building, you do not want every bricklayer to be appointed from the civil-service list, and that is what this has in mind, because if they build a demonstrating project they need skilled and unskilled labor. The CHAIRMAN. In that language stenographers, clerks, and accountants remain under the civil service? Senator WAGNER. Yes; they must be appointed only under the civil-service provisions. Mr. ICKES. Technical persons would not be employed under the civil service? Senator WAGNER. No; unless there is a classification under civil service for them. I, of course, agree with the Secretary that these men who have been working there in that division are better informed than anybody I know of in the United States, with the technique of housing, and certainly the Government ought to utilize their training and energy, and as the Secretary says, and I know, and I think we all know, in that particular division there has been no political consideration in their appointment. Mr. ICKES. The Government has paid for their training and education, and it ought not to be thrown away. On the top of page 9, it is provided that the Authority may continue all projects that have already been started, and then the next sentence beginning on page 9, line 4, provides: Any action taken by said Federal Emergency Administration of Public Works in connection with any such project is hereby adopted and ratified. The President may at any time in his discretion transfer to the Authority any other bureau or division of any department or agency of the Federal Government that is engaged in low-rent housing or slum-clearance activities, and the Authority may continue such activities subject to the provisions of this Act. I raise the question whether the word "may" in line 4 should not be made "shall," so as to read "and the Authority shall continue such projects." That concludes my statement, Mr. Chairman. The CHAIRMAN. Thank you, Mr. Secretary. Is Mr. Clas here? Mr. ICKES. Yes. The CHAIRMAN. What is his position? Mr. ICKES. Head of the Housing Division. The CHAIRMAN. He can give us information on this subject? Mr. ICKES. If he is not able to, I will see that it is sent at once. The CHAIRMAN. At this point, the clerk will insert in the record letter of Secretary Ickes to the committee, concerning the pending bill. Hon. DAVID I. WALSH, INTERIOR DEPARTMENT, Washington, April 20, 1936. Chairman, Committee on Education and Labor, MY DEAR SENATOR WALSH: I have your letter of April 10, requesting a report on S. 4424, a bill to provide financial assistance to the States and political subdivisions thereof for the elimination of unsafe and insanitary housing conditions, for the development of decent, safe, and sanitary dwellings for families of low income, and for the reduction of unemployment and the stimulation of business activity, to create a United States housing authority, and for other purposes. It is hardly necessary to dwell at length upon the necessity for the proposed legislation, nor upon the social evils which it aims to remedy. Millions of our citizens are compelled to live in dwellings unfit for human habitation. Slum conditions do not exist in large cities only but may be found in practically every community from coast to coast. It has long been known that the slum furnishes the environment most conducive to the existence, dissemination, and communication of sickness and disease, and fosters and encourages juvenile delinquency, crime, vice, and immorality. It is only in recent years, however, that careful study has revealed that the cost of slums, in terms of dollars and cents spent for municipal services, results in a drain upon the public treasury too great to be permitted to continue. Private enterprise has proved itself unable to supply adequate housing accommodations for families of low income at rentals which they can afford to pay. The available evidence will doubtless be presented in detail at the hearings on the bill. Although nations throughout the world have been conscious of the existence and evils of slums for many years and have been working toward a solution of this problem, the United States until very recently has remained indifferent to the problem. In this respect we have lagged behind other countries. It must also be recognized that the problem of unemployment is still urgent and will continue to be so for some time to come. Large numbers of the unemployed are from the building trades and allied industries and the revival of building construction will relieve this situation substantially. The proposed legislation is intended to accomplish this. The effective elimination of slums and the provision of adequate housing for families of low income require a definite long-term program and policy. The activities of the Housing Division of the Public Works Administration are being conducted pursuant to the provisions of title II of the National Industrial Recovery Act and the Emergency Relief Appropriation Act of 1935. All sums made available to the Division under these acts have been allotted to projects now in the course of construction and no funds are available to meet the insistent demand for additional projects by communities throughout the country. Moreover, these acts are concerned primarily with the immediate relief of unemployment and establish no housing policy for the Nation. One consequence of operating on an emergency and work-relief basis has been that many desirable projects, the construction of which could not begin immediately, were necessarily suspended. Another consequence of obtaining money from emergency appropriations has been that original allotments to the Housing Division have subsequently become unavailable, due to the necessity of using such funds for direct relief. Of the $154,200,100 allotted to the Housing Division under title II of the National Industrial Recovery Act (of which $10,971,600 and a later $1,670,000 was for limited-dividend projects, and $135,325,500 and a later $6,230,000 was for Federal housing projects), $110,000,000 was subsequently impounded for other purposes. Of the $249,860,000 recommended for allotment by the Advisory Committee on Allotments under the Emergency Relief Appropriation Act of 1935, $221,98-,000 was actually allotted for Federal housing projects, but of this latter amount $120,608,950 was later withdrawn. Such curtailment of funds has also been followed by the suspension of projects. The resulting uncertainty has discouraged or at least seriously hampered any planned effort on the part of local communities. Moreover, if projects are to be constructed economically, plans and specifications must be carefully prepared. The proper selection of project sites also involves careful city planning. All of these considerations are inconsistent with an emergency program and make a permanent housing policy essential. The proposed bill lays the foundation for such a policy. The cardinal points which any realistic public-housing program should embody are briefly (1) decentralization of responsibility, (2) adequate safeguards to protect legitimate private enterprise against governmental competition, (3) the recognition of the necessity for Federal assistance by way of loans and grants to local communities, and (4) appropriate measures to keep the expenditure of Federal funds at a minimum by inducing as large an investment of private capital as possible. It is extremely desirable that there be as much decentralization of responsibility as possible in the execution of a long-range slum-clearance and low-renthousing program. At the time of the organization of the Housing Division of the Public Works Administration there were no local public-housing agencies authorized by law to engage in such activities. The only method of providing low-cost housing was through direct Federal construction. Since its organization, the Housing Division has followed thes consistent policy of encouraging the enactment of State legislation authorizing local communities to engage in housing activities. Twenty States have already adopted such legislation. If the proposed bill should be enacted most of the remaining States would probably enact suitable legislation of this character. It should now be possible to commence the decentralization of responsibility, and the proposed bill expressly adopts such a policy. This will undoubtedly greatly stimulate local interest and will tend to focus the attention of numerous cities upon the proper solution. The bill realistically recognizes that such a goal cannot be achieved overnight and that there must be a transitional period in which Federal construction of housing projects must continue in those communities which are not yet prepared to assume full responsibility for it. Not only is it essential that legitimate private enterprise be protected from any competition which will ensue if families who can afford to pay economic rents are permitted to reside in such projects, but unless such projects are available solely to families of low income, our efforts will have been to no purpose. The proposed legislation contains adequate safeguards to avoid encroachment in the field in which private enterprise can operate profitably, by expressly providing that only families of low income shall be permitted to live in such projects and by charging the proposed authority with the responsibility of enforcing adherence to low rents. I believe that it is possible to exaggerate the fallacy that a program of public housing will affect private enterprise adversely. The large-scale English publichousing program has been accompanied by a substantial boom in private housing construction. In this program both private and public agencies have decognized the value of each other's work. Each has supplemented the other. There is no reason why similar advantages should not follow in this country. These benefits are already beginning to materialize in the cities where Public Works Administration projects are nearing completion. It is my opinion that Federal aid should be continued for the purposes contemplated by this bill. The financial condition of local governmental bodies renders it impossible for them to finance alone an extensive long-range lowrent-housing and slum-clearance program. Constitutional limitations upon the indebtedness that may be incurred by States and their subdivisions, as well as the absence of statutory power, are other factors which necessitate Federal aid. It must be also borne in mind that the Federal Government itself has a definite interest in correcting these conditions since, to a large measure, they affect the welfare of the United States as a whole. It is essential that the use of public funds be kept at a minimum. In order to do so, it is necessary to encourage the investment of private capital. This could be accomplished under the bill by loans to limited dividend housing corporations and by the sale of securities of local housing agencies to the public. In my report on S. 2392, introduced by Senator Wagner at the previous session of Congress, I stated that while I favored the principles of the bill I had certain objections to various provisions contained therein. The present bill has eliminated these objections. From experience, I question the practicability of one phase of the bill. It provides for the transfer of the Housing Division, which has been under my supervision, to a newly created, independent corporate agency, the management of which is vested in the Secretary of the Interior as a member ex officio and four other members to be appointed by the President. Commissions are frequently desirable where the functions to be performed are semijudicial in their nature, such, as for example, the Interstate Commerce Commission and the Federal Trade Commission. However, where the activities are purely executive, multiple control and responsibility may result in confusion and delay, and an unnecessary expenditure of public funds. Moreover, a multiplicity of independent establishments is both undesirable and unnecessary, and I recommend that all powers of the proposed Uited States Housing Authority be vested in the Secretary of the Interior. For the foregoing reasons, my personal opinion is that S. 4424 should be enacted with the suggested changes. Sincerely yours, HAROLD L. ICKES, Secretary of the Interior. 63408-36- -3 STATEMENT OF A. R. CLAS, DIRECTOR OF THE HOUSING The CHAIRMAN. What is your full name? Mr. CLAS. A. R. Clas. The CHAIRMAN. What is your official position? Mr. CLAS. Director of Housing, Public Works Administration. The CHAIRMAN. How long have you been Director of Housing? Mr. CLAS. Since June of last year. The CHAIRMAN. Prior to that time what were you doing? Mr. CLAS. I was Assistant Director of Housing. The CHAIRMAN. Who was your predecessor? Mr. CLAS. Col. Horatio B. Hackett. The CHAIRMAN. Where is he now? Mr. CLAS. He is Assistant Administrator of Public Works. The CHAIRMAN. Was that the time of its establishment? Mr. CLAS. No; it was established in 1933. Senator LA FOLLETTE. Mr. Clas, will you state briefly for the record your previous experience? Mr. CLAS. Prior to coming to Washington I was a partner of Holabird & Root, architects, in Chicago. Prior to that-do you want me to go back a few years? Senator LA FOLLETTE. Just briefly, please. Mr. CLAS. I have been in the achitectural and construction business for about 12 years. Prior to that time I was in the manufacturing business in Wisconsin. Senator LA FOLLETTE. You may proceed. Mr. CLAS. 1. There exists at present an acute shortage and future need of housing for the low-income groups: Estimates from various sources differ from 4 to 14 million units in stating the magnitude of the present and future shortage. Meticulous interpretation is futile. Any program, private and public, faced with the necessity of providing from 3 to 6 million livable dwelling units in the next 10 years for families earning less than $1,500 has a serious task. Å general estimate of the units required in the next 10 years can be stated as follows: (a) New families at 500,000 per annum for 10 years 5,000,000. The 1930 census shows approximately 30 million families in the United States, with an increase of at least 500,000 per annum. (b) Families not adequately housed (5 years at 500,000 less 500,000 built), 2,000,000. The Bureau of Labor Statistics showed construction of 298,000 dwellings in 257 cities in 5 years, 1930-34. A reasonable assumption is that 500,000 dwellings were constructed throughout the country. (c) 10 percent replacement of 30,000,000 existing, 3,000,000. It can be assumed from the Real Property Inventory that 10 percent of existing units are unfit and should be replaced. (d) 1 percent replacement annually for 10 years, 3,000,000. It is reasonable that 1 percent of all units should be replaced annually in the future because of old age. (e) Miscellaneous (normal vacancy, accidental destruction, family disintegration), 1,000,000. Total need in the next 10 years, 14,000,000. The Department of Commerce income data shows that two-thirds of all families, both owner and tenant, earn less than $1,400-$1,500 per year, and that two-thirds of tenant families are below $1,300. Therefore, it appears that two-thirds of 14 million or 9 million units must be built for income groups below $1,500, but as stated a precise estimate is unnecessary. Modernization and justified subdivision of existing vacancies cannot meet the need. The huge capital loss which the middle income groups would have to absorb to build new quarters for themselves and to hand down their present dwellings at a low enough cost to be available to the less fortunate economic class, will prevent adequate housing by this means. 2. Cities must be rehabilitated. Great areas of our cities are subjected, inevitably, to change, age, and shift of population. As buildings have disintegrated, the cost to the cities for fire, police, and health has steadily mounted, while the income from taxes, because of serious delinquency, has decreased. This condition, widespread, places an ever-increasing and ominous burden on the city treasury. Aside from any social justification, the cost to the public for the maintenance of slum areas has only recently been definitely determined in certain cities. During 1932, in a certain slum area in Cleveland, where 2.47 percent of the population of the city dwelt on 0.73 percent of the land area, the tax income was $225,035, whereas the total cost of maintaining the section was $1,972,437, or a net loss of $1,747,402. Likewise in Indianapolis, in those "areas of greatest economic drain", it has been found that taxpayers are spending every year for each person $27.29 as against $4 per person in other areas; 26 percent of the taxes spent for police, fire, health, and sanitary services are maintaining only 10 percent of the city's population. Thirty percent of the city hospital service in 1932 went into this area of 10 percent of the population. More than 33 percent of the public relief and 36 percent of the city expenditure for arrests, trials, and imprisonments were likewise absorbed by these 11 census tracts. Again during 1933, a study of a substandard area in south Boston of 769 families indicated an income of $27,093.23 and expenses of $275,113.74 for an excess of expenses over income of $248,020.51. Astounding as these figures may be, they are typical in a general way of every city in America where there are slums and this means practically every one. In Cleveland this yearly loss represents a sum of money which at the end of 20 years could produce approximately 7,300 new four-room dwelling units. In Minneapolis, the average cost to the city for a fire run was $800. At this rate the cost of fire protection for an area under consideration for a housing project totaled $70,000 in 1932, for runs alone. Compared to this, the total taxes assessed against all properties in the neighborhood amounted to $30,835. In the city of Birmingham there are 22 distinct blighted areas covering 817 city blocks. Twelve of these areas, covering 541, are occupied by colored families. On the basis of 1,000 comparable |