construction as a percent of all 
construction expenditures, 1915-43 ' 


All construc- 
tion expendi- 

Private residential con- 
struction expenditures 


All construc- 
tion expendi- 

Private residential con- 
struction expenditures 




















$3, 136, 000, 000 

3, 677, 000, 000 

4, 420, 000, 000 
5, 015, 000, 000 
6, 121, 000, 000 
6, 310, 000, 000 

5, 640, 000, 000 

8, 684, 000, 000 

9, 572, 000, 000 
10, 476, 000, 000 
10, 803, 000. 000 
10, 668, 000, 000 

$1, 185, 000, 000 
1, 355, 000, 000 
1, 240, 000. 000 
1, 030. 000. 000 
1, 995, 000, 000 
1, 964, 000, 000 
1, 929. 000. 000 
3, 035, 000, 000 
4, 029, 000. 000 
4, 559, 000. 000 
4, 846, 000, 000 
4, 845, 000, 000 
4, 576. 000. 000 
4, 239, 000. 000 
3, 845, 000, 000 









1937 - 







$8, 398, 000, 000 
6, 347, 000, 000 
3, 578, 000, 000 

2. 485. 000. 000 

3, 070, 000, 000 
3, 542, 000, 000 
5, 119, 000, 000 
5, 833, 000, 000 

5, 475, 000. 000 

6, 850. 000, 000 

7, 602, 000, 000 
13, 486, 000, 000 

7, 764, 000, 000 

$1, 989, 000, 000 

1. 588, 000, 000 

707, 000, 000 

508, 000, 000 


1, 088, 000, 000 

1, 558, 000, 000 

1, 878, 000, 000 

1, 964, 000, 000 

2, 641, 000, 000 


3, 391, 000, 000 

1, 656, 000, 000 



1 Includes major additions, alterations, and repairs, and covers farm and nonfarm construction. 
Source: Bureau of Labor Statistics, Construction and Public Employment Division. 

Table 3. — Estimated on-site and off-site employment on new private residential 
building compared with total nonagricuUural employment, 1909-43 

Number of persons employed 

Percent of nonagricultural employ- 
ment attributed to new private 
residential building 


In nonagri- 

ments 1 

New private residential building 



on-site > 



Off-site ' 


20, 339, OCO 
20, 803. OCO 

22, 230, OCO 
21, 355, COO 

21, 533, 000 

23, 939, OCO 
26, 109, OCO 
26, 109, 000 
35. 661, COO 

25, 651, OCO 

21, 798, OCO 

24, 024, OCO 
26, 953. OCO 

26, 323, OCO 

27, 780, OCO 

28, 855, COO 

28, 788, OCO 

29, 327, OCO 
31, 045, OCO 
28, 903, OCO 
26, 123, COO 

22, 950, 000 
23, 078, COO 
25, 454, OCO 
26, 628, OCO 
28, 832, OCO 

30, 600. 000 
28, 756, OCO 

30, 353, OCO 

31, 784, OCO 
35, 668, 000 

38, 447, OCO 

39, 728, 000 

1, 4C8, OtO 

1, 430, OCO 


1, 375, OCO 




1.091, ceo 

693, OCO 

406, OCO 

978, OCO 

753, COO 

1,062, OCO 

1, 759. COO 

2, 396, OCO 
2, 509, OCO 
2, 473, OCO 
2, 279, COO 
1,694, ceo 

983, OCO 
778. 000 
567, OCO 
251, OCO 
255. OCO 
438, OCO 
657, 000 
713, OCO 
804, 000 
948, 000 
1, 029, ceo 
1, 073, 000 
193, 000 

518, 000 
527, 000 

458, 000 
520, OCO 
486, 000 

459, COO 
423, OCO 
253, OCO 
169, 000 
369, 000 
284, 000 
082, OCO 
807, 000 
934, 000 
989, 000 
983, 000 
937, 000 
865, OCO 
696, COO 
338, 000 
207, 000 
109, 000 
196, OCO 
291, OCO 
309, 000 
371, 000 
429, 000 
483, 000 
529, 000 
223, 000 

99, 000 

890, 000 

903, 000 


855, COO 

799, 000 

757. 000 

703, 000 

668, OCO 

440, 000 

297, 000 

609, 000 

469, 000 

. 650,000 

1, 077, 000 

1, 278, 000 

1, 462. 000 

1, 520, 000 

1, 490, OCO 

1, 342, 000 

1, 246, 000 

998. OCO 

584. 000 

440. 000 

260, OCO 

136, 000 

146, 000 

242, 000 

366. 000 

404, 000 

433, 000 


546, 000 

644, 000 

208, 000 

94, 000 











































1930 . . 

















1939 - . 










1 Preliminary. Excludes proprietors, self-employed persons, domestic servants, and personnel of the 
armed services. 

' Includes employment involved Ln extraction, processing, fabricating, and transporting construction 
materials and in administration. 

Source: Bureau of Labor Statistics, Construction and Public Employment Division and Occupational 
Outlook Division. 




II.2 £! = 2 o> <o N. 

(0 m 4 

10 CM _ 




2 3 .1 




!^ ill 






s III 





!S 5ol 



in %i\\ 

0) Ju;0 










0} 1 

i ■ 












_i a. 




2 : 


O) 1 

a i 










s i 





















s ! 



UJ 1 









% 2 1 




s if 





<j> gg 






3:^(0 * CM CO (0 * 

CM * 

«© 'T CM 6» 

^»CM CM CM CM — — — 

_■ - 

000 03 

















2 — 









1 UJ 






















Wholesale prices, building costs, and the price of houses 

It has frequently been reasoned that if the prices of building materials were 
lower and moved more readily A\ith the times, houses would be cheaper, more 
people could buy new houses or live in them, more houses could then be built, and 
consequently the building industry and the country as a whole would benefit. 
Actually, there appears to be no simple carry-over from low prices of building 
materials alone to prices of new houses inexpensive enough to satisfy the heavy 
potential demand in the low-income groups. 

Building materials account for about 40 percent of the cost to purchaser of a 
medium-priced house. A reduction as large as 20 percent in the prices of these 
materials would result in a decrease of 8 percent in the cost of this house. (Such 
a reduction would, for example, reduce the cost of a standard six-room house from 
$6,000 to $5,520). If labor costs, which account for about 27 percent of cost to 
purchaser, were also cut 20 percent, the combined effect of the 20 percent reduc- 
tion in labor and material costs would be a drop of about 13 percent, and the cost 
of the $6,000 house would fall to $5,220. This, of course, is a substantial reduction, 
which would be likely to affect the volume and nature of new construction, 
especially in times of reasonably high business activity. However, it would not 
lower over-all costs sufficiently to reach the bulk of low-income families. Though 
the cost of houses to the consumer depends on the prices of building materials and 
of labor, these prices and their effect on total costs are determined basically by the 
design of the house, the amount and kinds of materials that are used, and the 
efficiency of construction. When designs are developed that require less hand 
workmanship and fewer and less costly materials distributed through less costly 
channels, we shall see a cheaper house and one not necessarily less adequate than 
its predecessors. 

How ever, it is extremely important to distinguish between changes in building 
costs which are directly associated with changes in the phase of the business cycle 
and betw een additional decreases in costs, apart from the effect of the cycle. In 
this connection, it is w ell known that the volume of building and the employment 
that flows from its moves in response to the cycle and associated changes in con- 
sumer income. In bad times even enormous reductions in cost will have little 
effect on the volume of construction. Between 1929 and 1932, wholesale prices 
of all building materials dropped 25 percent, and all building costs declined 24 
percent, yet the volume of new construction fell disastrously. After 1932 prices 
of materials and building costs rose substantiallj', and in 1943 were 24 and 33 
percent, respectively, above the 1935-39 average. The number of new dwelling 
units built also increased considerably, but probably not as much as would have 
been the case if the cost increase had been dampened. Builders are quick to take 
advantage of a rising econom}' and must as quick to be discouraged in a falling 
one. In fact, more money is spent on building in good times, proportionately, 
than in other enterprises, but in bad times, the situation is exactly the reverse. 

It is interesting to note that the average valuation of new one-family houses, 
when adjusted to eliminate changes in building costs (table 6) increased from 1923 
to 1931, but has declined steadily and rapidly since then. This was largely due to 
the fact that in the thirties, new one-family homes were becoming progressively 
smaller and less elaborate. In 1942 and 1943 the drop in average valuation was 
unusuall}- sharp as a result of priorities assistance being granted by the Federal 
Government only for individual dwelling units selling at $6,000 or less, or renting 
for a maximum of $50 monthly. 

This tendency away from larger houses and from houses having a garage is 
confirmed in striking fashion by the following tabulation of the size of single- 
family homes insured under section 203 of the National Housing Act between 
1937 and 1942. The sample of one-family homes for which the data are presented 
comprised approximately 3 in every 10 of such houses built during the 6-year 



Percentage of new homes with Federal Housing Administration insured mortgages 
under sec. 203 of the National Housing Act having specified number of rooms or 
garage, 19S7-4'2 

of new 

Percentage of 

new homes having— 


1 to4 

5 rooms 

6 rooms 

7 rooms 
or more 


1937 --- 

53, 552 
123, 731 
162, 333 
169, 651 
60, 917 











1940 . 




1942 - 


Before 1942 there was no regulatory reason for the drop in the average cost of 
houses. Nor did the d^op follow building materials prices, building costs, building 
activity, the business cycle, or the trend in family income. It occurred actually 
because a different kind of house, a smaller, more compact, and cheaper dwelling, 
had become more important in the American housing picture than ever before, 
and builders were finding it profitable to build such a house. 

Restrictions in the building industry and the price of houses 

The size of house cannot be reduced very much without affecting its adequacy, 
nor can all families of moderate or lower means occupy a four-room house con- 
veniently. It is to be hoped that the cost or rental of homes to the purchaser or 
tenant will decrease in the future without affecting the fundamental quality or 
adequacy of the dwelling. 

This is not as fantastic an achievement as it may appear at first. Actually, 
numerous arbitrary and artificial restrictions on construction operations at present 
are so powerful as to affect the price of housing much more than any other single 
consideration including the cost of land, of building materials, of labor, or of 
financing. These restrictive practices have the following effects (1) they dis- 
courage research in building design and techniques and in the development of 
different building materials, thereby maintaining the technological status quo in 
the industry (2) they lead to monopoly and price fixing and to arbitrary and 
limited channels of distribution of building materials (3) they encourage and 
maintoin handicraft methods and discourage mechanization or prefabrication. 
Under such conditions the possibilities of the building hidustry in the way of 
technological and productive advances have never been fully realized. In con- 
sequence, even with building costs moderate, land cheap, and financing easy, new 
houses have been too expensive for most families to buy or to rent. 

The agency most qualified to describe in detail to the committee the gainut of 
restrictive practices that prevail in the construction industry is the Antitrust 
Division of the Department of Justice. Between 1939 and 1942 this Division 
was engaged in making a coordinated attack on all significant restraints throughout 
the United States. Its extensive activities ranged from indictment of the Southern 
Pine Association and two related groups for abusing a system of grading, grade- 
marking, and inspection of southern-pine lumber, to securing an injunction against 
fee splitting for the privilege of bidding among the New Orleans Chapter of 
Associated General Contractors, to termination of efforts throughout the country 
to control the channels for the distribution and installation of tile, and, finally, 
to the discrediting of the bid depository. 

All groups involved in restraints of trade were simultaneously attacked under 
the Antitrust Division's program of this period. Only in this way could that 
program be economically effective, for housing involves many types of producers 
and distributors and many crafts. To produce an appreciable effect on building 
costs, restraints would have to be removed in each. This meant investigation 
into manufacture, wholesale and "retail distributing, contracting, and labor ac- 
tivity over the country and in various industries, and then separate investigation 
in major cities where restraints were carried on locally. 

These activities were felt and in many cases had a telling economic effect even 
before reaching the courts. What is more, they had unusual support from the 
building industry itself, entirely because of the scope and technique of the investi- 
gation. In addition to the immediate savings achieved by dissolving price-fixing 
conspiracies and doing away with other restraints that impose uneconomic methods 



on the industry, it was found that experimental builders interested in simplifying 
and standardizing plans and parts, prefabrication, and other techniques that would 
help to introduce low-cost production were prepared to begin functioning under 
the assurance that organized efforts in the industry to restrain their activities 
would be attacked. 

Antitrust activity in the construction industry was reduced in scope and 
intensity in 1942 and though the Division continues to prosecute in the field the 
total effect is not as great as before. It is to be hoped that the Antitrust Division 
will be enabled to embark again in the post-war period on a coordinated and ex- 
tensive attack of restraints in the building industry in order to give the greatest 
possible encouragement to free, competitive enterprise and to research and tech- 
nological change. 

As a necessary supplement to the attack on restraints of trade, it is recom- 
mended that the Federal Government through already existing and well-equipped 
and competent agencies, such as the National Bureau of Standards of the De- 
partment of Commerce and the Forest Products Laboratory of the Department of 
Agriculture and through an agency like the National Advisory Council of Aero- 
nautics for Aircraft, carry on widespread research in building. Such research will 
provide invaluable information toward the end of making it profitable for private 
industry to build a house that even low-income groups can afford, by providing 
basic scientific data concerning known and conventional as well as unknown and 
unconventional materials; about building techniques and possible modifications 
that will yield economies in time and effort; about building-code revision and 
designs; and about methods of standardizing dimensions. The results of such 
research should be given wide publicity. Senate bill 2046 might be considered in 
this connection, provided that in the broad programs of developmental research 
proposed, it were made mandatory for the National Housing Agency, under whose 
auspieces the research would be carried on to avoid duplication of effort by using 
existing facilities and personnel of such agencies as the National Bureau of Stand- 
ards and the Forest Products Laboratory in the technical field and the Bureau 
of Labor Statistics in the economic and statistical field. 

Local governments also could help immeasurably toward reducing housing costs 
by instituting controls over the price of land for housing through regulation of 
land use and especially of speculative subdividing. Zoning should be placed on a 
sound technical footing and improvement of facilities should be carried on to 
encourage redevelopment of blighted areas. 

Table 4. — Index numbers of building materials prices and other wholesale prices, 



= 100] 


All com- 





Fuel and 

ing goods 


122. 6 

96. S 

95. 5 

103. 8 
90. 1 








1923 . . 




1925 .... 


1926 . . 














1933 . 










1938 " 












Source: Bureau of Labor Statistics, Wholesale Prices Division. 



Table 5. — Indexes of union xoage rates and wholesale prices of building materials, 


[1935-39 = 100] 

Union wage rates 

Wholesale prices 





All build- 



Paint and 



106. 2 

. 95. 9 



































95. 5 
























1925 ... - 












1931 . . 






1934 - 








1938 . 










Source: Bureau of Labor Statistics, Industrial Relations Division and Wholesale Prices Division. 

Table 6. — New privately financed nonfarm dwelling units, and related factors, 


[Indexes, 1935-39 = 100] 

Dwelling units 

Average permit valuation 


index 3 



tion 1 








costs 2 


1920 - - - -- 

247, 000 
449, 000 
716, 000 
871, 000 
893, 000 
937, 000 
849, 000 
810, 000 
753, 000 
509, 000 
330, 000 
254, 000 
134, 000 
93, 000 
126, 000 
215, 705 
304, 225 
332, 406 
399, 294 
458, 458 
529, 571 
619, 460 
301. 193 
183, 751 



209. 3 





2.36. 8 


















$3, 972 
4, 593 

10.5. 6 





























107. 6 


























1925 - . 






1928 . 


1929 . 




1931 .. 


1932 --- 






1935 - 




1937 . 










1942 -- 




1 Valuations declared by builders of l-family houses on permit applications in 257 cities. For 1938 it is 
estimated that these valuations understate building construction costs by 15 to 20 percent and selling price 
by 40 to 50 percent. , , ^ .,j. ,. ^ 

a This index has been calculated by dividing the unadjusted index in column 4 by the buildmg cost index 
in column 6. It indicates, therefore, changes in the nature and size of the houses built during this period, 
but not in the valuation of houses with constant specifications. 

3 This index represents the weighted average of the cost of building materials and wage rates with ad- 
justment for technological change. 

* Index of rents to wage earners and lower-salaried workers in large cities. 

» Not available. 

Source: Bureau of Labor Statistics, Construction and Public Employment Division. 





If s ? 1 i g 



















\ ^ V 
















A> O 


( 1 




to \ 





















2? ' 




































s |i 



o SN 



C\J gg 


5 a! 












One of the most persistent of labor problems has been the seasonal pattern in 
the building industry whereby workers are usually employed steadily for only part 
of each year. As a result, building trades employees actually receive an annual 
wage that is far lower than might be expected on the basis of the hourly wage 
rates which prevail in the industry. 

Annual earnings data that clearly apply to individuals employed only on con- 
struction work unfortunately are not available. Average weekly earnings, however, 
are computed in the Bureau of Labor Statistics. In 1939 such earnings on private 
building construction amounted to $30.24 and in 1940 to $31.51. (The difference 
in average earnings between quarters was at most $3 in 1939 and $4 in 1940.) It 
can be inferred from this that if building workers were employed throughout the 
year their annual wage would have been in the neighborhood of $1,550 in 1939 or 
$1,600 in 1940. 

The following table shows average monthly employment on private building 
construction in 1939 and 1940: 

Average monthly employment on private building construction, 19S9 and 1940 

[In thousands of persons] 









1, 000. 9 

1, 075. 6 

1, 163. 7 





1, 020. 7 


1, 329. 6 




October.. _ 


1, 239. 8 
1, 264. 8 
1, 234. 4 
1, 099. 4 
1, 014. 4 


1. 412. 7 

1. 427. 
1, 394. 5 
1, 247. 6 

1. 154. 8 

1. 102. 1 

Taking the ratio of the month of lowest to that of the highest average employ- 
ment, a maximum of about two-thirds of the workers in 1939. and only three-fifths 
in 1940 could possibly have worked throughout the year and thereby earned the 
full annual wage. The data show in fact that at least 20 percent worked less 
than 6 months on construction and so averaged below $800 in 1939 and 1940.^ 

These data illustrate vividly the pressing need for reducing the extreme season- 
ality in the building industry. This is by no means impossible ^ and real effort 
should be made on the imtional level to cope with the problem. If these seasonal 
fluctuations could be eliminated, or at least greatly reduced, building trades 
workers would have more satisfactory incomes, and the American people would 
have better housing. 

' Annual earnings data for 1939 are available in the manual Old Age and Survivors Insurance Statistics 
issued by the Social Security Board in 1941. They cover workers classified in building construction or 
special trade contracting who may have worked also in other industries. They do not include earnings 
not taxable under the Social Security Act, thereby excluding wages earned in agriculture, domestic service, 
etc.; wages of over $3,000 from any one employer; or money earned under self-employment. The resultant 
figure is $668 for employees of general contractors in building construction and .$804 for employees of special 
trade contractors. No data are available to show the annual earnings of individuals primarily employed 
iOn construction work, with separate figures for those who are regularly employed in some other industry 
but work m construction for short times in slack seasons. Since there is a wealth of underlying, basic 
material on this subject, it may be appropriate to direct the Social Security Board and the Bureau of Labor 
Statistics to perpare the necessary analysis from data already gathered. While some financial resources 
would doubtless be required, such a project would appear to be technically feasible. The basic machinery 
for such a program is already set up in the Bureau of Old Age and Survivors' Insurance Benefits in the form 
of its continuous work history sample. This sample includes workers covered under the Old Age and 
Survivors' Insurance program and provides a basis for tabulation by industry and annual earnings. The 
results that can he secured from the use of these and other records toward the end of arriving at the annual 
earnings of construction workers are essential for the development of basic policy. 

* Federated American Engineering Societies, Waste in Industry. Washington, ''1921. Hersch, L., 
Seasonal Unemployment in the Building Industry in Certain European Comitries, International Labor 
Review, vol. 19, Nos. 1-3, January to March 1929. 

Mendershauser, Horst, "The Elimination of Seasonal Fluctuations in the Building Industry," Inter- 
national Labor Review, vol. 36, No. 2, August 1937, pp. 167-199. 

Monthly Labor Review, Causes of Seasonal Fluctuations in the Construction Industry, vol. 33, No. 3, 
September 1931, pp. 6-33. . , , . 

The President's Conference on Unemployment. Seasonal Operations m the Construction Industries. 
New York, 1924. 

U. S. Department of Labor, Housing and Building Operations, in Handbook of Labor Statistics: 1936 
pp. 224-228. 




The disparity between prevailing family incomes and the cost of occupying 
housing that meets modern standards of health and decency has been recognized 
by most investigators as the chief obstacle to widespread improvement in the 
Nation's housing. It is clear that the vast need for improved low-cost housing, 
as shown by the 1940 census, will in general not be met by private industry until 
costs of occupancy can be reduced to a level more consistent with consumers' 
ability to pay. 

Statistical data on the distribution of nonfarm familieb by income in 1935-36 
and average property valuations on which mortgages were insured by the Federal 
Housing Administration in 1938 are presented in a report of the Temporary Na- 
tional Economic Committee, Monograph No. 8: Toward More Housing. In that 
report it is estimated that at least four-fifths of the homes built in 1938 were in a 
price class obviously beyond the reach of three-fourths of our nonfarm families. 

Data for 1941, when consumer incomes were at a higher level, show some im- 
provement over the situation in the late thirties, though the disparity between 
income and prices of new dwellings continued to be of serious proportions. In 
1941 approximately one-fourth of the property valuations of mortgages insured 
by the Federal Housing Administration were less than $4,000; whereas 55 percent 
of the nonfarm families had incomes of less than $2,000.^ This narrowing of the 
breach resulted chiefly from the general rise in family incomes. 

Income distribution, 1935-36 and 1941 

Higher money incomes, on the average, were enjoyed by the civilian population 
in 1941 than at any previous time in our national history. Per capita incomes 
exceeded the previous peak of 1929. Average cash incomes were 42 percent higher 
in 1941 than in 1935-36, and there was a general moving up all along the income 
scale. In 1935-36 over half the Nation's families and single consumers had annual 
cash incomes below $1,000 and nearly three-fourths had less than $1,500. In 1941 
only half fell below the $1,500 mark. 

The percentage of nonfarm families and single consumers in each money-income 
class in the two periods is shown below: 

Percent having money 



Percent having money 



Under $500 



$2,000 to $3,000 



$500 to $1,000 

$3,000 to $5,000 

$1,000 to $1,500 

$5,000 and over 

$1,500 to »:2,000 

For families of two or more persons, incomes showed a rise from a median of 
$1,026 to nearly $1,678 in 1941. Both farm and nonfarm families shared in the 
general increases of income which occurred between the two periods. Thus, from 
1935-36 to 1941, 21 percent of all urban families and 10 percent of those in rural- 
nonfarm areas shifted from the class with money incomes under $1,000 to higher 
Income classes. The corresponding percentage for farm families was 19 (table 7). 

The rise in incomes during this period allowed for considerable improvement in 
the level of living of families, since it far outpaced the increase of about 7 percent 
in living costs from 1935-36 to 1941, and consumers were only slightly affected by 
the wartime shortages which set in immediately after that year. 

Consumer expenditures for housing 

In 1941 consumers in nonfarm areas spent about one-fourth of their total money 
income for housing, household operation, and housefurnishings and equipment. 
These expenditures ranked second only to food as a major item in the family 
budget. Average costs of occupancy (bousing, fuel, light, and refrigeration) 
amounted to $332 per year, while other household operation costs (laundry, paid 
help, telephones, etc.) averaged $94, and average expenditures for housefurnish- 
ings and equii^ment were about $97. On the basis of these figures, aggregate ex- 
penditures of nonfarm consumers for housing in 1941 are estimated at nearly 
$18,000,000,000, of which $11,000,000,000 represented such occupancy costs as 
rent, mortgage interest, insurance, taxes, repairs, fuel, light, and refrigeration, 

' It is generally assumed that a family can afford to buy a home costing twice its annual income. 


Among urban families of two or more persons, average expenditures for housing, 
fuel, light, and refrigeration were $423 per family, with figures ranging from $123 
for families having incomes under $500 to $1,433 for families with incomes of 
$10,000 or more. About 16 percent of the average money income of urban fami- 
lies was spent for housing, fuel, light, and refrigeration. Families in the lower- 
income classes spent more than one-fourth of their income for housing occupancy, 
while the much larger expenditures of families in the highest income classes 
required only one-tenth of their income. If expense for furnishings and other 
operating costs are added, total expenditures of urban families for housing repre- 
sented 25 percent of the average money income (table 8). 

Expenditures of owners and tenants 

Comparative data on housing expenditures of urban home owners and tenants 
at different levels of family income are presented in table 9. It will be noted that 
average current expenses of home owners were considerably less than those of 
tenants at practically all income levels. Interest on the mortgage, insurance, 
and taxes on the property are included for owners in lieu of rent for tenants, while 
the figures for both groups include repairs, replacements, and fuel, light, and 
refrigeration, costs payable by the occupant. Maintenance costs were, of course, 
higher for owners than for tenants, but the differential was not large enough to 
offset the difference between rent and the lower fixed costs of owners for interest, 
insurance, and taxes. 

In the accounting system used in this and other consumer studies, payments 
on mortgage principal are not included as current expenditures but are considered 
an increase in family assets. The validity of this procedure is questionable when 
applied to loans for which the amortization period is nearly equal to the life of 
the property. Even when the loan is amortized over a reasonably short period, 
it may be argued that some fraction of the principal payment should be added to 
the home owner's current expense if a fair comparison is to be made of the costs 
of owner and tenant occupancy. Thus the average payment on mortgage prin- 
cipal is shown separately in talale 9 and may be added in whole or in part to the 
current expenditures of owner occupants. Assuming that one-half of the average 
principal payment is equivalent to rent and not properly classifiable as savings, 
the owner would still seem to have some advantage over the tenant in the same 
income class with respect to occupancy costs. 

In comparing these average costs of owners and tenants, consideration should 
be given to the quality of housing furnished. The estimated rental value of 
owned houses was higher than the actual rent paid by tenants in the same income 
class. Whether this merely indicates a tendency for owners to overestimate the 
rental value of their homes or implies a real difference in the quality of housing 
cannot be determined from the available tabulations. The housing characteristics 
of the two tenure groups are recorded on punched cards, however, and can be 
tabulated if the committee is interested in exploring these relationships. Since 
the cross-tabulations of Census data showing the characteristics of owned and 
rented homes by monthly rent or rental value tend to refute the common assump- 
tion that owners' estimates of the rental value of their homes are generally exag- 
gerated, there is reason to believe that the expense reported by owners in our 
consumer study relate to housing of somewhat better quality than that of tenants 
in the same income class. 

The available statistics on comparative costs of owner and tenant occupancy 
do not furnish conclusive evidence as to whether it is cheaper in the long run to 
own than to rent housing. However, the calculation of average yearly costs of a 
representative sample of owners and tenants shows that owners tend to spend a 
somewhat smaller percentage of their income for current housing expense than 
tenants and probably receive for this smaller outlay more satisfactory housing. 

There is another advantage in home ownership from the point of view of the 
community. The home owner is under a certain social pressure to keep his 
house in a good state of repair, and he will make improvements himself when he 
is not in a position to pay others to make them, thus increasing his own nonmoney 
income and that of the community at large. This sense of community con- 
sciousness is rarely found among the occupants of rental properties, largely 
because the tenant is offered no compensation for the value of the maintenance 
service performed. Partial tenant maintenance has been tried in a few large 
public and private projects and has been shown to be a cost-reducing factor. 
Further experimentation with such plans, placing emphasis on educational 
programs designed to develop a sense of community responsibility among tenants, 
should be encouraged for the twofold purpose of reducing the cost of tenant 
occupancy and improving their housing conditions. 


Home ownership at different income levels 

Further evidence of the desirability of home ownership is furnished by statistics 
on owner-occupancy at different income levels. Aside from the unresolved 
question of real savings in occupancy costs, most families apparently prefer to 
own their homes when they have sufficient funds to make the down payment and 
reasonable assurance of continued employment. 

Among nonfarm families, the trend in home ownership over a long period has 
been slowly upward, increasing from 37 percent in 1890 to 46 percent in 1930, 
according to data from the decennial censuses. Between 1930 and 1940 the 
proportion of nonfarm home owners fell to 41 percent. This sharp decline, 
however, probably represented only a temporary reversal of the long-time trend 
because of the large number of foreclosures in depression years. After employ- 
ment began to increase in the late thirties, there was only a brief period before the 
1940 census for the accumulation of savings usually necessary for the down pay- 
ment on a home. Since home ownership may be expected to increase in a period 
of rising incomes, the proportion of homeowning families at the present time 
probably approaches the level recorded for 1930.^ Part of the increase in urban 
areas, at least in the last year or two, must be regarded as unsound insofar as it is 
due solely to a shortage of houses available for tenant occupancy. In crowded 
war-production areas many families undoubtedly have been forced to buy homes 
which they would have preferred to occupy as tenants, and as a consequence, may 
be risking serious financial loss. 

The proportion of urban families that were home owners by the end of 1941 
is shown by income level in table 9. These figures are not directly comparable 
with Census data because they include only economic families of two or more 
persons and the economic family, as defined for consumer studies, is slightly 
different in concept from the family of related persons and the household, as 
defined for Census purposes. Because of these differences in definition the 
proportion of home owners in the consumer study would be slightly higher than 
shown in the Census. 

Figures from the consumer study indicate that the proportion of home owners 
ranged from one-third of the families having incomes under $1,000 to two-thirds 
of those with incomes of $5,000 or more. All occupational groups are included — 
entrepreneurs and families with no earnings, as well as the large group of wage 
earners for which comprehensive statistics are available in the 1940 census. 

It is often contended that wage earners are less inclined than other occupational 
groups to incur the financial responsibility of home ownership because of in- 
security of employment and the probability of moving in search of better employ- 
ment opportunities. The 1940 census data for urban families give a factual basis 
for this belief, though precise comparisons between wage earner and other groups 
at equivalent income levels are not available. Only 30 percent of the urban 
families having no income (or not more than $50) from sources other than earnings 
in 1939 owned their homes, as compared with 47 percent of the families with in- 
come from other sources. For the urban wage-earner families without other 
income, the proportion of owners ranged from about 20 percent of those with earn- 
ings of less than $1,000 to 52 percent of those receiving $5,000 or more. Although 
these percentages are only roughly comparable with data from the consumer 
study in 1941, they are enough lower, income class by income class, to give some 
credence to the theory that wage earners are less interested than other groups in 
home ownership. 

Wage earners who wish to become home owners are handicapped in buying 
homes because they cannot be sure in case the.y find it necessary to take new Jobs 
in other cities that they will be able to sell the homes they have bought at a fair 

' Unofficial estimates based on data obtained in a survey conducted in April 1944 by the Bureau of the 
Census for the War Production Board oSer the following comparisons: 

Percent of families that were home owners 




Total - 










91183— 45— pt. 15 12 



price. In part this risk is an inevitable result of the relationship between sale 
values of the dwellings in a community and the economic situation, both local 
and national. The problem could be solved in part, however, if home owners 
were provided with Government certification of the quality of the materials going 
into the construction of their homes and if the Government certifying agency 
could inspect and certify to repairs and replacements as they are made by the 
owner. The Department of Labor recommends that the committee invesHgate 
the possibility of developing a certifying agency which would carry on the type 
of work described on the basis of construction standards developed by the Na- 
tional Bureau of Standards. An equity insurance plan such as that recommended 
by Ivan Tarnowsky is worth consideration. 

The recent upward trend in home ownership with the restoration of a high 
level of employment does not mean that the increase may be expected to go on 
indefinitely. Even if employment can be stabilized at a high level, at least half 
of the housing market in nonfarm areas probably will remain in the rental prop- 
erty class. Part of this demand will be met by "filtering down" of used homes, 
but a significant portion of the program for new housing indoubtedly should be 
planned for tenant occupancy. The proportion of law-income families in need of 
subsidized housing should decline under favorable economic conditions but it 
can hardly be expected to disappear, even with sustained full employment. 

Estimated effect of full employment on income distribution 

Since the level of national income strongly affects the construction industry 
and income distribution is at the heart of the problem of housing improvement, 
we believe the committee will be interested in an estimate being prepared in the 
Bureau of an income distribution which might be expected in a post-war year of 
full employment. The estimate is built up on the basis of clearly defined assump- 
tions and does not in any sense represent a forecast of what is likely to happen in 
the post-war period. It serves a useful purpose, however, in providing a rough 
quantitative measure of the effect which full employment probably would have 
on the income distribution, if no differential changes in pre-war wage rates are 

Population weights and labor force estimates for the year 1950 are used for the 
income estimate, but the point of time is unimportant in considering the proportion 
in each income class. The frequency distribution may be applied to an earlier 
or later period by making appropriate adjustments in the population data. The 
estimate assumes an average civilian labor force in 1950 of 59,000,000 workers, 
including an allowance for ''frictional" unemployment of one and one-half million 
workers. No modifications of the present economy are assumed other than the 
condition of full employment on a peacetime basis. Thus the shape of the income 
curve in 1941 is changed only by the sharp reduction in unemployment, which in 
turn implies an increase in "the number of families with more than one earner. 
The estimate is preliminary and subject to revision when further refinements in 
the basic data required for these assumptions will be available. 

A first approximation of the percentage distribution of nonfarm families and 
single consumers by money income class in 1950, assuming full employment and 
1941 prices, is presented "below, together with the comparable distribution for 
1935-36 and 1941: 

Money income class 

Under $1,000-.. 
$1,000 to $2,000. 
$2,000 to $3,000. 
$3,000 to $5,000. 
$5,000 and over 



1950 (full 

The full employment estimate shows a distinct broadening of the middle-income 
groups between $2,000 and $5,000. Whereas these classes included only 16 
percent of the families and single consumers in 1935-36, and 36 percent in 1941, 
they would comprise nearly half of the total consumer units in a year of full 



It is significant, however, that a large proportion of the consumers in nonfarm 
areas probably would remain in the income classes below $2,000. This conclusion 
is inescapable if we assume merely the condition of full employment without 
arbitrary changes in differential wage rates prevailing before the war. It must be 
remembered that millions of fully-employed workers received annual earnings of 
less than $1,500 before the war, particularly in villages and smaller cities. Under 
full employment, some of these workers would have opportunity to change to 
jobs paying better wages, but others presumably would not. Moreover, families 
dependent on pensions and other forms of fixed income would not be materially 
affected by an improvement in the level of employment. In view of these con- 
siderations, it is doubtful if the proportion of consumers with incomes below 
$2,000 would be significantly smaller in a year of full employment than indicated 
by this estimate. 

Final estimates for nonfarm and farm areas, under the full employment assump- 
tion, and a more detailed description of the methods used in preparing the esti- 
mates will be submitted to the committee in a few weeks. 

Table 7. — Percentage distribution of nonfarm and farm families of 2 or more 
■persons, by money income class, 1935-36 and 1941 

Money income 






Under $500 




} « 


$500 to $1,000 


$1,000 to $1,500 


$1,500 to $2,000 


$2,000 to $3,000 


$3,000 to $5,000 

{ 1 

$5,000 and over 

Median family income 

$1, 214 





Under $500 .. . . 







$500 to $1,000 


$1,000 to $1,500 


$1,500 to $2,000 ..- .... 


$2,000 to $3,000 


$3,000 to $5,000 


$5,000 and over 


Median family income 

$1, 864 

$2, 113 

$1, 177 


Source: Bureau of Labor Statistics, Cost of Living Division. 

Table 8. — Average expenditures for housing, household operation, furnishings and 
equipment of nonfarm families and single consumers, by money income class, 1941 

Money income 

Average expenditure 


and re- 


ings and 

Proportion of money income 


and re- 


ings and 


All incomes... 

Under $500 ' 

$500 to $1,000 

$1,000 to $1,500 - 

$1,500 to $2,000. - 

$2,000 to $3,000 

$3,000 to $5,000.... 

$5,000 and over 



















Table 8. — Average expenditures for housing, household operation, furnishings and 
equipment of nonf arm families and single consumers, by money income class, 1941 — 

Money income 


All mcomes 

Under $500 ' - 

$500 to $1,000 - 

$1,000 to $1,500- 

$1,500 to $2,000 .— 

$2,000 to $2,500 

$2,500 to $3,000 

$3,000 to $5,000 

$5,000 to $10,000-... 

$10,000 and over 


All incomes 

Under $500' 

$500 to $1,000 

$1,000 to $1,500 

$1,500 to $2,000 

$2,000 to $2,500. 

$2,500 to $3,000 

$3,000 to $5,000 

$5,000 to $10,000 

$10,000 and over 

Average expenditure 









2, 597 



and re- 










ings and 





Proportion of money income 







and re- 










ings and 






' The high percentage spent for housing by families with incomes under $500 is accounted for by the fact 
that a large proportion at this income level were drawing on savings or relymg on credit to finance part 
of their current expenditures. 

Source: Bureau of Labor Statistics, Cost of Living Division. 

Table 9. — Percentage of home ownership, monthly rent or rental value, and average 
expenses of owners and rente'>-s, by money income class, 1941 {urban families of 2 
or more persons) 


Money income 




$1,000 to 

$2,000 to 

$3,000 to 

$5,000 and 

Percent of families that were— 



































Average monthly rental value of owned 



Average monthly rent paid by renters 

Average annual expenditures for housing, 
fuel, light, and refrigeration; 



Average annual payment of principal of 
mortgage (all owners) 

Percent of owners reporting payments on 


Average annual payment of owners mak- 


Source: Bureau of Labor Statistics, Cost of Living Division. 



The Census of Housing of 1940 has contributed immeasurably to the available 
information about housing conditions and house building in the United States. 
The census now provides facts in areas where impressions and at best estimates 
were available before. 

As a reference work, the Census of Housing with its break-down by county, 
and smallest urban place, is invaluable to Federal, State, and local governmental 
agencies, to city planners, builders, house financing agencies, trade-unions, cham- 
bers of commerce, real-estate boards, in short, to every person and group inter- 
ested in any of the multitude of community problems or business ventures in 
which home building and housing play a part. 

The housing supply has been deteriorating rapidly during the war, not only 
from lack of labor and materials for normal maintenance of existing houses, but 
from the greatly curtailed volume of construction of other than temporary and 
substandard units.' As a result many communities face difficult problems of post- 
war housing development. The Census of Housing of 1940 will be in constant 
demand for providing an accurate picture of pre-war conditions as a basis for 
determining courses of action after the war. 

The Department of Labor should like to see a decennial census of housing to 
keep our information up to date and to permit analysis of trends in this vital field. 

HOUSING, 1940-43 ^ 

Between January 1940 and December 1943, 2,165,000 new nonfarm family 
dwelling units were put under construction. Of these, 1,634,000. or three-fourths, 
were privately financed and 531,000 were built under contracts awarded by various 
Federal agencies, notably the Federal Public Housing Authority. 

Federal aid in the construction of war housing by private builders was first 
extended on March 28, 1941, by the passage of the title VI amendment to the 
National Housing Act. This amendment liberalized the terms for insuring mort- 
gages on houses built in specified critical war production areas. By the end of 
1943, 277,000 units had been insured under title VI. 

In September 1941 the Office of Production Management began granting pri- 
ority assistance for materials, and in April 1942 priorities became mandatory. 
By the end of 1943, over 400,000 units had been built with priority assistance. 

The first direct Federal construction of war housing was authorized on June 28, 
1940, when Public Act 671, Sixty-seventh Congress, was approved, authorizing 
the United States Housing Authority to cooperate with the Army and Navy in 
providing necessary housing for families of enlisted men and civilian war workers. 
Subsequently, other legislation, particularly the Lanham Act (Public Act 849, 
76th Cong.), expanded the scope of public war housing until by December 1943 
over $2,285,000,000 had been authorized. 

By the end of 1943, 218,000 new permanent and 313,000 new temporary family 
dwelling units had been placed under Federal construction contract, including a 
few thousand slum-clearance units not earmarked for war housing. In addition, 
158,000 dormitory units and 40,000 trailers were available or under construction. 
The Home Owners' Loan Corporation also answered the pressing housing need in 
its conversion program begun early in 1943 when 56,000 family units, were 

The figures indicate that the Federal Government has relied largely on private 
enterprise to provide the bulk of the war housing. Federally financed building 
has been most active in the areas where need was particularly great and would 
probably not exist after the war. Private enterprise, on the other hand, was 
encouraged to provide housing where there was likely to be permanent need. 

One of the important but hidden benefits that has come out of the pressure 
during the war to provide quantities of adequate but inexpensive housing at short 

' See Construction of $500 House in 1943, Monthly Labor Review, December 1943, Serial No. R. 1594, 
and New Dwelling Units in Nonfarm Areas, 1942 and 1943, Monthly Labor Review, March 1944, Serial 
No. R. 1628, p. 8. -,. . , 

8 For further discussion and detail, see: Monthly Labor Review, July 1940, Serial No. R. 1140, Federal 
Housing of War Industry Workers, 1917-18. Monthly Labor Review, May 1941. Seriai No. R. 1340, 
Defense Housing Policies and Progress. Monthly Labor Review, June 1942, Serial No. R. 1464, Housing 
for War Workers. Monthly Labor Review, August 1942, Serial No. R. 1473, Occupancy of Old and New 
Homes by Bridgeport War Workers. Monthly Labor Review, December 1942, Serial No. R. 1504, 
Housing Proviaed in 1.38 Defense Areas. Monthly Labor Review, December 1943, Serial No. R. 1594, 
Construction of .$500 Houses in 1943. Monthly Labor Review, March 1944, Serial No. R. 1628, New 
Dwelling Units in Nonfarm Areas, 1942 and 1943. 



notice has been the encouragement of mass building and experiment in pre- 
fabrication designs and methods. Such activity was most evident in the con- 
struction of the temporary and demountable housing under puVjlic contract in 
1942 and 1943. It also played a significant part in private building largely 
because of the legal price ceiling on private war housing. 


Policies regarding the disposition of war housing will of necessity vary in 
different areas according to the type of units constructed for the war program 
and the post-war demand for their continued occupancy. The evidence we have 
on the housing situation in the war production centers indicates that there will 
probably be need for practically all the new war housing in these areas for 
some time after the close of the war. The removal of temporary or demountable 
units should only be undertaken it if is established that they are no longer needed. 

Figures from the Housing Census of 1940 and recent surveys of housing require- 
ments of war workers, conducted by the Bureau of Labor Statistics for the National 
Housing Agency in 13 war production areas, indicate that most of the new war 
housing units will be needed by permanent residents now living under definitely 
substandard conditions. In 1940 the number of occupied dwelling units needing 
major repairs or without private bath greatly exceeded the total number of new 
family units completed or scheduled for starting under the war-housing program 
in all of the 13 areas except San Diego. Although the Bureau's surveys were 
designed to measure the backlog need for housing among workers eligible for war 
housing, it was necessary to obtain data on the housing conditions of all war 
workers' families in order to determine eligibility. Thus it was found that from 5 
to 27 percent of the war workers' families that did not qualify as candidates for 
war housing occupied living quarters which did not meet even the minimum 
wartime standards of housing as defined bj^ the National Housing Agency.' 

War production area 

Occupied units 
needing major 
repairs or with- 
out private 
bath, 1940 i 

Family units 
for war hous- 
ing Apr. 30, 
1944 2 

War workers' 
families ineli- 
gible for war 
housing and liv- 
ing in substand- 
ard quarters 
1943-44 s 

Akron . 

28, 050 
74, 083 
38, 331 
13, 255 

11, 677 

12, 676 
45, 339 
15, 260 
46, 176 
23, 663 
11, 600 

28, 608 







10, 820 






19, 673 



Denver .. . .. . 




Lancaster . 





Mobile .... . . 


New Orleans 




San Antonio 


San Diego 


1 Census figures are for metropolitan districts, with the exception of Chester. 

2 Includes both private and public housing, but excludes trailers and dormitories. 

3 Estimates based on sample surveys. For the total number of war workers' families reporting sub- 
standard housing conditions, see table 10. 

* Separate figures for the Chester area not available for this report. 

Housing conditions classified as substandard in the surveys of war workers 
are so bad that they may seriously impair the workers' efficiency. Under war- 
housing regulations, however, only the in-migrant war workers living under these 
conditions are considered eligible for war housing. All the ineligible war workers' 
families in substandard housing were residents of the area before the date es- 
tablished for the classification of in-inigrants; hence it is reasonable to assume that 
most of these families will remain in the area after the war. In most areas the 
needs of this group alone would provide a sizable demand for the new family 
units which may be vacated by workers who leave the area after the war. 

1 In these surveys, families reporting one or more of the following conditions were classified as having 
housing below National Housing Agency wartime standards: (1) Living in a trailer, tent, or tourist cabin; 
(2) lacking outside light or ventilation in bedroom; (3) lacking running water or (if in a northern climate) 
heating facilities in living quarters; (4) lacking flush toilet, bath or shower, or cooking facilities in building; 
(5) sharing toilet facilities with 3 or more families or with 9 or more unrelated persons; (6) having more 
than 1.5 persons per room. 



It is probable that the survey figures given above greatly understate the imme- 
diate need for adequate housing in these areas after the war because they include 
only families of war workers, which are better off financially than the population 
as a whole. There is in addition a very large group of workers in trades and 
services outside the scope of the war-housing program. Since the earnings of 
these workers are generally lower than the earnings of essential war workers, 
relatively more of them may be expected to be living under substandard housing 

Table 10. — Estimated number of war workers' families living in substandard 
housing, by eligibility for war housing, for specified war production areas 

(Data from surveys of housing requirements of war workers conducted in September 1943 and March 1944) 

All war workers' families 

Eligible for war housing > 



Reporting housing conditions 


Reporting housing conditions 

Total 2 

in sub- 

Percent of 
total re- 

Total 2 

in sub- 

Percent of 
total re- 

Akron . 

95, 252 
167, 056 
79, 561 
50, 804 
39, 067 
20, 761 
15, 801 
147, 422 
49, 972 
54, 746 
36, 371 
55, 942 

83, 825 
155, 460 
69, 232 

48, 692 
35, 303 
17, 123 
14, 665 

135, 449 
45, 070 

49, 456 
40, 522 
33, 037 
61, 782 

13, 485 
8, 258 
22, 670 
20, 565 


16, 526 
20, 703 
16, 613 

12, 897 
15, 931 
13, 933 

12, 206 





Denver - 



Lancaster .. - 







New Orleans. 

Omaha - - 



San Diego 


Ineligible for war housing ' 

Eligibility not determined 



Reporting housing conditions 


Reporting housing conditions 


Total 2 

in sub- 

Percent of 
total re- 

Total 2 

in sub- 

Percent of 
total re- 

Akron .-. 

76, 634 
144, 986 
67, 298 
45, 559 
134, 745 
32, 644 
45, 807 
38. 304 
30, 059 
46, 499 

70, 877 
62, 438 
29, 095 
127, 746 
43, 556 
37, 623 
28, 468 
45, 843 

19, 673 
18, 268 
























Chester. . 


Denver - -- 








M il waukee 



New Orleans 

Omaha . . 



' To be eligible for war housing, war workers must qualify in 1 of the following groups: (1) Workers having 
moved to the war production area after the date establisned for the classification of in-migrants, or having 
brought their families to the area since that date, and housed under conditions that seriously impair effi- 
ciency; (2) workers wishing to bring their families to the area and needing larger quarters for this purpose; 
(3) workers who are commuting unreasonable distances to their places of employment; or (4) workers being 
forced to move from their living quarters through no fault of their own. 

2 Excludes families living in rented rooms. 

Estimates based on samples of 2,000 to 3,000 families in each city. 
Source: Bureau of Labor Statistics. Cost of Living Division. 



Housing need 

There is severe shortage of adequate housing in this countr_v. There was short- 
age before the war, as the Census of Housing can testify, but the shortage is more 
acute now and will be especially serious by the end of hostilities. 

The Bureau of Labor Statistics estimates that about 525,000 dwelling units are 
needea annually in nonfarm areas merely to provide for increase in tne number 
of families and to maintain existing standards, yet, over the past decade 1930-39, 
the average number of new units constructed, including slum clearance, was less 
than 275,000. Though in 1940 and 1941 much more residential building took 
place, a sharp decease occurred in 1942 and 1943. Little was done in the first 
2 years of the forties to make up for the great backlog that moimted during the 
thirties. Furthermore, in 1942 and 1943, at least a fourth of the new units 
built were temporary structures put up only to meet emergency conditions during 
the war. 

The tremendous building deficit has brought vacancy rates to a dangerously 
low level in practically all industrial areas and has caused extensive increase in 
doubling up. Tt has prevented nonfamily household groups preferring separate 
quarters from taking them and has halted the demolition of obsolescent and sub- 
standard dwellings and clearance of blighted areas. 

To make matters worse, the Bureau of the Census estimated that during the 
current def'ade the number of families in the United States, exclusive of war losses, 
will increase by about 5,000,000.'" Many of the newly formed families are incom- 
plete since the husband is in the armed services. Some of these and others must 
live in temporary a,nd makeshift accommodations for the duration. They will 
need T)ermanent accommodations when the war is over that will permit normal 
housekeeping and family life. 

When it is considered that even existing dwellings have been deteriorating 
more rapidly than usual because of lack of labor and materials for adequate 
maintenance, the enormity of the post-war housing problem becomes even more 

Various estimates indicate, however, that the need for new housing will probably 
not be met by the effective demand." 

It has already been shown above that some of the patterns of residential 
building must be changed to supply adequately those who need housing most and 
that even under full employment a considerable proportion of the country's 
families will have a smaller income than is necessary to buy or live in decent 
dwellings. This gap must be bridged. If it is not bridged by private enterprise, 
it will have to be bridged by public subsidy. It is this area of housing need that 
the Federal Government has provided for in the past and it is hoped will continue 
to provide for in the future, not as a m.eans of employing workers, but rather as a 
means of housing people decently where private enterprise fails to do so. 

Under the current limitations on construction and taking into consideration 
the dooletion of certain inventories and other restrictions on activity', it still is 
possible that an average of about 900,000 nonfarm dwelling units per year can 
be provided during the first 5 years after the war. This would meet the bulk of 
the need estimated variously at between 900,000 to about 1,800,000 units per 
year. The estimates concentrate about 1,200,000 per year. 

The challenge of housing 

The tremendous housing need, swelled by heavy requirements for additions, 
alterations, and repairs, is a challenge to the building industry. It is en- 
heartening in this connection that builders are known for their ability to begin 
operation quickly and to expand them rapidly. They will need some help, 
however. It is important, for example, that the existing necessary restrictions 
on the use of critical materials for housing be modified progressively as tne military 
situation permits. In this way inventories of building materials can be built 
up gradually, thereby giving confidence to buyers and builders alike. 

10 U. S. Bureau of the Census, Population Special Reports, series P-A43, No. 2, September 30, 1943. 

11 See National Resources Planning Board, Memorandum on Estimated Nonfarm Housing Needs. 


It is essential also that a buyer's strike be averted primarily by keeping a tight 
control over prices and then also by discouraging advertisement of fantastic and 
preposterous post-war houses and post-war equipment. The Federal Govern- 
ment can and should help to bring about the development of new designs, materials, 
and construction methods, but at the same time, it must also helj) bring a realiza- 
tion that, though techniques of construction can and will be improved, building 
new homes should not be postponed in the expectation that radical changes can 
be effected in the immediate future. 

When the way is clear for builders to go ahead, the effect on employment is 
obvious and has been discussed in an earlier section of this report. In combina- 
tion with the labor required, impetus will be given to the builders themselves. 
In 1939 there were 33,346 builders and building contractors. Both these groups 
employed from time to time most of the 176,187 special trade contractors. 

These three groups are by and large small businessmen as evidenced by the fact 
that in 1939, according to the Census of Business, between 70 and 75 percent of 
the builders and building contractors and 92 percent of the special trade con- 
tractors did less than $25,000 worth of business. An even larger proportion, 9 in 
10, did not operate beyond the bounds of their home State and about three-fifths 
did business entirely within the limits of their htDme city. In fact, according to a 
survey made by the Bureau of Labor Statistics, 94 percent of the builders of one- 
family houses in 72 representative cities in 1938 had built less than 10 houses each. 
Well over three-fifths had built but one house. Revival of building construction, 
therefore, will cause ready money to reach quickly the hands of the small entre- 
preneur who will exchange it immediately for wages, goods, and services. 

Federal Housing Legislation 

Up to the establishment of the National Housing Agency, the Federal Govern- 
ment's housing program evolved piecemeal to meet successive emergencies. 
Though each of the agencies formed and operating today is performing a real 
function, it is important not only that all functions be coordinated as they are 
under the National Housing Agency, but that objectives be unified clearly and 
directed toward the general end of sponsoring and supporting provision of good 
quality housing for the American people. 

There is signal opportunity today for achieving coordinated administration and 
objectives through the medium of the current keen awareness of the necessity for 
planning, especially for post-war. In this connection, the Department of Labor 
is particularly interested in Senate Resolutions 13 and 112 introduced by the Sen- 
ator from Ohio himself. These resolutions would provide for study of all Federal 
agencies now concerned with housing to the end of developing a constructive 
over-all plan for housing provision and for the permanent coordination of all 
Government activities relating to housing. 

Inadequate regulation of land use leading to neighborhood deterioration has 
been at the root of the development of blighted areas and the high cost of housing 
in many places, as well as the discouragement of private enterprise from providing 
any new housing at all in others. 

It is encouraging that two bills are now being considered in committee that 
deal with this important matter, S. 953 introduced by Senator Thomas and S. 
1163 bv Senator Wagner on April 2 and June 4, 1943, respectively. The former, 
called the Federal urban redevelopment bill of 1943 was referred to the Com- 
mittee on Education and Labor, the latter, the neighborhood redevelopment bill, 
was referred to the Committee on Banking and Currency. These bills, along 
with provision also for Federally subsidized slum clearance, should be considered 
together and their differences ironed out to the end of providing sound and 
integrated legislation covering (1) financial aid to local governmental bodies for 
developing comprehensive master plans of their land, and more particularly of 
any areas within their bounds that require special attention; (2) aid in the pur- 
chase of land and in its improvement necessary to preparing it for neighborhood 
rebuilding; and (3) provision of public housing for low-income groups where 
private enterprise under the acts cannot meet the need. All the land proposed 
for private redevelopment not to be devoted to public uses, such as streets, 
schools, playgrounds, and public housing, would be leased to private development 
corporations for rebuilding according to land-usage plan and under provisions 
made for safeguarding standards of building and of building maintenance. The 
lease rentals so received would be used to repay the Federal Government. 

Legislation of this kind is necessary and it is needed now, before the post-war 
construction period arrives and there is no longer time for careful, comprehensive, 
and efficient planning. The financial aid provided will be in the form of a Federal 


investment, yet will give private enterprise long-awaited opportunity and security 
in urban redevelopment, rid our cities of grossly substandard dwellings now 
occupied, while substituting housing and neighborhoods that will be truly worthy 
of America. 

It must be recognized, however, that the Nation-wide magnitude of our future 
redevelopment program must be very great — measured in hundreds of square 
miles — if it is to achieve its objectives of ridding our cities of slums, stabilizing 
property values, providing for lower-paid workers the living environment essen- 
tial for wholesome family life, and ending the exodus of population which has 
been undermining the tax base of so many cities. Cost of acquiring the land 
necessary for such a program will be staggering if carried out primarily through 
condemnation under current patterns of land use; and economic value of the 
land for any pattern of use consistent with the objectives of the program is 
necessarily low, because the objectives ordinarily require rather low density of 
population. Feasibility of the program is therefore dependent on reducing the 
acquisition cost of the property to approach the low economic value commensurate 
with its uses. This means removal of the excessive occupancy and the expectation 
of later conversion to higher-value uses, which support current market prices. 
Excessive occupancy can be handled by strict enforcement of the local building, 
health, fire, and occupancy ordinances, after some surplus of accommodations 
has been provided for the families affected by such enforcement. Unrealistic 
hopes of increased future value will ordinarily be revised on adoption of a master 
plan for the city, such as is provided in the bills. The physical improvement 
which the two bills permit and the demonstrations of future possibilities will be 
of the greatest value, provided acquisition procedures followed under the bills 
do not act as a precedent for needless financial costs which can only limit redevel- 

The importance of technological progress in the building industry for effecting 
substantial reduction in building costs and the price of housing to the consumer 
was discussed in a previous section of this report.'^ In that connection the 
importance of bill S. 2046, introduced by Senator Kilgore on June 23, 1944, was 
mentioned. Passage of this bill would bring about important progress in the 
building industry and aid in making low-cost housing a profitable enterprise for 
private industry. 

Housing in the Community 

The Department of liabor has a special interest in the housing of individual 
wage earners and salaried workers and in housing as it affects the health and 
development of children. The relation of poor housing to illness, crime, and 
delinquency has been studied over a long period of time. It is very difficult 
to isolate the effect of this one factor in the complex of causes which contribute 
to ill health and social maladjustment. 

Housing and health 

The Committee on Housing and the Community of President Hoover's Con- 
ference on Home Building and Home Ownership in its report on the relationship 
of housing to illness ^^ pointed out that "Housing has an evident relation to 
health. This relationship is partly intimate, but mainly indirect. The rela- 
tionship between housing and health is so apparent that a few diseases have been 
called house diseases, i* It is difficult to separate the factors of crowding, 
crowding, heredity, race, and personal habits, poverty, diet, and other hygienic 
and sanitary influences from the actual housing conditions. * * *" But, 
"It is the judgment of this committee that this problem comes within the purview 
of good health administration, although it is largely a broad social and economic 

There have been some investigations on the relation of housing to health which 
were planned in such a way as to provide clear evidence of the effect of poor 
housing, as such. 

1' See the section, "Effect of Costs on Building and Housing," pp. 9-19. 

13 The President's Conference on Home Building and Home Ownership. Housing and the Community. 
Vol. VIII, pp. 4-12. 1932. 

'< The committee listed tuberculosis, typhoid fever, hookworm disease, diseases spread by rodents and 
vermin, malaria, plague, typhus fever, infant mortality and venereal diseases as directly affected by poor 
housing. They might well have added rickets, which is caused in party by inadequate sunlight. 


A report of the Children's Bureau on the causes of infant mortality in seven 
cities showed a high correlation between overcrowding, earnings of father, and na- 
tionality of mother and the proportion of deaths in infancy among babies having 
survived 2 weeks. When the data were analyzed so as to eliminate the factors of 
earnings and nationality, overcrowding was found to have a profound effect on 
the infant death rate. The figures are as follows: 

Ratio of actual number of infant deaths to number expected on the basis of the average 

for all infants 
AU families 100. 

Families living in dwellings with — 

Less than 1 person per room 8L 1 

1 and less than 2 persons per room 110. 5 

2 and less than 3 persons per room 129. 8 

3 or more persons per room 146. 

An analysis of the relations of poor housing to illness and accidents on the basis 
of data obtained in the National Health Survey '^ shows a definite relationship 
between crowding and the incidence of certain diseases. For example, the pro- 
portion of families having pneumonia or tuberculosis in the year of the survey was 
greater among families having one to one and a half persons per room than among 
those with less than one person per room, and still higher among those having 
more than one and a half persons per room. The proportion of children under 5 
having had diphtheria and mumps was related to the degree of crowding in their 
homes. The analysis also showed that children in crowded homes had the com- 
mon communicable diseases of childhood (chickenpox, scarlet fever, German 
measles, mumps, measles, diphtheria, and whooping cough) at an earlier age than 
children living in homes with less than one person per room. It is generally recog- 
nized that a younger age incidence means a greater risk of serious complications 
and of mortality. 

A correlation of the frequency of certain digestive diseases with the presence or 
absence of a flush toilet shows that illness of this type lasting a w^ek or more 
(indigestion and other stomach ailments, diarrhea, enteritis, colitis, typhoid, and 
paratyphoid fever) was much more apt to occur in families without a flush toilet 
than in families with modern plumbing. In fact the proportion was 70 percent 
greater in families living in dwellings without modern plumbing. As the report 
notes : 

"In the interpretation of this excess, several points must be borne in mind. 
First, in households not meeting this standard there will probably be concomitant 
deficiencies (especially lack of screening and poor facilities for refrigeration of 
food) which may have an effect on the illness rate from this group of digestive 
diseases. As in the case of the crowding index employed in the preceding sec- 
tion, we are confronted with an expression which tends to measure poor housing 
as a whole. In the second place, the excess may be due, in part at least, to the 
lower economic level of households which do not meet the standard set as to toilet 
facilities. However, data show that the excess is marked in each income group." 

About 33 percent of the accidental deaths in the United States in the pre-war 
period were caused by accidents in the home, and about 50 percent of the acci- 
dental injuries occurred in the home.^^ The Public Health Survey showed that 
the frequency of accidents in the home was related to the rent or rental values of 
homes of families reporting accidents which required hospitalization or were dis- 
abled for a week or longer (including fatal cases). The analysis showed that the 
frequency of home accidents decreased as the rent or rental value went up, and 
that this tendency was true of accidents due to each type of injury (falls, burns, 

Housing and delinquency 

As regards the relation of delinquency and housing the Committee on Housing 
and the Community of President Hoover's Conference on Housing and Home 
Ownership concluded "that delinquency is concentrated in the areas of bad hous- 
ing and is associated with a complex of conditions, of which bad housing is only 

15 Britten, R. H.. Brown, J. E., and Altman, I. Certain Characteristics of Urban Housing and their 
Relation to Illness and Accidents. Milbank Memorial Fund Quarterly, April 1940, xvii, No. 2, pp. 114-136. 
1' National Safety Council: Accident Facts. 


one. There is no sufficient reason for believing that an appreciable reduction in 
delinquency rates will result from improvement of individual houses, if other 
things remain unchanged. The conclusion, on the contrary, is that a reduction 
in delinquency rates is most likely to result from a program which combined im- 
provements in housing with modifications in other elements in the complex. 
This combination means, at the least, the development of improved housing in 
neighborhood units." 

The most recent summary of the available data on the subject appears in a 
report of the Housing Division of the Federal Emergency Administration of 
Public Works. 

This summary was made to find out whether the delinquent members of our 
society have been definitely handicapped in relation to housing. 

Previous surveys concerned with the housing problem of delinquents and 
criminals provided a substantial amount of background material. New data 
were collected by means of a statistical study of the housing of several groups of 
delinquents and criminals. 

On the basis of material collected for this and previous studies the following 
conclusions were reached.'' 

1. Judged by household space (number of persons per room) the delinquent 
group in both the urban and rural communities is housed much less adequately 
than is the general population. 

2. The condition of the structure in which the delinquent member of our 
society is housed is inferior to the type of dwelling occupied by the general 

3. A significantly large proportion of the delinquent group comes from homes 
which are situated in overcrowded areas of poor light and ventilation and having 
inadequate wholesome recreation space. 

4. A major portion of the delinquents studied came from unsatisfactory neigh- 
borhoods — sections not only marked by congestion and physical deterioration, 
but also by the presence of positive bad factors, such as nearby pool halls, street 
gangs, etc. 

The general conclusion reached on the basis of this inquiry was that the delin- 
quents studied were handicapped with respect to every aspect of their housing 
situation. "With reference to the juveniles at least, the conclusion can scarcely 
be escaped that the housing, if not the chief factor, was at least a very significant 
factor accounting for the delinquent behavior." 

"It is reasonable to expect, provided the housing (including not only the 
structure itself, but also the immediate environment) were improved, that delin- 
quency would decrease. This reasoning is confirmed by careful students of the 

Clifford R. Shaw, a specialist in studies of juvenile delinquency, makes the 
following comment on the environment factor in delinquency: 

"Thus in the delinquency areas of the city the activities and values of many 
of the play groups are largely of a delinquent character. It is important to note, 
particularly in the deteriorated sections of the city where large families are crowded 
into limited quarters and the facilities in the home for the satisfaction of play 
interests are extremely meager, that the play group may almost completely 
supersede the family as an agency for the control and direction of the boy's 
activities. In fact, his most vital relationships may be restricted almost exclu- 
sively to these play groups. In such cases, this group may represent the only 
moral order with which the boy is intimately familiar and may serve as the chief 
source from which patterns of behavior are acquired. It should not be surprising, 
therefore, that the boy's identification with the play group very frequently marks 
the beginning of his career in delinquency and crime." *^ 

In the introduction to a recent book by Shaw and McKay, Prof. E. W. Burgess 
of the University of Chicago comments: 

"The findings of this study establish conclusively a fact of far-reaching sig- 
nificance, namely, that the distribution of juvenile delinquents in space and time 
follows the pattern of the physical structure and the social organization of the 
American city. 

"If the main trend in city growth is expansion from the center to the periphery, 
then two consequences follow. Physical deterioration of residences will be 

1' U. S. Federal Emergency Administration of Public Works. Housing in Relation to Delinquency and 
Crime (A Study of Certain New Case Material). 1936. pp. 40-41. 
18 Bulletin of the State University of Iowa, pp. 3-4, New Series 701. 1933. 


highest around the central business district, lowest at the outskirts, and inter- 
mediate in between. Social disorganization will correspondingly be greatest in 
the central zone, least at the outer zone, and moderate in the middle zone. As far 
as this theoretical conception of the effect of urban growth upon the physical 
structure and the social organization of the city corresponds to concrete reality, 
the incidence of juvenile delinquency would be expected to be highest in the 
residential areas of the center of the city and to decrease regularly to the periphery. 

"Accordingly, for the majority of the cities studied, concentric zones were set up 
by arbitrarily marking off uniform distances of from 1 to 2 miles. Delinquency 
rates were calculated by taking for each zone the ratio of official juvenile delin- 
quents to the population of juvenile court age. 

"The findings were astonishingly uniform in every city. The higher rates were 
in the inner zones, and the lower rates were in the outer zones. Even more 
surprising was the discovery that, for all cities but three for which zonal ratios 
were calculated, the rates declined regularly with progression from the innermost 
to the outermost zone. Even in the three cities (Omaha, Birmingham, and 
Boston) where the rates in outermost zones are somewhat higher than in inter- 
mediate zones, these exceptions can be explained by local counteracting factors, 
such as the presence of industrial areas near the periphery, with perhaps the 
additional fact of variation in policy of diiferent courts in Greater Boston," " 

Housing needs of large families 

Families of employed wage earners and clerical workers in large cities in the 
mid 1930's, with at least one member employed in at least 30 weeks of the year, 
had incomes averaging $1,524. (They were a relatively favored group at that 
time when about 17 percent of our city families were receiving some relief during 
a year.) Seventy percent of these families rented their homes. Thirty-nine 
percent of the renting families in this group and 32 percent of the families who 
owned their own homes did not have the following basic housing facilities in 
combination: Inside flush toilets, running hot water, electric light, and gas or 
electricity for cooking. In smaller cities the proportion of nonrelief families 
without these facilities was even larger. In villages in 1941 only one-third of the 
families had these four facilities: Hot and cold running water, tub or shower, an 
indoor flush toilet, and electricity for lighting. 

The number of larger families without modern conveniences was very striking. 
Among the 35 percent of the families at the lowest economic levels found among 
the employed city wage earners and clerical workers, the household averaged 5 
persons, as compared with 3.8 persons for the group as a whole. Sixty-two 
percent of the children in the employed wage-earner-clerical worker group were 
found in this lowest third of their families. Thirty-seven percent of the families 
at this level were without modern housing facilities. 

Recent data from the Census Bureau show that on the basis of the birth and 
death rates prevailing in the United States between 1930 and 1940 the population 
of the Nation would eventually show a slow decline in the absence of net immigra- 
tion. If the birth and death rates of the period 1935 to 1940 were to continue 
indefinitely there would by 978 daughters born per generation for every 1,000 
women born in the preceding generation. In the years 1905 to 1910, 1,336 
daughters were born to every 1,000 women in the preceding generation. In 
this war as in the last there has been an increase in the birth rate, but a peak was 
reached in January 1943. Beginning with October 1943 there has been a sharp 
drop in the birth rate. If the experience of the last war is repeated, there will 
be a great increase in the number of births immediately after the demobilization 
of the Army, and then the decline which has been going on since 1820 will be 
resumed. It seems likely that this will happen if there is no change in our eco- 
nomic and social policies particularly since the recent upswing in the birthrate is 
result of more women under 30 bearing their first child. The number of women 
who had already had 2 or more children who bore children in 1942, was less than 
in 1933, when the birth rate reached an all-time low. The decline in the birth 
rate has been particularly striking in our cities. If the migration to cities from 
the farm is continued after the war, as seems likely, this will further accelerate 
the decline. 

'» Shaw, Clifford R., and McKay, Henry D., Juvenile Delinquency in Urban Areas, 1942, pp. IX-XI. 


The difficulty of obtaining adequate housing for large families at reasonable 
rental rates is one of the factors making for small families in cities. The percent- 
age of new dwellings with four rooms or less has been gradually increasing for a 
long time. (See the section of this report on The Effects of Costs on Building 
and Housing.) This is a natural result of the declining size of family, but it also 
serves to accelerate a trend, which may, in course of time, have serious conse- 
quences for our economy. 20 Lorimer and Roback ^i found in analyzing data on 
consumer purchases gathered by the Bureau of Labor Statistics that there were 
no significant dilTerences between housing expenditures of large and small families 
at the same income level. In fact the higher expenditures for food by the larger 
families resulted in somewhat smaller percentage of total expenditure going to 
housing in large as compared with small families. They say, "It is therefore 
apparent that larger families (as regards number of children under 16) are forced 
to accept more crowded quarters or live in less desirable situations." 

In Sweden, where the decline in the birth rate has proceeded much further than 
in the United States, and where city dwellings are on the average smaller, the 
Government adopted in 1935 a housing program which places special emphasis 
on building dwellings for families with three or more children, and for subsidizing 
these families. 22 Differentiating rent according to income has been followed in 
some war housing projects, and the Department recommends this be continued 
in post-war projects for low and moderate-income families. In addition it is 
recommended that in developing post-war plans, special attention be paid to 
providing low-cost dwellings for families with three or more children. 

Housing and morale 

As far as we know, there have been no studies of the relation of housing to 
morale in peacetime (except the studies of housing and delinquency and crime, 
which may be regarded as extreme cases of the deterioration of morale) . During 
the war there have been sporadic studies of the causes of absenteeism, and it has 
been found that in some centers poor housing has been an important factor in 
the situation. 

Both the American Federation of Labor and the Congress of Industrial Organi- 
zations have committees on post-war housing which stress the importance of good 
housing in maintaining after the war a working population with high morale. In 
addition, some of the national and international unions have post-war housing 
committees of their own. 

The cost of bad housing to the municipality 

During the 1930's a number of American cities made studies of the cost of 
certain slum areas to the city government. The cost of direct services such as 
hospitalization, treatment at venereal disease clinics, extinguishing fires, and the 
care and treatinent of delinquents and criminals was calculated for the area, and 
the general administrative expenses of the city were prorated. The resulting per 
capita expense was then compared with the taxes received from the area. In the 
case of Boston it was found that excess cost in slum areas was more than $37 per 
capita per year. Studies made in Indianapolis and Cleveland were not as com- 
prehensive but also showed large excess costs in the slum areas where property 
valuations are very low, and where the incidence of illness, and crime and delin- 
quency is very high.23 

Housing and city planning 

The Department is concerned not only about a post-war housing program which 
will make well-built homes of adequate size and with adequate facilities available 
to low- and moderate-income families. It is also concerned about a program that 
will provide for building such homes in well-planned neighborhoods which are 
properly zoned so as to protect them against blight in the future, and which have 

2» See Two Billion People, Fortune magazine, February 1944, pp. 157-163; and Effect of the War on the 
Birth Rate and Post-war Fertility Prospects, by Wilson Grabill, American Journal of Sociology, August 

21 Lorimer, F., and Roback, H., Economics of the Family Relative to Number of Children. Milbank 
Memorial Fund Quarterly, vol. XVIII, No. 2, April 1940, pp. 119 ff. 

-'2 Myrdal, Alva, Nation and Family, p. 204. 1941. 

23 A summary of these studies is presented in Wood, E. E., The Costs of Bad Housing, Amials of the 
American Academy of Political and Special Science. Vol. 190, March 1937. 


proper schools, play space for children (both outdoor and indoor), nursery schools 
or day-care centers for the children of mothers working outside their homes 
facilities for the health supervision of infants and young children, and protection 
against traffic hazards. In order to facilitate plans for housing developments of 
this sort and for the coordination of the new housing with school, public recrea- 
tion, public health, and other community facilities, the Department recommends 
that where the new developments are to be assisted in any way with Federal 
funds, the plans shall be subject to the approval of a responsible agency of the 
local government •such as the local planning board, in which there is representation 
of housing authorities, of local government departments including the school board 
the public health department, the welfare department, the public recreation com- 
mission, and other interested government departments, of local labor organiza- 
tions and other community groups. 

Summary of Recommendations 

1. The Federal Government should make a concerted effort to reduce seasonal 
fluctuations in the building industry. (See pp. 5 and 20.) 

2. Coordinated and extensive attack on restraints in the building industry by 
the Antitrust Division of the Department of Justice should be resumed in order 
to give the greatest possible encouragement to free competitive enterprise and to 
research and technological change. (See pp. 13-14.) 

3. The Federal Government should promote widespread research in building 
through already existing, well-equipped, and competent agencies, such as the 
National Bureau of Standards of the Department of Commerce and the Forest 
Products Laboratory of the Department of Agriculture, and through an agency 
like the National Advisory Council of Aeronautics for aircraft, toward the end of 
making it profitable for private industry to build houses low-income groups can 
afford. The results of such research should be given wide publicity. Senate bill 
2046 should be considered in this connection, provided that in the broad programs 
of developmental research proposed it were made mandatory for the National 
Housing Agency under whose auspices the research would be carried on to avoid 
duplication of effort and of existing facilities and personnel of such agencies as the 
National Bureau of Standards and the Forest Products Laboratory in the tech- 
nical field and the Bureau of Labor Statistics in the economic and statistical field. 
(See pp. 15 and 46.) 

4. Local regulation of land use and of speculative subdividing, improvement of 
zoning, and redevelopment of blighted areas should be promoted by the Federal 
Government by means of Federal support such as would be provided by Senate 
bills 953 (Federal urban redevelopment bill of 1943) and 1163 (the neighborhood 
redevelopment bill), introduced, respectively, by Senator Thomas on April 2, 1943, 
and Senator Wagner on June 4, 1943. These "bills should be considered together^ 
along with provision also for federally subsidized slum clearance, and their differ- 
ences ironed out to the end of providing sound and integrated legislation covering 
(1) financial aid to local governmental bodies for developing comprehensive master 
plans of their land; (2) aid in the purchase of land and in its improvement necessary 
to preparing it for neighborhood rebuilding; and (3) provision of public housing 
for low-income groups where private enterprise under the acts cannot meet the 
need. Feasibility of the program of land acquisition depends, however, on reduc- 
ing acquisition costs to a figure approaching the low economic value of the land 
when related to its uses. (See pp. 16 and 44-46.) 

5. The Federal Government should continue to provide for the area of housing 
need that is not met by private enterprise, not as a means primarily of employing 
workers, but rather to house people decently. (See p. 41.) 

6. A decennial Census of Housing should be taken to keep the country's hous- 
ing information up to date and permit analysis of trends in this vital field (See 
p. 33.) 

7. The existing necessary restrictions on the use of critical materials for housing 
should be modified progressively as the military situation perm.its in order to 
create inventories of building materials, thereby giving confidence to buyers 
and builders alike. (See p. 42.) 

8. To prevent a buyers' strike after the war, tight control should be maintained 
over post-war prices and advertisement of fantastic and preposterous post-war 
houses and equipment should be curbed now as much as possible. (See p. 42.) 


9. Serious consideration should be given to Senate Resolutions 13 and 112 
introduced by Senator Taft and providing for study of all Federal agencies now 
concerned with housing to the end of developing a constructive over-all plan for 
housing provision and for the permanent coordination of all Government activities 
relating to housing. (See p. 44.) 

10. Public experimentation with plans for partial tenant maintenance should 
be continued and special emphasis be placed on educational programs designed to 
develop a sense of community responsibility among tenants in order to reduce the 
cost of tenant occupancy and improve renters' housing conditions. (See p. 25.) 

11. Investigation should be carried on by the Subcommittee on Housing and 
Urban Redevelopment into the feasibility of Government certification as to the 
quality of materials going into the construction of homes and inspection and 
certification as to repairs and replacements made by the owner. Such 
certification and inspection would make home ownership and disposal less of a risk, 
thereby placing it within the range of more wage earners. An equity insurance 
plan such as that recommended by Ivan Tarnowsky is worth consideration also. 
(See p. 27.) 

12. In view of the current serious housing shortage and inadequacy in many 
areas, removal of temporary or demountable dwelling units constructed during 
the war emergency should be undertaken only if it is established that they are no 
longer needed. (.See p. 36.) 

13. Rent should be differentiated according to income in post-war public hous- 
ing projects for low- and moderate-income families. (See p. 55.) 

14. Special attention should be paid to providing low-cost dwellings for families 
with three or more children. (See p. 55.) 

15. Plans for post-war housing to be assisted in any way with Federal funds 
should be subject to the approval of a responsible agency of the local government 
such as the local planning board, in which there is representation of housing author- 
ities; local government departments including the school board, the public health 
department, the welfare department, and the public recreation commission; of 
local labor organizations, and other community groups. (See p. 57.) 


A Page 

Addison, F. G., Jr 2182-2185 

Age of nonfarm housing, 1940 1242, 1383 

Airports 1600, 1601 

Alanzan Courts, San Antonio, Tex 1979 

Alexandria, Va 1529, 1530 

Alley Dwelling Authority, District of Columbia 2090 

American Bankers Association 2182-2185 

Charts submitted: 

Average cost per family of new dwellings in 257 identical cities, 

1921-43 1882 

Cash and Government securities, United States corporations, 

1939-44 1886 

$5,000 pre-war house costs 1884 

Indexes of building costs for the standard 6-room frame house 1881 

Net working capital. United States corporations, 1939-44 1886 

New dwelling units in nonfarm areas, 1920-43 1885 

Percentage of mortgages made at varrying interest rates, St. 

Louis, 1893-1944 1880 

St. Louis building permits, total construction, 1917-43 1879 

St. Louis reproduction costs, 1913-44 1881 

Tables submitted: 

Additional cost per dwelling unit for use of slum sites instead of 

vacant sites 2187 

Average cost per family of new dwellings 1883 

Building costs, standard 6-room frame house 1883 

Comparison of city building permits by years 1880 

Net income of farmers in various areas 1887 

New dwelling units in nonfarm areas, 1920-43 u__ 1884 

Real-estate loans by type of security, by classes of banks, 1939-44_ 2184 
Real-estate loans of all active banks in United States, by classes, 

1913-44 2184-2185 

Savings and other time deposits in banks, 1910-44 2183 

Site acquisition and site improvement as percent of total develop- 
ment cost for low-rent projects on vacant sites 2186 

American Federation of Labor 1633, 1637, 1638, 1640, 1643. 1646 

American Federation of Labor: 
Tables submitted: 

Estimated number of all operating business firms in contract con- 
struction compared with manufacturing and all industries in 

1939 and 1943 c 1659 

Housing need, 1940-56 1658 

American Housing by Miles Colean 1862 

American Institute of Architects 2152-2158 

American Institute of Planners 1605 

Statement of 1619-1622 

American Planning and Civic Association 1 90 1-1 908 

Amortization 1 224, 

1389, 1395, 1402, 1430, 1445, 1446, 1454, 1485, 1544, 1553, 1582, 
1638, 1694, 1695, 1697, 1699, 1713, 1725, 1741, 1748, 1754, 1766, 
1768, 1769, 1903, 1920, 1924, 1949, 1950, 1986, 1998, 2068, 2088, 

Adoption of long-term amortized loan plan 1284 

Extension of customary period 1665 

Home Owners' Loan Corporation amortized loans widely adopted 1407 

Loans not written by commercial banks 1389 

91183— 45— pt. 15 13 I 



Anderson, Constance W 2170, 2171 

Annual volume of residential construction, 1920-39 1213, 1214 

Appraisal methods 1 289, 

1637, 1684, 1767-1768, 1770, 1848, 1855, 1861, 1928, 2015 

Adequate appraisals keep costs down 1479 

Federal Housing Administration system of appraisal 1451 

Higher standards should be stimulated 1668 

Improvement in standards 1284 

Uniform system has proved outstanding contribution in the field of 

home financing 1 455 

Wide variance in the standards of 1603, 1604 

Architectural trends 1 600 

Arlington County, Va 1529, 1530, 1531, 1540 

Arna Valley housing project 1531 

Arnold, Thurman, cited 2014 

Assets and loans outstanding, for selected financial institutions, 1926-43- _ 1283 


Banking and Currency Committee • 1191, 1192, 1671 

Bankhead-Jones Farm Tenant Act 1703 

Barkley, Hon. Alben W 1192 

Bates, Harry C, chairman, housing committee, American Federation of 

Labor ■_ 1633-1649 

Bestor, Paul, Prudential Life Insurance Co., vice president, in charge of 

mortgage loan investments 1948-1956 

Bettman, Alfred, chairman, the American Institute of Planners, Cin- 
cinnati, Ohio 1604-1619 

Blandford, John B., Jr., Administrator, National Housing Agency. _ 1194-1321, 

1402, 1417 
Bodfish, Morton, executive vice president. United States Savings and 

Loan League 2040-2064 

Bohrer, Randolph 2159-2169 

Boston, city planning board of 1231 

Revenues and expenditures for various types of housing 1232. 1233 

Boyd, Beverly M., Federal Council of Churches in America 2064, 2065 

Brand Whitlock Homes, Toledo, Ohio 1979 

Brigham, Elbert S., president. National Life Insurance Co., Montpelier, 

Vt 1917-1931 

British Government's plan for post-war reconstruction 1526 

Building and loan associations^ 1385, 1395, 1418 

Limitation as to lending authoritv 1399, 1400 

Building codes 1286, 1316, 1457, 1746, 1855,2014,2015, 2056 

Municipal regulations 1601 


Commercial 1281, 1283, 1286, 1386, 1388, 1432, 1847, 1850 

Mutual savings 1281, 1283, 1289, 1385, 1389, 1850 

National 1432 

Savings banks 1389, 1432 

Building industry 1214, 1516, 1587, 

1674-1680, 1841, 1861, 1862, 1942, 2001, 2004-2006, 2075, 2076 

Annual income in the 1 652 

Government encouragement of 1902 

Reorganization of the 1747 

Wartime controls 1853, 1854, 1962, 1990-1992, 2002 

Building materials, availability of 1843, 1991-1995, 2002 

Bureau of Home Economics 1260 

Bureau of Labor Statistics 1260 

Survey of urban families 1237 


Cabrini Homes, Chicago, 111 1979 

Capital, availability of 1842, 1843 

Carr Square housing project, St. Louis, Mo 1979 

Carson, John 2144-2151 

Cedar Apartments, Cleveland, Ohio 1979, 1980 

Chicago Housing Authority 2023, 2024, 2081, 2083 



Cincinnati Real Estate Board 2151, 2152 

Citizens' Housing Council of New York 1743, 2159, 2169 

City planning 1601, 1602, 1685, 1697, 2014, 2033, 2034, 2056 

City Planning Conamission of Cincinnati 1605 

Clark, Irvin W., chairman, residential committee, Producers' Council, 

Inc ■- 1997-2000 

Clinton-Peabody Terrace, St. Louis, Mo 1979 

Colean, Miles, cited 1862, 1963 

Community housing _' 1287 

Community housing supply, problems of 1315-1317 

Congress of Industrial Organizations — Housing Committee 1672-1687 

Consolidated statement of war housing funds as of Oct. 31, 1944 1200 

Construction industry (see also, Building industry) 1987 

Construction loans 1479, 1603 

Insurance of 1 968 

Construction wages 1639, 1648, 1652 

Consumer expenditures for housing compared with total consumer-ex- 
penditures 1223, 1930-1939 

Conversions 20 17 

Cooperative League 2144-2150 

County housing authorities 1893 


Defense Homes Corporation ^ 1483, 1534, 1851 

Board of the 1516 

Demountable housing - 1206, 1486, 1487, 1692 

Disposal of war housing 1194, 

1195, 1204, 1205, 1212, 1483, 1484, 1683, 1684, 1691, 1692, 
1852, 1853, 1863, 1902, 1962, 1990, 2001, 2002, 2077, 2078 

Draper, Earl S 1424 


East River Houses, New York, N. Y _*_ 1979 

Eccles, M. S 2136-2139 

Education and labor committee 1191, 1192, 1671 

Electrical codes 1 286 

Employment in construction 1220, 1274, 1276, 1843 

Equity financing 1279 

Equity investment 1447, 

1581, 1732, 1734, 1748, 1763, 1765, 1871, 1954 

By insurance companies 1955 

In rental housing projects 1 640 

Transfer of equities 1667, 1668 

Erdmann, Arthur G., president, National Savings and Loan League.. 1938-1947 
Expenditures for residential construction compared with expenditures for 

all capital goods 1221 


Fahey, John H., Commissioner, Federal Home Loan Bank Administra- 
tion 1381-1429 

Fairfax County, Va 1529, 1530, 1531 

Fairlington housing project-.- 1530, 1533, 1536, 1539 

Families whose housing has been directly affected by Federal Housing 

Administration insurance activities 1426 

Family income, 1942 1678 

Family spending and saving in wartime, study of 1 260 

Farm Credit Administration 1388, 1851, 1996 

Modifying loans for repair of farm buildings 1891 

Farm Security Administration 1482, 1519, 1652, 1851 

Federal Home Loan Bank Act 1390, 1394, 1418, 1851 

Bills to amend 1398 

Federal Home Loan Bank Administration 1208, 

1301, 1382, 1384, 1390, 1391, 1403, 1410, 1475, 1725, 1850, 1851, 
1902, 1925, 1988. 


Federal Home Loan Bank Administration — Continued. Page 

Activities of 1288 

Function of home loan banks 1 289 

New resources available for home financing 1285 

Private financing aspects of home ownership 1381 

Federal Home Loan Bank Administration: 
Table submitted: 

Comparison of mortgaged owner-occupied nonfarm dwelling units 

and Home Owners' Loan Corporation loans 1409-1410 

Federal Home Loan Bank Board, sets a ceiling on interest rates within the 

bank svstem 1387 

Federal Home Loan Bank System 1191. 

1284, 1288, 1302, 1382, 1384, 1390, 1403, 1404, 1416, 1453, 1940, 
1946, 2041, 2054. 

Activities of 1393 

Character of member institutions 1385 

Evolution of, and its possibilities of greater usefulness in the post-war 

period i 1384 

Largest mortgage reserve system 1391 

Member institutions 1385 

Pressure against inflationary trends in real estate markets 1398 

Federal home loan banks 1384, 1945 

Federal Housing Administration 1191, 

1208, 1284, 1301, 1304, 1309, 1316, 1384, 1395, 1404, 1456, 1458, 
1594, 1599, 1603, 1604, 1638-1639, 1662, 1678, 1725, 1747-1748, 
1762, 1765, 1771, 1850, 1851, 1862, 1902, 1924, 1925, 1940, 1948, 
1988, 1996, 2015, 2035, 2079. 

Activities of 1290-1291 

Annual income of new home buyers 1435 

Control of appraisals and insurance 1415 

Families affected by Federal Housing Administration insurance 

activity 1471 

Family income groups served 1473-1474 

Information concerning housing conditions 1458-1460 

Insurance of 20- and 25-yt5ar loans 1284 

Insuring operations — all titles 1424-1454 

Location of homes insured under section 203 of title II 1471-1473 

Long-term amortized loans insured by 1289 

Long-term amortized mortgages 1389 

Resources available for home financing 1285 

Mortgage insurance 1420, 1436, 1714 

Mutual mortgage insurance fund operations 1429-1432 

New housing construction and sales of existing homes 1474-1478 

Post-war operations 1997-1999 

Title I loans 1395, 1413, 1425, 1426, 1458, 1460, 1472, 1475, 1476 

Title II loans . 1208, 

1395, 1421, 1422, 1429, 1455, 1460, 1474, 1475, 1476, 1477, 1480 

Title III 1451 

Title VI, war housing insurance 1421-1424, 

1479, 1480, 1596, 1604, 1676, 1872, 1981 
Title VI, resources and liabilities, war housing insurance fund — 1423, 1424 

Types of homes insured 1473 

Underwriting technique 1455 

Valuation of new homes started under Federal Housing Administra- 
tion 1433,1434 

War housing insurance, operations of the 1420-1424 

Federal land banks 1388, 1894 

Federal Housing Administration: 
Charts submitted: 

Annual income of new home buyers under the Federal Housing 

Administration plan, 1940 --- 1435 

Trends in home mortgage financing under the Federal Housing 

Administration plan, 1935-40 1437 

Valuation of new homes started under the Federal Housing Ad- 
ministration plan, 1935-41 1434 


Federal Housing Administration — Continued. 

Tables submitted: Page 

Federal National Mortgage Association purchases 1452 

Housing insurance fund: Statement of resources and liabilities, 

as of June 30, 1944 1448 

Mutual mortgage insurance fund: Statement of resources and 

liabilities, as of June 30, 1944 1436 

Net volume of notes insured under title I and firm commitments 
issued under sections 203 and 603, secured by properties located 
inside the metropolitan districts, cumulative 1934 through 

June 1944 1441-1444 

Statement A. Insurance provisions under title I of the National 

Housing Act 1465-1467 

Statement B. Title II (sec. 203) 1468-1469 

Statement C. Title II (sec. 207). New construction only, mort- 
gages exceeding $100,000 1469-1471 

Status of mortgage insurance operations (sec. 203 of title II) as of 

June 30, 1944 1436 

Status of mortgage insurance operations (sec. 207-210 of title ID, 

as of June 30, 1944 1447 

Status of title VI mortgage insurance operations, March 1941 

through June 1944 1423-1424 

Title I. Statement of income and expenses, including claims for 

insurance paid, period July 1, 1934, through June 20, 1944 142S 

Volume of Federal Housing Administration insuring operations 

by States 1439-1440 

Volume of Federal Housing Administration mortgages insured, 

by States i 1449-1450 

Yearly trend of characteristics of mortgages, homes, and borrow- 
ers: Median averages of new and existing home mortgages ac- 
cepted for insurance bv the Federal Housing Administration, 

under section 203, 1935-41 1438 

Federal Loan Agency 1310, 1850-1852 

Federal Mortgage Association 2055 

Federal National Mortgage Association 1 284, 1 464, 1945 

Operations of 1451-1453 

Federal Public Housing Authority _ 1205,1206,1306, 

1313, 1422, 1481-1524, 1542-1588, 1640, 1643, 1692, 1693, 1699, 
1703, 1725, 1757, 1850, 1902, 1920, 1921, 1925, 1988, 2185-2187 

Activities of 1291-1292 

Agent for Foreign Economic Administration 1482 

Conversion program 1205 

Cost of low-rent projects built on slum sites as compared with vacant 

sites 1522-1 524 

Development cost of the low-rest projects 1520 

Large-scale experience in slum clearance 1559 

Local organization for low-rent housing 1518 

Low-rent program experience and accomplishments 1517-1524 

Management of publicly financed conversion of homes for war workers. 1482 

Number of dwelling units in total program, as of Oct. 31, 1944 1489-1512 

Publicly financed conversions 1515-1517 

Responsibilities and organization of 1481-1483 

Stopgap housing 1515 

Federal Public Housing Authority: 

Chart No. 1. Total Federal Public Housing Authority program 1482 

Chart No. 2. Organization of Federal Public Housing Authority 1484 

Chart No. 3. War housing program under Federal Public Housing 

Authority 1484 

Chart No. 4. Local organization for low-rent housing 1518 

Chart No. 5. Low-rent program developed under United States Hous- 
ing Act 1518 

Chart No. 6. Development cost of low-rent projects 1520 

Chart No. 7. Elimination of substandard dwellings 1542 

Chart No. 8. Capital financing of low-rent projects 1544 

Chart No. 9. Federal Public Housing Authority capital funds for low- 
rent projects 1546 

Chart No. 10. Income of families admitted to low-rent projects 1548 


Federal Public Housing Authority — Continued. Page 

Chart No. 11. Gross rents of families admitted to low-rent projects.. 1550 

Chart No. 12. Income and expense of low-rent projects 1552 

Chart No. 13. Distribution of cost of low-rent housing 1554 

Chart No. 14. Federal Public Housing Authority contributions for low- 
rent projects 1556 

Chart No. 15. Effect of low-rent housing on tenants' welfare 1556 

Chart No. 16. Example of local 3-year program of low-rent housing.. 1568 
Tables submitted: 

Additional cost per dwelling unit for use of slum sites instead of 

vacant sites 1524 

Number of dwelling units in Federal Public Housing Authority 

program, as of October 31, 1944 1489-1512 

Site acquisition and site improvement as percent of total develop- 
ment cost for low-rent projects on vacant sites 1523 

Federal Reserve System, Board of Governors 21 36-2 1 43 

Federal savings and loan associations 1385, 1603 

Activities of 1289, 1290 

Chartering of 1940 

Twenty-year amortized loans 1284 

Federal savings and loan insurance corporations 1288, 

1302, 1382, 1384, 1902, 1940, 2041 

Activities of 1290 

Record of progress 1403, 1404 

Federal tools for housing and home financing 1288 

Federal Works Agency 1482, 1529, 1851, 1988, 1989, 2018 

Ferguson, Abner H., Commissioner, Federal Housing Administration 1291, 

1307, 1395, 1420-1480 

Fire-prevention codes 1 286 

Fisher, D. K. Este, Jr 2152-2158 

Fleming, Maj. Gen. Philip B., Administrator, Federal Works Agency. 1524-1529 

Foreign Economic Administration 1205 

Requisition for barracks in France 1514 

Forest Products Laboratory 1989 

Francis Cabrini Homes 2080, 2081 


G. I. bill of rights (see also Veterans' loans) 1208, 

1209, 1304, 1573, 1596, 1639, 1644, 1645, 1647, 1648, 1684, 1860, 
1888, 1942, 1944, 1969, 1996. 

Grant, Maj. Gen. U. S., 3d, first vice president, American Planning and 

Civic Association 1901-1908 

Green Hills housing project, Cincinnati, Ohio 1519, 1892, 1902 

Greenbelt towns 1482, 1483, 1519, 1756 

Greendale housing project 1892 

Gross national product , 1222 

Groves, Harold, cited 2007 

Gulick, Dr. Luther, cited 2007 

Guste, William J., chairman, committee on legislation, National Public 

Housing Conference, Inc 1688-1706 


H-1 housing program 1206, 1207 

H-2 housing program 1206, 1208, 1212 

H-3 housing program 1206, 1208, 1209 

Hansen, Prof. Alvin H 1605, 1611 

Three Plans for Financing Urban Redevelopment 1622-1625 

Hart, Mrs. Shirley K 1428, 1429, 1430 

Health ordinances 1286 

Henry G. Shirley Homes 1531 

Highways, development of, within urban areas 1540 

Hines, Brig. Gen. Frank T., Administrator of Veterans' Affairs, and Ad- 
ministrator of Retraining and Reemployment Administration 1761-1847 

Home indebtedness and private long-term debt, 1930-39 1226-1227 

Home Loan Bank Act 2049 



Home Loan Bank Administration 1404 

Home Loan Bank Board 1664 

Home Loan Bank System 1417, 1771, 1926 

Home Owners' Loan Act 1391, 1392, 1851 

Home Owners' Loan Corporation 1315, 

1316, 1382, 1384, 1390, 1392, 1394, 1409, 1410, 1415, 1482, 1635, 
1637, 1851, 1902, 1925, 1950, 2041, 2055. 

15- and 25-vear amortized loan plan 1284 

Activities of 1288, 1289 

Liquidation of 1414 

Modernized houses 1412 

Record of progress 1404-1406 

Home ownership 1381, 1382, 

1601, 1637-1639, 1653, 1736, 1748, 1948, 1996, 2043, 2056, 2063 

Financing in post-war period 2045-2052 

Long-term funds 1382 

Mortgage financing 1382, 1410-1413, 1415 

Veterans 1208, 1684 

Housing backlog 1841, 1842 

Housing construction, geographical distribution of 1842 

Housing costs 1260, 1477, 1478, 1603, 1646, 1647, 

1648, 1653, 1654, 1656-1658, 1664, 1665, 1680, 1681, 1928, 2015 

Capital - 1285 

Excessive costs 1 382 

Increase in costs since 1939 1668 

Measured against total family expenditures ' 1237 

Technical research 1299 

Housing developments and express highways 1529-1542 

Housing demand 1260, 1297, 1416, 1737, 1738, 1838-1840 

Housing industry 1277, 1865 

Housing need 1212, 1278, 1297, 1313, 1416, 1477, 

1633, 1655, 1656, 1674, 1690, 1697, 1698, 1987, 2006 

Estimate of 1260-1263, 1324, 1646, 1647, 1658 

Nonfarm dwelling units needed, 1945-55 1294-1296 

Post-war 1193, 1259, 1267, 1269, 1270, 1277, 1287, 1296, 2078 

St. Louis metropolitan area, analysis 1662-1664 

Statistics 1596 

Studies, as to 1929 

Veterans 1195, 1840, 1208 

Housing program 

Post-war program 1193 

Transitional 1194, 1195 

Housing situation before the war 1238 

Housing standards 1299, 

1639, 1645, 1668, 1679, 1727, 1737, 1929, 1943, 1993, 1994, 2006 

Architectural trends 1 600 

Improvement of 1455, 1458 

New housing 1457, 1458 

Inflationary trend 1413, 1414 

Insurance companies.. 1281, 1283, 1289. 1386, 1395, 1432, 1479. 1731, 1733, 1749, 
1847, 1848, 1849, 1917, 1948, 1949, 1999. 2000, 2034, 2035, 2041 

Assets available for mortgage loans 1863, 1871 

Guarantee of fixed return on funds in large scale housing projects 1304 

Iowa State Planniug Board, study of 1236 

Interest rate 1315, 1387, 1388, 

1389, 1390, 1408, 1479, 1480, 1557, 1576, 1582, 1603, 1666, 1680, 
1695, 1709, 1713, 1716, 1731, 1732, 1739, 1749, 1763, 1850, 1871, 
1917-1920, 1948, 1949, 1951, 1953, 1964, 1965, 1969, 2042, 2056 

Governmental control of 1917 

Relation to life insurance company premiums and reserves 1956-1958 

Reduction of interest rates in the housing field 1284, 1285 




Jacobstein, Dr. Meyer 1392, 1393, 1714 

Jane Addams Homes, Chicago, 111 1979, 1980,2080,2081 

Johnson, Lee, executive vice president, National Public Housing Confer- 
ence, Inc 1687, 1688, 1692, 1700 

Johnson, Reginald A., field secretary, National Urban League 2021-2029 

Johnston, Eric A., president. Chamber of Commerce of the United 

States 2031-2039 

Jurisdictional disputes 1715, 1716, 2014 


Keyserling, Leon H., general counsel, National Housing Agency 1269, 

1272, 1285, 1293, 1584 

Klutznick, Philip M., Commissioner, Federal Public Housing Authority — 1205, 

1292, 1293, 1307, 1308, 1309, 1481-1524, 1542-1588, 2185-2187 

Kreutz, Oscar R., executive manager, National Savings and Loan League. 1931- 

1939, 2065-2075 
Krooth, David, general counsel, Federal Public Housing Authority. _ 1544, 1585 


Labor, Department of . 2188-2218 

Charts submitted: 

Employment, new private residential building 2l92 

New privately financed nonfarm dwelling units and related 

factors 2198 

On-site and off-site employment on new private residential build- 
ing 2193 

Union wage rates and wholesale prices of building materials 2199 

Tables submitted: 

Table 1. Construction expenditures in continental United States, 

1915-43 2190 

Table 2. Expenditures for private residential construction as a 

percent of all construction expenditures, 1915-43 2191 

Table 3. Estimated on-site and off-site employment on new pri- 
vate residential building compared with total nonagricultural 

employment, 1 909-43 2191 

Table 4. Index numbers of building materials prices and other 

wholesale prices, 1920-43 2196 

Table 5. Indexes of union wage rates and wholesale prices of 

building materials, 1920-43 2197 

Table 6. New privatelv financed nonfarm dwelling units, and re- 
lated factors, 1920-43 2197 

Table 7. Percentage distribution of nonfarm and farm families-. 2205 
Table 8. Average expenditures for housing, household operation, 
furnishings, and equipment of nonfarm families and single con- 
sumers 2205 

Table 9. Percentage of home ownership, monthly rent or rental 
value, and average expenses of owners and renters, by money 

income class, 1941 2206 

Table 10. Estimated number of war workers' families living in 

substandard housing — 2209 

Average monthly employment on private building construction, 

1939-40 2200 

Income distribution, 1935-36 and 1941 .-- 2201 

Percentage of new homes with Federal Housing Administration 

insured mortgages under sec. 203 of the National Housing Act. 2195 

Percent of families that were home owners 2203 

Lafitte Avenue housing project 1979 

La Follette, Hon. Robert M 1192, 1193 

LaGuardia, Hon. Fiorello H., mayor of the city of New York, N. Y 1707-1720 

Table submitted: 

Completed low-cost public housing 1720 

Lakeview Terrace, Cleveland, Ohio 1979, 1982 

Land acquisition, improvement of the tools for 1305-1306 

Land improvements. {See Land planning.) 



Land planning 1456, 1594, 1738 

Airports 1600, 1601 

Availability of land 1597, 1598 

Coordination and planning 1643, 1644 

Improvement costs 1598, 1599 

Neighborhood plannmg 1599-1600 

Lanham Act 1197, 1204, 1205, 

1208, 1211, 1212, 1420, 1484, 1486, 1641, 1642, 1644, 1691, 1990 

Laurel Homes, Cincinnati, Ohio 1979, 2081 

Lee, Harold, general counsel. Federal Home Loan Bank Administration 1395 

1404, 1418 

Licensing laws ] 286 

Linder, Leo J . 2171-2181 

Limited dividend corporations 1573, 1584, 

1665, 1666, 1667, 1730, 1733, 1749, 1972, 2053 

Local housing authorities 1204,1285, 

1286, 1293, 1298, 1518, 1543, 1565, 1566, 1578, 1582, 1642, 1643, 
1665, 1681, 1693, 1694, 1696, 1736, 1739, 1740, 1741, 2015. 

Aid in war housing responsibilities 1691 

Disposition of permanent Lanham projects to 1484 

Disposition of permanent war housing to 1 485 

Guides to localities in determining their public housing needs. 1517, 1567-1571 

Federal Public Housing Authority 1903 

Low-rent nonwar housing of 1722, 1723 

Payments in lieu of taxes 1520 

Post-war needs 1517 

Sale of war projects to 1 684 

Slum clearance 1 690 

Local planning agencies 1 286 

Low-rent housing {see also Rental housing) 1204, 1205, 1206, 1286, 1287 

Lumber. {See Building materials.) 


MacDonald, Milton T., vice president, the Trust Co. of New Jersey, Jersev 

City, N. J :... 1868, 1872 

MacDonald, Thomas H., Commissioner, Public Roads Administration. 1529-1542 

Magnolia St. housing project. New Orleans, La 1979 

Mahan, L. E., president. Mortgage Bankers Association of America.. 1847-1873 

Marina Village, Bridgeport, Conn _. 1979 

Market analysis (see aZ.?o Supply).... 1459-1460, 1595-1596, 1668, 1745-1746, 1950 
Marquette, Bleeker, representing National Committee of Housing Associa- 
tions 1742-1760 

Marsh, Benjamin C 2181 

McLean Gardens housing project 1516, 1517 

Meridian Hill property 1517 

Merrion, Joseph E., president, the National Association of Home Builders 

of the United States 2075-2085 

Metropolitan Life Insurance Co 1530 

Metropolitan Life Insurance Co.'s Stuyvesant Town 1287 

Mohlman, Harry J 2151, 2152 

Mortgage Bankers Association 1847, 1848, 1849, 1850, 1858 

Chart submitted: 

Percent age of mortgages to total admitted assets 1 876 

Table submitted: 

Total mortgage debt (as of December 31, 1943) 1862 

Table and chart: 

Volume of mortgages and total admitted assets 1874, 1875 

Mortgage debt (as of December 31, 1943) 1862 

Mortgage finance 1279, 1315, 1383, 1410-1413, 1452, 1455, 1475, 1479, 1747, 

1748, 1847, 1861, 1917-1920, 1948-1956, 1997-2000, 2040-2057 

Adequate financing 1 382 

Current lending activity 1318 

Facilitation of flow of mortgage funds 1454 

Federal Home Loan Bank Administration 1381, 1420 

Government interest in home financing 1940, 1941 


Mortgage finance — Continued. Page 

Importance ofmethods 1382 

Improvement of mortgage lending practices and procedures. 1301, 1304, 1454 

New mortgage financing facility 1388 

Participation of lending institutions in insured small home. _ 1382, 1432, 1433 

Private residential housing 1381, 1420 

Qualitative improvements in 1283, 1284 

Secondarj' market created for mortgages 1284 

Single-mortgage financing 1284 

Speculation and inflation of prices 1415, 1416 

Trends in home mortgage financing under Federal Housing Adminis- 
tration plan, 1 935-40 1437 

Volume of mortgage loans made on nonfarm homes 1282, 1926, 1943 

Mortgage insurance 1 208, 

1320, 1424-1453, 1475, 1476, 1477, 1635, 1638, 1927, 2052 

Federal Housing Administration 1420, 1480 

Housing insurance fund operations ' 1445 

Loans for farm housing 1891 

Mutual mortgage insurance operations 1429, 1432 

Reduction of premium charge 1460, 1461 

Mott, Seward H., director, Urban Land Institute 1593, 1604 

Municipal economy and housing 1227, 1229 

Multiple-family apartment houses 1445, 1447 

Mutual housing ._ 1304, 1640-1641, 1665 


National Association of Home Builders 2076-2077 

National Association of Housing Officials 1720 

Housing for the United States After the War, report of 1721, 1723, 1724 

National Association of Real Estate Boards 2004, 2024 

Chart submitted: 

Proposed organization of housing and housing finance activities 

in the Executive branch of the Federal Government 2019 

National Bureau of Standards 1989, 2014 

National Capital Housing Authority 2090 

National Committee on Construction Research 1989 

National Committee of Housing Associations 1742 

National Committee on Housing, Inc 1659-1660, 1661, 1664, 1665, 1670 

National Congress of Parents and Teachers 2169 

National Health Survey, 1935-36 1236 

National Housing Act 1284, 1395, 1396, 1403, 1424, 1425, 1427, 1430, 

1445, 1446, 1451, 1477, 1574, 1683, 1851, 1886, 1986, 1997, 1998 

Attainment of objectives of the 1454, 1461 

Machinery and procedures of operation, titles I, II, and III 1461, 1471 

National Housing Agencv 1191, 

1206, 1208, 1209, 1259, 1260, 1285, 1296, 1301, 1316, 1422, 1481, 
1484, 1587, 1604, 1655, 1656, 1660, 1661, 1668, 1670, 1672, 1673, 
1674, 1680, 1690, 1692, 1715, 1740, 1745, 1746, 1747, 1840, 1850, 
1892, 1922, 1925, 1928, 1952, 1964, 2032. 

Analysis of housing costs 1680 

Analj'sis of provisions of State urban planning laws 1286 

Central assembly point for housing market statistics 1297 

Chart summarizing State zoning laws 1286 

Defines housing goal 1259 

Disposal agent for surplus housing 1204, 1848, 1863 

Estimate for post-war housing need 1269, 1270 

Housing needs, preliminary estimate 1324, 1380 

Operational responsibilty for publicly financed war housing 1205 

Powers vested in local housing authorities 1287 

Research 1299, 1300 

Role in home financing 1318 

Subdivision controls 1286 

The Tools of the National Housing Agency, and How They Work, 

study prepared by 1288 

War Housing .. 1691 

National Housing Board 1644 


National Housing Agency: 

Charts submitted: •■ '*^® 

Chart I. War housing program 1196 

Chart II. War housing characteristics 1198 

Chart IV. War housing program 1200 

Chart V. Occupancy of war housing 1203 

Chart VI-A. Annual volume of residential construction 1213 

Chart VI-B. Residential construction and industrial production. 1215 
Chart VI-C. Residential construction and general economic 

activity 1217 

Chart VI-D. Trend of employment, residential construction 1219 

Chart VI-F. Residential construction expenditures 1220 

Chart VI-G. Housing in gross national product, 1939 1222 

Chart VII-A. Housing expenditures and total consumer expendi- 
tures 1 222 

Chart VII-B. Home indebtedness and private long-term debt-.- 1226 

Chart VIII-A. Use pattern of developed urban land areas 1228 

Chart VIII-C. Housing in the municipal economy 1229 

Chart VIII-D. City revenues and expenditures 1232 

Chart VIII-E-1 and 2. Municipal expenditures in slum areas. . 1234 

Chart VIII-F. Relationship of housnig conditions to health 1236 

Chart VIII-G. Social aspects of slum areas. 1236 

Chart X-D. Age of non-farm housing, 1940 1242 

Chart X-E. Quality of existing housing 1 244 

Chart X-L. Family income and rent of existing housing 1252 

Chart X-M-l. Rent and quality of existing housing 1254 

Chart X-N. Family income and quality of existing housing 1256 

Chart XI-B. Families needing housing in 1955 1260 

Chart XI-D. Dwelling units needed in 1955 1264 

Chart XI-F. Housing in gross national product 1268 

Chart XI-G. Employment and lumber consumption 1270 

Chart XIII-A. Annual average nonfarm dwelling units needed, 

1946-55 1294 

Chart XIV-D. National Housing Agency's role in home fi- 
nancing -- 1318 

Major participants in the construction of a single-family house in 

an urban area 1278 

Organization of the principal housing functions of the Federal 

Government under the reorganization of February 24, 1942 — 1312 
Principal housing agencies and functions of the Federal Govern- 
ment prior to the reorganization of February 24, 1942 1311 

Summary description of National Housing Agency's program and 

its scope 1312 

Tables submitted: 

Table I. War housing program 1197 

Table II. War housing characteristics 1199 

Table III. War housing funds and mortgage insurance au- 
thorization as of October 31, 1944 1200 

Table IV. War housing 1201 

Table IVa. War program 1201-1202 

Table VI-A. Annual volumes of residential construction 1214 

Table VI-B. Residential construction compared with industrial 

production 1216 

Table VI-C. Residential construction compared with general 

economic activitv 1218 

Table VI-D. Employment in residential construction compared 

w ith total nonagricultural employment 1220 

Table VI-E. Lumber consumed by residential and all construc- 
tion compared with total lumber consumption 1322 

Table VI-F. Residential construction expenditures 1221 

Table VI-H. Residential rents, building-material prices, and 
construction costs compared with volume of residential con- 
struction and general economic activity _-- 1323 

Table VII-A. Consumer expenditures for housing compared with 

total consumer expenditures 1223 

Table VII-B. Home indebtedness compared with private long- 
term debt 1227 


National Housing Agency — Continued. 

Tables submitted — Continued. Page 

Table VIII-B. Estimated ratio of assessed valuation of resi- 
dential real estate to total assessed valuation of all property 

subject to local property tax 1230 

Table VIII-C. Estimated tax revenues from residential property 

as compared with total tax revenues and total city revenues 1230 

Table IX-A. Ratio of housing expenditures to income and to 
total expenditures for city families classified according to net 

money income, 1941 1323 

Table X-A. Amount of existing housing 1239 

Table X-A-1. Residential structures and dwelling units com- 
pared with households and population, 1940 1239 

Table X-B. Physical characteristics of existing housing 1280 

Table X-C. Physical characteristics of existing housing 1241 

Table X-D. Quality of existing housing 1243 

Table X-E. Quality of existing housing 1245 

Table X-F. Occupancy characteristics of existing housing 1247 

Table X-H. Occupancy characteristics of existing housing 1248 

Table X-I. Occupancy characteristics of existing housing 1249 

Table X-J. Economic characteristics of existing housing supply. _ 1250 

Table X-K. Economic characteristics of existing housing 1251 

Table X-L. Economic characteristics of existing housing 1252 

Table X-M. Economic characteristics and quality of existing 

housing 1254 

Table X-M-1. Economic characteristics and quality of existing 

housing 1255 

Table X-N. Economic characteristics and quality of existing 

housing 1 257 

Table XI-A. Estimated distribution of nonfarm families in 

1955 1261 

Table XI-B. Estimated distribution of total number of nonfarm 

dwelling units needed in 1955 1262 

Table XI-C. Estimated number of nonfarm dwelling units 

available in 1955 1263 

Table XI-D. Estimated number of nonfarm dwelling units to be 

constructed 1946-55 to supply total 1955 need 1264 

Table XI-E. Estimated number of nonfarm dwelling units to be 

constructed 1946-55 to supply total 1955 need 1266 

Table XI-F. Estimated expenditures for housing construction, 

compared with gross national product 1267 

Table XI-G-1. Estimate of employment related to 1,260,000 

housing units 1274-1276 

Table XII-B. Estimated year-end balance of outstanding mort- 
gage loans on one- to four-family nonfarm homes, by type of 

mortgage, 1926-43 1280 

Table XII-C. Estimated volume of mortgage loans made on 
one- to four-family nonfarm homes, by type of mortgage, 

1926-43 1282 

Table XII-D. Estimated amount of total assets, and amount 
and proportion of nonfarm home mortgage loans outstanding 

for selected financial institutions, 1926-43 1283 

Table XIII-A. Annual average nonfarm dwelling units needed 
1946-55 compared with number of new nonfarm dwelling units 

started in 1940 1294 

Table XIV-D. National Housing Agency's role in home financing- 1318 

National income 1260, 1266, 1552, 1573 

National Lawyers' Guild 2171-2181 

National League of Women Voters 2187, 2188 

National Life Insurance Co., Montpelier, Vt 1917, 1924 

Tables submitted: 

Federal Housing Administration sec. 203 loans made by National 

Life, 1935 to 1940 1922 

National Life Insurance Co., purchases and holdings of Federal 
Housing Administration — insured small homes and rental 

housing 1923 

National Mortgage Association 1939 



National Public Housing Conference 1683, 

1687, 1688, 1689, 1690, 1692, 1697, 1702, 1703, 1704 

National Savings and Loan League 1944, 2065, 2067, 2074 

Recommendations of 1937, 1938 

Suggestions for post-war housing 1941, 1942 

National Urban League 2021, 2027, 2028 

Charts submitted: 

Percent of occupied dwelling units needing major repair or with 

plumbing deficiencies, by race 2022B 

State of repairs and plumbing equipment for occupied units by 

race, for the United States 2022A 

Negro housing 1748, 1749, 2021-29, 2078 

Nelson, Herbert A., executive vice president, National Association of Real 

Estate Boards 2004-2021 

Newcomer, Mabel, cited 2007 

New Orleans Housing Authority 1687 

New York City, low-cost public housing 1720 

Northup, H. R., secretarj'-manager, National Retail Lumber Dealers As- 
sociation 2000-2003 


Occupancy characteristics of existing housing, 1940 1247 

Odom, Ward E., Solicitor, Veterans' Administration 1763,. 

1764, 1767, 1768, 1769, 1770, 1772, 1839 

Office of Price Administration, rent restrictions 1422 

O'Grady, Rt. Rev. Msgr. John J., secretary, National Conference of 

Catholic Charities 1977-1986 

Ohio Building and Loan Association 1 384 

Old Colonv^ Homes, South Boston, Mass 1979 

Old Harbor Village, Boston, Mass 1979 

O'Mallev, James J., chairman, legislative committee. National Savings 

and Loan League . 1944, 1946, 1947 

Ordinances for tenement housing 1286 

Organization of the housing agencies 1191, 1194, 1309, 

1313, 1384, 1850-1852, 1903, 1924,1925, 1943,1944, 1961,1962, 
2000, 2001, 2018-2020, 2032, 2042-2045, 2064, 2065-2075, 2079 

Activities of the Federal Government 1309-1319 

Administration of public housing 1988, 1989 

Coordination of Federal housing programs 1660, 1661 

Housing agencies and functions of the Federal Government prior to 

the reorganization 1312 

Unity of housing agencies desirable 1313 


Parkchester housing project 1530, 1733, 1973 

Parkfairfax housing project 1530, 1531, 1534, 1536, 1537, 1539, 1581 

People's Lobbv, Inc 2181 

Perkins, Frances 2188-2218 

Pomerov, Hugh R., executive director. National Association of Housing 

Officials 1 720-1 742 

Post-war housing 1193, 1194, 1195, 1207, 1209, 1210, 1320, 1476, 1841 

Critical materials 1320 

Improving the tools for 1296 

Prefabrication 1653-1655, 1686 

President's unemployment conference of 1931, cited 1389 

Private credit aids, types of 1855-1856, 1967-1968 

Private enterprise in post-war home building 1868, 

1941, 1942, 1944, 1946, 1959, 1960, 1983, 1986, 1994, 2004, 2009, 
2016, 2017, 2049, 2054, 2071, 2073, 2076, 2093, 2130, 2132. 

Producers' Council Inc . 1993, 1997, 1999 

Public Building Administration 1526 

Public housing . 1191, 

1205, 1315, 1481-1483, 1517, 1542-1588, 1603, 1641, 1642, 1682, 
1686, 1687, 1689, 1709-1720, 1744, 1745, 1749-1751, 1755, 1758, 
1851, 1854, 1855, 1902, 1979-1986, 1992, 1994, 1995, 2015-2017, 
2033, 2065, 2080-2085, 2098. 



Public housing authorities 1485, 1747 

Publicly financed housing 1197 

Disposition of 1204, 1205 

Public Roads Administration 1989 

Figure 1. Aerial view of southern portion of Arlington County, Va., 
showing land uses prior to construction of Shirley Highway and 

housing developments 1530 

Figure 2. Aerial view of Parkfairfax and Fairlington housing projects 

in relation to partially completed Shirley Highway 1530 

Figure 3. Growth of the occupied areas of cities 1532 

Figure 4. Shirley Highway, Virginia 1534 

Figure 5. Bridges carrying rotary intersection over Shirley Highway. 1534 
Figure 6. Rotary intersection at junction of Shirley Highway, Sem- 
inary Road and Gunston Road 1534 

Figure 7. Distribution, by places of employment, of workers living 

in housing developments served directly by Shirley Highway 1534 

Figure 8. Traffic volume on Shirley Highway 1535 

Figure 9. Traffic flow map of Shirley Highway 1536 

Figure 10. Origin and destination of motor vehicle trips 1536 

Figure 1 1 . Comparison of time and distance by Shirley Highway and 

old routes 1537 

Figure 12. Distribution of traffic on Shirley Highway by hours for a 

typical weekday, 1944 1538 

Figure 13. Zone uses of land adjacent to Shirley Highway 1540 

Figure 14. Housing developments adjacent to Shirley Highway 1542 

Figure 15. Aerial view, partially completed Shirley Highway 1542 

Public Works Administration 1482, 1519 


Quality of existing housing, 1940 1243-1246 


Racial problems in housing 2021 

Ramona Houses, Los Angeles, Calif 1979 

Reconstruction Finance Corporation, allocation of funds to Federal Housing 

Administration 1425, 1427, 1431 

Reconstruction Finance Corporation Mortgage Company. 1284, 1433, 1451, 1452 
Reconversion (transition from war to peace).. 1635-1637, 1667, 1991, 1992, 1994 

Redevelopment Corporation 1617, 1618 

Rehabilitation of existing housing 1560, 1561 

Red Hook Houses, Brooklyn, N. Y 1978, 1980 

Relation of housing agencies to the general credit policy of the Government _ 1 856- 

1857, 1968 

Rental housing 1381, 

1382, 1445-1447, 1543-1557, 1639, 1640, 1666, 1667, 1871-1873, 
1884, 1953, 1954, 1973-1975, 2012, 2052, 2130. 

Advance loans for planning 1565 

Cost of low-rent housing 1 552, 1555 

Investment in 1999, 2000 

Mortgage finance in connection with 1410-1413 

Private financing,., 1565, 1566 

Reduction of contribution period to 45 years 1566 

Rural areas 1 564 

Subsidy authorization 1566-1571 

Urban low-rent program 1565 

Rent certificate plan__, 1307, 1308, 1580, 1596, 1727, 1728, 1922, 2016, 2017, 2086 

Rent control: Restriction on post-war building 2012-2014 

Residential construction and general economic activity 1217, 1218 

Residential construction and industrial production 1214-1216 

Residential construction, trend of employment 1219 

Risk insurance 1 679 

Risk factors 1951 

Robert Brooks Homes, Chicago, 111 2083 



Role of housing in the national economy 1212 

Role of the Federal Government in future public housings. 1854, 1855, 1966, 1967 
Rosenman, Mrs. Dorothy, chairman, National Committee on Housing, Inc., 

New York, N. Y 1659-1672 

Rural housing 1561-1564, 1670, 1702, 1703, 1757, 1887-1895, 1996, 2035 

Credit requirements 1891 

Farm housing problem, report by United States Department of Agri- 
culture 1895-1901 

Farm housing situation 1889-1890 

Relation of, to the general-housing problem 1858-1860 


St. Louis 1662-1664 

St. Thomas Street housing project, New Orleans, La 1 979 

Sanitary codes 1286 

Savings and loan associations 1208, 1281, 1284, 1289, 1399, 1432, 1937 

Account for one-third of new mortgage lending on homes 1283 

Number of institutional loans 1389 

Schwulst, Earl Bryan, executive vice president. Bowery Savings Bank, 

New York City 1958-1975 

Servicemen's Readjustment Act (see also Veterans' loans) 1684, 

1687, 1761, 1772, 1840, 1843, 1844 

Shirley Memorial Highway 1529-1534, 1536, 1537, 1540 

Shirlington housing project 1534 

Shishkin, Boris, secretary, housing committee, American Federation of 

Labor 1649-1659 

Single-family houses 1410, 1595 

Slum areas 1525-1526, 1978, 1983 

Neglect to maintain and modernize dwelling units contributes to 

development of 1383 

Municipal expenditures 1235 

Slum clearance 1191, 

1204, 1205, 1206, 1243, 1286, 1287, 1291. 1293, 1316, 1320, 
1411, 1412, 1486, 1520-1529, 1555, 1558, 1559, 1618, 1641, 1642, 
1669, 1681, 1682, 1688-1690, 1700, 1725, 1739, 1744, 1751, 1755, 
2016, 2034, 2096. 
Smith, Raymond C, chief program analyst of the Bureau of Agricultural 

Economics ] 894 

Stability in residential construction 1454 

State government aids to housing 1285 

Stopgap housing. (See F. P. H. A.) 

Strauss, Anna Lord 2187, 2188 

Subdivision regulation 1286, 1668, 1669, 1746 

Subsidy 1307, 1308, 

1425, 1485, 1522, 1546, 1553-1564, 1571, 1576, 1579-1585, 1596, 
1613, 1614, 1640, 1665, 1666, 1682, 1691, 1694, 1695, 1698, 1699, 
1704, 1705, 1709, 1712, 1713, 1716-1718, 1725-1737, 1739, 1753- 
1759, 1868, 1869, 1906, 1907, 1919, 1922, 1942, 1954, 1959, 1967, 
1972, 1973, 2016, 2017, 2033, 2034, 2083, 2084, 2088, 2093-2095. 

Authorization 1 566-1 571 

Rental projects 1923 

Urban redevelopment 1 905 

Low interest rates 1918-1921 

Rural housing 1888, 1890 

Substandard housing .. 1259, 1260, 1265, 1267, 1542, 1543 

Supply, housing: 

Economic characteristics of existing supply, 1940 1250-1258 

Occupancy characteristics of existing 1247-1249 

Privately financed housing 1197 

Progress in meeting the problems of transitional 1206 

Units available in 1955 1263-1286 

Surplus Property Act of 1944 1205 

Swiggett, Emma B ^. 2169 




Taxation . 1224, 1316, 1748, 1754, 1862, 1905, 1942, 1943 

Excessive 1601 

Federal 2010-2012 

Local 2007-2010 

Loss of tax revenue by larger cities 1524-1526 

Residential property 1 230 

Technical research 1299, 

1300, 1314, 1528, 1541, 1643, 1644, 1653, 1680, 1682, 1862, 
1989, 1990, 2002, 2003, 2006, 2018, 2044, 2079. 

Temporarv housing 1211, 1485, 1487-1515, 1684, 1692, 1901, 1902 

Disposition of 1204, 1205, 1487, 1488, 1513-1516 

Tenement housing and multiple dwelling ordinances 1286 

Thomas, R. J., chairman, Congress of Industrial Organizations Housing 

Committee 1672-1687 

Transitional housing 1206, 1208 

Twentieth Century Fund, study of 1278 

Twohy, James, Governor, Federal Home Loan Bank System 1385-1387, 

1392. 1393, 1398-1401, 1404, 1407, 1417, 1419 


United States Conference of Mayors ._ 1707-1709 

United States Housing Act 1291, 

1482, 1484, 1517, 1518, 1519, 1560-1567, 1641-1644, 1683, 1687, 
1688, 1691, 1693-1699, 1703, 1723, 1739, 1851, 1982. 

Financing of low-rent projects 1543-1548 

Income of families admitted to low-rent projects 1548, 1549 

Loans for planning 1565 

Private financing 1565-1566 

Redevelopment 1557 

Reduction of contribution period to 45 years 1566 

Substandard dwellings eliminated 1542, 1543 

Urban low-rent program 1565 

United States Housing Authoritv 1197, 

1304, 1481, 1514, 1544, 1635, 1642, 1653, 1851, 1925 

United States Savings and Loan League 2040 

Mortgage-finance activities of 2040-2042 

Urban Land Institute 1594, 2006, 2007, 2020 

Urban redevelopment 1231, 

1260, 1286, 1287, 1288, 1528, 1557-1559, 1602, 1603, 1605-1632, 
1642, 1643, 1669, 1670, 1690, 1698-1702, 1738-1742, 1749, 1903- 
1906, 1969-1973, 1996, 1997, 2020. 

Three plans for financing 1622-1625 

Urban low-rent housing 1692-1698 


Valleyview Homes, Cleveland, Ohio .-. --- 1979, 1980 

Veterans' Administration 1208, 1761-1847 

Chart submitted: 

Areas of industrial concentration 1842 

Veterans a part of the whole economy 1843-1845 

Veterans' housing 1208, 1684 

Veterans' loans 1208, 1647, 

1649, 1705, 1744, 1761-1847, 1903, 1920, 1928, 1996, 2049, 2056 

Cooperation of Government -agencies and States 1 773 

Effect of, on the housing picture 1857, 1958-1969 

Farm loan regulations 1773, 1774 

Home loan regulations 1762, 1764 

Interest rate 1766, 1767 

Vinton, Warren Jav, chief economist. Federal Public Housing Authority _ 1520, 

1555, 1570 

INDEX xvn 

Ware, Caroline F 1909 

Tables submitted by : 

Table 1. Annual expenditure for housing, 1941 1911 

Table 2. Relation between condition of dwelling and rental value. 1911 

Tables. Proportion of income spent for rent, 1933 1911 

Table 4. Condition of dwellings of urban and rural families, 1940- 1912 

War housing 11 94, 

1195-1197, 1200, 1204, 1208, 1210, 1286, 1316, 1320, 1421-1424, 
1482, 1518, 1998, 2032. 

Charactertistics of 1 198, 1 199 

Construction status of accommodations already assigned to specific 

localities as of October 31, 1944 1201 

Demountable family dwellings 1486, 1487 

Disposition of 1204, 1313, 1483, 1484, 1G44, 1645, 1758 

Funds, consolidated statement of 1200 

Liquidation of - 2038, 2039 

Need 1208, 1211 

Objective of 1194 

Occupancy of 1203 

Permanent family dwellings 1484-1486 

Permanent type : . 1721-1722 

Privately financed 2076 

Slum areas 1486 

Temporary type 1722 

Types of dwellings 1484 

War Mobilization and Reconversion Act of 944 1527 

War Production Board _- 1208, 1212 

Authorized materials 1 1206 

Restriction of sales price 1422 

Wartime controls, relaxation of 1853-1854 

Washington metropolitan area 1529 

Whitlock, Douglas, president. Producers' Council, Inc 1986-1997 

Wickard, Hon. Claude R., Secretary of Agriculture 1887-1895 

Wilkes, James C, counsel. National Association of Home Builders 2085-2099 

Williamsburg Houses, New York 1979 

Woodbury, Coleman, Assistant Administrator, National Housing Agencv- _ 1025, 
1027, 1256, 1258, 1268, 1271-1272, 1273, 1285, "1302, 1303 

Woodhill Homes, Cleveland, Ohio 1979 

Works Progress Administration 1458 


Yamacraw Village, Savannah, Ga 1 979 

Yellow Mill Village, Bridgeport, Conn 1979 

Young Women's Christian Associations 2170,2171 


Zoning 1286, 1313, 1526, 1540, 1741, 1746, 1855, 2056 

Protects the character of existing sound neighborlioods 1286 

Various State zoning laws 1286 


9118?. — 45 — lit. 15- 


3 9999 06352 505 7