SEC. 26. Any person who induces or influences the Authority to purchase or acquire any property or to enter into any contract and willfully fails to disclose any interest, legal or equitable, which he has in such property or in the property to which such contract relates, or any special benefit which he expects to receive as a result of such contract, shall, upon conviction thereof, be fined not more than $1,000 or imprisoned for not more than one year, or both. SEC. 27. No individual, association, partnership, or corporation shall use the words "United States Housing Authority", or any combination of these four words, as the name, or part thereof, under which he or it shall do business. Any such use shall constitute a misdemeanor, and shall be punishable by a fine not exceeding $1,000. SEC. 28. If any provision of this Act, or the application thereof to any per- son or circumstances, shall be held invalid, the remainder of this Act, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. SEC. 29. This Act may be cited as the "United States Housing Act of 1936." The CHAIRMAN. At this point in the record there will be printed an analysis of the bill, prepared at my request by the Acting Solicitor of the Labor Department. ANALYSIS OF THE BILL Hon. DAVID I. WALSH, United States Senate, Washington, D. C. Re S. 4424. DEPARTMENT OF LABOR, MY DEAR SENATOR WALSH: You have requested an analysis of the bill,. popularly referred to as the Wagner housing bill, which was introduced in the Senate on February 24, 1936, and is entitled "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." This bill is a marked amplification and extension of the similar proposal introduced by Senator Wagner at the last session of Congress on March 13, 1935. It is quite different from the Home Owners' Loan Act of 1933 (48 Stat. 128, ch. 64), which provides emergency relief to financially-embarrassed owners of houses generally and also from the National Housing Act of 1934 (48 Stat. 1246, ch. 847), which guarantees mortgages securing funds loaned by certain agencies for renovating and building. Section 1 of the new bill relates a statement of findings and policy similar in tone to, but of a more detailed nature than, that in the corresponding section of its predecessor. Recognizing that families of low income throughout the country live under deplorable dwelling conditions which cause disease and lower the morale and vitality of the people, increase fire and other accident hazards, create immoral influences on the young, increase lawlessness, impair productive efficiency, lower standards of living, and necessitate great public expense to counteract these effects, and that private industry and the several States and their political subdivisions are unable to relieve this acute shortage of decent dwellings for such families without financial assistance, thereby paralyzing construction and dependent industries and employment, Congress declares the policy of the United States to be the promotion of the general welfare by assisting the States and their political subdivisions to alleviate unemployment and to remedy unsafe and insanitary housing conditions for families of low income. Section 2 defines the basic concepts employed in the bill. Thus "low-rent housing" means adaquate but inexpensive dwellings and surroundings available solely for "families of low income", that is, families financially unable to induce private enterprise to build such dwellings for them. Other parts of this section define the agencies to which funds will be furnished, such as "public-housing agency", "public-housing society", "limited-profit housing agency", and "housing agency." Section 3 creates a corporation of perpetual duration designated as the United States Housing Authority, all powers of which are vested in a board of five directors of which the Secretary of the Interior is a member ex officio, the other four being appointed on expressed terms by the President, by and with the advice of the Senate. Section 4, after defining the Authority's power to appoint and employ technical experts, professional assistants, and labor, terminates the Housing Division of the Federal Emergency Administration of Public Works and transfers all of its obligations and undertakings, assets, and records to the Authority, with provision for employees of such division. Section 5 designates the corporate advantages of the Authority, including specifically the right to sue and be sued, to foreclose on property, to protect its interests by insurance and to be free from taxes of all kinds. Section 6 authorizes routine expenses and also exacts conformance with the statutes requiring advertisements for bids and the purchase of American materials on all projects; section 7 permits the necessary research, experimentation, and educational programs; and section 8 allows the making of administrative rules and regulations. The gist of this bill appears in sections 9, 10, and 11, which permit the Authority to make grants and loans and to develop and administer low-rent housing and slum-clearance demonstration projects. Thus by section 9 the Authority may make grants and loans to any public-housing agency to promote a low-rent housing project, the amount of such grant being sufficient to assure the desired low-rent although it must not exceed 45 percent of the development cost. Any loan in addition to this grant must not exceed the value of the development minus the amount of the grant. In section 10 the Authority is permitted to make loans to limited-profit housing agencies to promote lowrent housing projects. The total of such loans must not exceed $25,000,000 in any year, and any of such loans must not exceed 85 percent of the development cost. And section 11 enables the Authority to develop low-rent housing and slum-clearance demonstration projects with local consent and cooperation, providing also for the renting or sale of such projects to some public-housing agency or society. It also enables the acquisition and disposition of property incident to the development of such demonstration projects and permits the Authority to call upon the Attorney General to initiate condemnation proceedings to acquire lands for these demonstration projects. This section obviates the difficulties with which the Rural Resettlement Administration has been confronted by providing that the Authority may make annual payments in lieu of State and local taxes and that the local, civil, and criminal jurisdiction over such lands shall remain unimpaired. Section 12 gives the Authority broad powers, subject however to the other sections of this bill, to modify any of its contracts or agreements with respect to rate of interest, time of payment of any installment of principal or interest, security, or amount of annual contributions. This section is somewhat ambiguous since it is uncertain whether the Authority under it may increase and accelerate obligations of the other contracting party, e. g., the public-housing agency, or may defer, lessen, or entirely cancel the obligations of such other party. The validity of this section is open to some doubt. Section 13 specifies the standards to guide the Authority in exercising its powers under sections 9, 10, and 11. Thus in the communities affected there must exist a shortage of decent, safe, and sanitary dwellings within financial reach of families of low income which is not being remedied by private enterprise, and in all slum-clearance projects the dispossessed inhabitants must be provided with equally adequate and cheap dwellings elsewhere or with lowrent housing within their financial reach. Moreover the Authority must distribute the benefits of the act, consistent with need, as widely as practicable throughout the country, the grant or loan must be no greater than necessary, and the site for each project must be suitable and available at a reasonable price. Although this section may appear objectionable as to indefinite and as an undue delegation of legislative function, this seems unlikely. In order that it may preserve the low-rent feature of housing projects and thus protect private industry in securing the business of construction for families able to afford decent dwellings without public assistance, section 14 enables the Authority to take over and run any project and to preserve such low-rent feature in case of substantial breach of covenant by the other contracting party, e. g., the public-housing agency. Such covenants to preserve the low-rent feature are required in every development and continue for 60 years, 63408-36--2 or where the assistance is a loan, throughout the life of the loan. The balance of this section furnishes sanctions to the Authority to compel maintenance of the low-rent feature. Section 16 merely provides that if the Authority disposes, either by rent or sale to a public-housing agency, etc., any low-rent housing project which it owns, it shall clear sufficient to repay all but the amount of the grant specified in section 9. Section 16 establishes the labor standards to govern contracts in connection with low-rent housing and slum-clearance projects owned by the Authority and for the purchasing of materials and labor for such projects. Thus the provisions of the act of August 30, 1935 (the amended Davis-Bacon Act, Public, No. 403, 74th Cong.), and those of the act of August 24, 1935 (U. S. C. A., Supp. 1934 edition, title 40, sec. 270 (a) to (d) inclusive), requiring a bond to protect the United States and all materialmen and laborers, are applied in connection with such projects. And every contract of the Authority with a housing agency must contain a provision that the wages prevailing in the locality, as determined by the Authority, will be paid to all laborers and mechanics employed. In addition, this section extends the provisions of the 8-hour law (37 Stat. 137) to all contracts of the Authority for work at its demonstration projects, and the kick-back law, sections 1 and 2 of the act of June 13, 1934 (U. S. C. A. title 40, sec. 276 (b) and (c)), are made to apply to all projects financed in whole or in part by the Authority. The Compensation Act (39 Stat. 742) is extended to officers and employees of the Authority. Sections 17 through 22 set forth the financial provisions of the Authority. Thus section 17 recites that the Authority shall be capitalized at $1,000,000; section 18 provides for appropriation of $51,000,000 for the ensuing fiscal year, $75,000,000 for the next, and $100,000,000 for each of the 2 subsequent years; section 19 renders all funds otherwise available under any acts of Congress for projects of this sort subject to allocation to the Authority at the President's discretion; and section 20 requires the Reconstruction Finance Corporation to advance to the Authority loans up to $100,000,000. Section 21 authorizes the Authority to raise funds by issuing and selling obligations such as notes and bonds up to $100,000,000 on July 1, 1936, and $150,000,000 additional in each of the 3 following years. Section 22 deals merely with the banking and holding of any funds of the Authority. Sections 23 through 27 provide penalties to be imposed on persons dealing illegally or criminally with the Authority; section 28 is the separability provision, and section 29 sets forth the title of the bill. On the whole, the measures of this bill seem to be adequately conceived and presented. As it was pointed out above, there may be some question about sections 12 and 13 and the effect of the provision in section 11, which permits the Authority to call on the Attorney General to institute condemnation proceedings, depends upon whether or not the demonstration projects are for a public use. The public use of such projects, however, seems fairly apparent. Your attention is also directed to that part of section 10 which permits loans made under this act to be unpaid over a period of 60 years. The undesirable implications of this clause, coupled with the loose nature of section 12, give rise to some doubts concerning the discretionary powers vested in the Authority by this bill. I trust that this memorandum will suffice. GERARD D. REILLY, Acting Solicitor of Labor. The CHAIRMAN. Senator Wagner, we had a hearing on S. 2392, a somewhat similar bill in the first session of this Congress-at least similar in its name and objective. Senator WAGNER. We had a hearing on a bill which I think quite dissimilar, if I may say so to the Senator. The CHAIRMAN. We would be glad to have you proceed with your views on S. 4424, which is the bill introduced by you recently. STATEMENT OF HON. ROBERT F. WAGNER, UNITED STATES SENATOR FROM THE STATE OF NEW YORK Senator WAGNER. Mr. Chairman and members of the committee: Anyone who attempts to discuss the housing problem comprehensively must feel that he is tearing a seamless web. There is hardly any phase of human endeavor that is not affected by the conditions under which people live. But I am not going to tax the patience of this committee with a futile effort to cover all the ground. It is not necessary to prove here that millions of people in America live in homes that are injurious to their health and not conducive to their safety; for you have all known and felt these conditions in every city and rural area of your respective States. Nor do I need to elaborate upon the fact that bad housing leaves its permanent scars upon the minds and bodies of the young, and thus is transmitted as a social liability from generation to generation. I intended to confine my discussion to the economic problems raised by the legislation here proposed, using the word "economic" in its more restrictive sense. First of all, what necessary role must an augmented housing program play in conserving and advancing the gains in industry and employment that have been made during the past few years; and secondly, what can and ought the Federal Government do to accelerate the pace of this type of housing program? THE PROBLEM OF UNEMPLOYMENT The central problem confronting the American Nation today is not the depression which is being left behind, but rather the character of the recovery that is now under way. As President Roosevelt said so impressively in his Baltimore address last week, we are challenged by the paradox of rapid business improvement accompanied by stubborn and persistent unemployment. A leading financial monthly now reports that "the spring season will be the best in 6 years." Summarizing the completed returns for 1935, the same journal states that 2,010 representative industrial, public utilities, and financial companies, with an aggregate net worth of over $25,000,000,000, earned a net return of 5.1 percent, compared with only 3.5 percent for 1934. While net profits thus increased over 43 percent last year, the Bureau of Labor Statistics index shows that industrial employment was only 2.3 percent higher in February 1936 than in February 1935. During 1935, fully 1,000,000 men regained their jobs, but there are still two-thirds as many without work today as at the depth of the depression. The so-called prosperity era of the nineteen twenties was marred and finally destroyed by the constant presence of about 3,000,000 jobless men who were disinherited by our economic system. If the new prosperity toward which we are heading is to be accompanied by an irreducible minimum of 7 or 8 million unemployed, it will be a prosperity sustained only by staggering and in the end unbearable governmental expenditures, and ending before very long in a new decline. To a few people, the picture that I have sketched might seem terrifying. But it is not terrifying to any of us whose confidence for the future is measured by an appreciation of our achievements in the recent past. If instead of sounding retreat at the first signs of victory, we are willing to apply to the problems of today the same boldness and intelligence that we applied to the problems of 1933 and 1934, the solution will be as satisfying as we dare to make it. METHODS OF DEALING WITH UNEMPLOYMENT One method of cutting down unemployment is by shortening the workweek in industry. No one believes more firmly than I that in many cases hours should be far shorter than they are today. In some trades, deplorable results have followed the suspension of the N. R. A. codes. But in the last analysis, the shorter week has limited potentialities that are finally exhausted. It would be theoretically possible to give everyone a job overnight by reducing the workweek to 15 hours; but few would suggest that as the method of securing the maximum benefits from our technical skills and natural resources. Sharing jobs can never take the place of creating jobs. Higher standards of living mean new jobs developed through new opportunities for the productive use of labor. In our search for new employment opportunities, we are constantly running a race against the technological displacement of men by machines. Prof. F. C. Mills, an outstanding economic statistician, estimates that in the 30 years between 1899 and 1929, the per-hour productivity of the average worker increased 90 percent, or 3 percent per year. The coincidence of the recent depression with new technical improvements intensified this trend. Between the end of 1929 and the end of 1934, according to Professor Mills, this per-hour productivity rose 23 percent, or almost 5 percent per year. During the first 3 months of 1936, machine-tool orders have been placed at twice the 1935 rate. Any effort to wave back this technological trend would be as foolish as King Canute trying to stop the tide. The wise course is to harness the tide and make it our servant rather than our master. We can do this, if we match the increases in goods produced by the machine, by equivalent increases in the consuming power of the general public. This means that men displaced by machinery must find profitable employment elsewhere. REVIVAL OF HOME CONSTRUCTION NEEDED The opportunities for large-scale reemployment today are not to be found in the consumer goods industries. These industries are the very ones which already have made the greatest progress on the path to normal operations. It is fantastic to expect them to fill in the entire gap caused by the persistent sluggishness of the durable goods lines, which normally would spend $20,000,000,000 per year.. Nor can that gap be plugged by $2,500,000,000 in annual emergency Federal expenditures, wise and humane though these certainly are. When we get to the bottom of the problem, we find a lag in home construction. Only one-fifth as many dwellings were built last year as 10 years ago. During the first quarter of 1936, the total of residential contracts for 37 States amounted to only $123,000,000, or less than one-fourth the normal of over half a billion dollars. About |