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I feel sure that our modest beginnings may be regarded as no more than the first step in a great and permanent campaign against those appalling slum conditions in which a third of our urban population is now forced to exist.

I ask you, Mr. Chairman, what better argument than this statement by President Roosevelt can be offered for the early adoption of the Wagner slum-clearance and low-rent public housing bill?

I want to offer several communications for the record.
The CHAIRMAN. They may be included in the record.

Miss ALFRED. The first is a resolution from the United Neighborhood Houses of New York, Inc., as follows:

Resolution adopted by United Neighborhood Houses of New York at a meeting of its executive committee on Tuesday, April 14. To the SENATE COMMITTEE ON EDUCATION AND LABOR :

Whereas a large part of the population of New York City are now forced to live in unsanitary and unsafe multiple dwellings; and

Whereas through our intimate knowledge of the conditions under which vast numbers of these people now live we are firm in the conviction that slums breed crime, disease, juvenile delinquency, and make a normal happy life impossible for those who live in them; and

Whereas the present cost to the community in fire protection, police protection, and public health services is greatly increased by the existence of slums; and

Whereas it is a proven fact that the people now residing in slum areas cannot find decent living quarters within their means in privately financed buildings; and

Whereas the settlements of New York have labored for many years to promote public housing for the lowest income groups : Be it

Resolved, That the United Neighborhood Houses go on record as favoring the purposes and general provisions contained in the Wagner-Ellenbogen slumclearance and low-rent housing bill and that the United States Congress be most strongly urged to enact this measure.

The next is a letter from the Welfare Council of New York City, which reads as follows:

APRIL 22, 1936. Miss HELEN ALFRED,

Hotel Willard, Washington, D. C. DEAR MISS ALFRED: I know you will want to hear that the housing section of the Welfare Council has gone on record in support of the Wagner-Ellenbogen bill. The section has asked the executive committee of the Welfare Council to consider the bill at an early date and to approve it if possible; thereafter, taking such further action in relation to the bill as they think best.

The constituent members of the section will be notified of these recommendations and will be urged to express their opinion to the members of the Senate Committee on Education and Labor and the House Committee on Banking and Currency.

Hoping that this message reaches you in time to be recorded in the minutes of the hearing, I am, Sincerely yours,

(Mrs.) ALICE FLEXNER ROTHBLATT,

Secretary, Housing Section. The next is a resolution of the National Public Housing Conference, as follows:

NATIONAL PUBLIC HOUSING CONFERENCE,

112 East Nineteenth Street, New York, N. Y. Mr. Chairman, Senate Committee on Education and Labor, the following resolution was adopted at a meeting held at Christodora House, New York, on April 16, 1936, and signed by Abraham Goldfeld, chairman, housing section, American Association of Social Workers; Helen Hall, National Federation of Settlements; Worth Tippy, Federal Council of the Churches of Christ in

America; Maude Swartz, National Women's Trade Unioni League; and Mary Kingsbury Simkhovitch, president, National Public Housing Conference:

Because it is recognized that low-income wage earners in every part of the country are obliged to occupy dwellings which are a constant menace to health and safety, to life itself; and

Because insanitary and unsafe conditions of housing are an economic drain upon the entire community because the cost to the city of servicing them is commonly many times greater than the amount received by the city in taxes from such property; and

Because private enterprise finds it unprofitable to provide housing accommodations of modern standard at rents sufficiently low to meet the needs of lowincome wage workers, and therefore it becomes the responsibility of government to do so; and

Because the clearance of slums and the gradual rehousing of low-income families will provide for a steady flow of activity in the long-dormant building industry: Be it

Resolved, That the organizations here assembled go on record as favoring the purposes and the general provisions outlined in the Wagner-Ellenbogen slum clearance and low-rent housing bill.

HELEN ALFREI, Secretary, National Public Housing Conference. (The document entitled “Dollars and Houses" is filed with the committee, and is as follows:)

DOLLARS AND HOUSES—AN ECONOMIO BRIEF ON LOW-RENT HOUSING IN RELATION

TO GOVERNMENT SUBSIDIES AND PRIVATE CAPITAL

By Evans Clark, chairman of board of directors, National Public Housing

Conference

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(Printed and distributed by the National Public Housing Conference in the

interest of public understanding of the need for low-rent housing in the United States)

I. By far the most important housing need in the United States today is for new dwellings in urban centers which will rent for an average of $5 to $6 per room per month.

(a) No less than two-thirds of the total tenant families living in the 64 leading American cities, representing all States, surveyed by the United States Real Property Inventory in 1933, could not afford to pay more than about $6.25 per room per month for rent.

(1) In these cities 66.6 percent of the families earn less than $1,327 a year; (2) the recognized proportion of the total family expenditure spent on rent among the low-income groups is 20 percent; (3) 20 percent of $1,327 per year is $265 per year. The rent of a 312-room apartment at $6.25 per room per month is $263 per year.

(b) The Real Property Inventory survey showed that in one-third of all the dwellings covered, the rent actually paid was less than $20 per apartment per month, or about $5.75 per room.

(c) While it is recognized that these income figures are on depression levels, the effects of even a marked recovery in wages would not drastically change the picture.

(1) At the height of American prosperity in 1929, as many as one-half of the “spending units” in the United States had incomes under $1,535 a year (Brookings Institution).

(d) It is also recognized that the housing problem can be solved either by low rents or by increasing the income of the masses.

(1) This brief, in concentrating on the first method as the more immediately practicable, does not deny the merits of, and the need for, the second method.

(e) The public health, welfare, and morals require sanitary, fire-proof, and well-lighted dwellings for the American people.

(f) It is estimated that a total of 54,000 blocks, or almost 300 square miles, in the 93 United States cities of 100,000 population and over are in an advanced state of blight.

(1) The Real Property Inventory found 18 percent of the dwellings surveyed “unfit for use"; 33' percent had no inside toilets and 50 percent had no baths or central heat.

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(9) These slum areas are a menace to the health, welfare, and morals of the people of the United States. For example:

(1) The death rate from tuberculosis in the slum area of Cleveland has been found to be five times that of the city as a whole; (2) the cost of fire protection in similar areas is 18 times as great; (3) in the 2 years ending December 31, 1935, deaths from fire in "old law" tenements in New York City (24 percent of all family units) amoutned to 67, or 13.5 per 100,000 family units, while those in all others in the city amounted to 36, or 2.3 per 100,000 units-almost six times as many in "old-law” tenements.

II. Private initiative and operation will not and cannot meet this need.

(a) Private initiative, operation, and ownership has not, and cannot under modern conditions, provide adequate new construction for lower rentals than about $12 per room per month in the large cities—more than twice as much as the average family can afford to pay.

(1) The lowest rents for new dwellings, even in limited dividend housing developments, are about $11.

(6) All new housing to be built in urban centers at present costs for the mass of American families cannot, of necessity, therefore, be constructed or operated by private interests.

(1) As shown above, rentals for the mass of American families in these centers should average from $5 to $6 per room per month-only about one-half what private interests would have to charge to make a reasonable profit.

(c) Recent claims that new low-cost houses can be provided by private initiative for the urban masses are dangerously misleading.

1. For example, the committee for economic recovery asserts that 6-room houses can be produced at a cost of $3,500 to meet the needs of families with incomes as low as $1,000 a year. But

(a) These cost figures are far too low under present conditions. (1) The $3,500 house would today cost at least $4,500 anywhere near an urban center.

(b) The charges per room per month on such a house would be $7.33 and, in addition, a cash down payment of $350. Interest and amortization, at 3.5 and 3.3 percent-

$3.83 Taxes, at 2 percent..

1. 41 Heat Repairs

97

.56 Servicing of mortgage..

28 Insurance

. 28

Total charges per room per month.-

7.33 (c) Less than one-third of the tenant population in urban centers could afford such houses, because two-thirds cannot afford to spend as much as $6.25 per room per month for shelter, not to mention making a down payment of $350 in cash. (Point I-a.)

(d) Nor can the problem be met by building an excess of higher priced new dwellings which will drain off persons now occupying old, higher rental buildings which will in turn be occupied by slum dwellers. This policy would

(1) Have little effect until the present shortage of dwellings is met; thereafter it would (2) play havoc with existing values and rentals in old higher-priced buildings vacated by present tenants; and (3) leave the slums with unoccupied derelict buildings without hope of improvement or reclamation.

(e) None of the above statements should be taken to imply that private initiative and ownership should not be stimulated and assisted by appropriate Govrenment agencies to meet as large a proportion of the need as possible.

(1) A Nation-wide effort to reduce land and construction costs would, of course, greatly enlarge the field in which private interests can operate; (2) such reductions would modify the figures given in II-c-1 above.

III. The low-rental housing need must be met mainly through the initiative of Government agencies.

(a) Traditional American policies demand that private initiative be encouraged and fostered wherever it will function in the public interest; and

(6) Conversely, American policy requires that public initiative and operation be substituted in fields where private interests cannot function. (1) For example, highways, river and harbor improvements, bridges, canals, ferries, etc.

(c) Government initiative is always and most especially called for in remedying conditions that threaten the health, welfare, and morals of the American people.

IV. In spite of the overwhelming need for low-rental housing which cannot be met by private agencies, Federal housing activities to date have been concentrated almost exclusively on assistance to private agencies.

(a) The following figures show the funds disbursed by and the outstanding obligations of major Federal agencies directly concerned with housing as of December 1935 : 1. (a) R. F. C. loans to limited dividend projects-

$8,000,000 P. W. Housing Division (actual disbursements)

29, 828,000 Additional committments..

53, 854, 000 2. (a) H. O. L. C. mortgage refinancing

2, 921, 682, 000 (6) F. C. A. mortgage refinancing

813,000,000 3. (a) Loans on home mortgages through Federal Savings and Loan System---

$325, 000, 000 (6)Direct R. F. C. loans to home-mortgage agencies (building and loan associations)

7, 866, 000 4. (a) Modernization and repair notes insured by F. H. A--- 265, 568, 000

(6) Home-mortgage insurance commitments by F. H. A.- 187, 543, 000

Total disbursements and obligations--

6, 612, 341, 000 (6) Of this total of over $6,500,000,000 in disbursements and obligations incurred by the major agencies of the Federal Government for housing assistance 99.1 percent has been in support of private owners and agencies and only ninetenths of 1 percent in aid of genuine low-rental housing through public agencies—a total of $61,026,000 disbursed or pledged by the Housing Division of P. W. A.

V. It is absolutely essential that the Government subsidize public low-rental housing with outright grants or nominal interest loans.

(a) In order to get rents down to about $6 per room per month the cost of the money used to finance projects (annual interest rate) must be brought down to a point that averages about nine-tenths of 1 percent for each project.

(1) This calculation is made on the basis of typical urban conditions at present costs of land and construction, expressed in per room terms, as follows: Land (133 square feet, at $1.50 per square foot)

$200 Materials

600 Labor

525 Overhead -

145

Total land and construction costs per room to be met by financing-- 1, 470 Maintenance per room per year (including insurance)--

45 Assumptions: Rents, $6 per room plus 50 cents for stores. Three-story buildings with 30-percent coverage. Density per gross acre, 85; per net acre, 125. No taxes. Vacancy allowance, 5 percent. Amortization, over 40 years.

(2) Variations in the various items of project costs would produce the following variations in rent (on the basis of the above assumptions):

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11 percent.

(3) A density variation of 5 per net acre (3.4 per gross acre) would produce a rent variation (in land at $1 per square foot) of $0.01 per room per month.

(4) On the project assumed above: (a) The income per room per year equals.

$78.00 (b) Less 5 percent for vacancies, equals-

74. 10 (0) Deducing maintenance, there is an annual return on capital of_-- 29.10 (d) Which is at the rate of..

1.98 percent (f) But the arguments for rental subsidies are not as compelling as those against such subsidies.

(6) If $15.85 out of the $29.10 net income of the project-or 1.08 percent of the total financing ($1,470)-is invested and reinvested at 3 percent each year for 45 years there will be accumulated $1,470 at the end of the period—or enough to retire the loan. This would leave $13.25, or 0.9 percent of $1,470, available for interest.

(c) This means that the difference between the rate at which money can be borrowed in the open market and 0.9 percent must be made up by Government subsidies, either through:

(1) Outright grants of a sufficiently large portion of the total costs of each project so that the interest rate on the remainder to be borrowed would equal 0.9 on the entire sum needed to finance the project; or (2) loans of the entire sum needed to finance the project at 0.9, which are, in effect, subsidies, because the Government must pay more than 0.9 percent for the money it borrows.

(d) These figures are constants and do not vary with increases or decreases in costs of land and construction, provided rents are always adjusted proportionately, as indicated under point V-a-2.

(1) For example, in a project built on land costing 50 cents, instead of $1.50, rent could be reduced 23 cents per room per month-i. e., to $5.77 (see V-a-2 above)—but the interest on a loan to finance it would still have to be ninetenths of 1 percent; (2) again, if the cost of construction per room in a project were reduced from $1,470 to $1,270, the rent could be reduced by 36 cents per room per month-i. e., to $5.64 (see V-a-2)—but the financing income would remain constant at nine-tenths of 1 percent.

(e) Government grants, however, might take the form of "rental subsidies”— i. e., annual or other periodic payments to specific going public housing projects of sufficient amounts to meet operating deficits—assuming that the original costs of the project were financed at market interest rates.

1. Arguments for rental subsidies :

(a) They involve a smaller outlay of Government funds at any one time than original cost loans or subsidies; (1) original cost subsidies must be made available in one lump sum while the project is being assembled and built, but (2) rental subsidies involve relatively small periodic payments. [NOTE.—While original cost subsidies must be paid in a lump sum, the funds could be borrowed and amortized in small annual payments.]

(b) Rental subsidies can be adjusted from year to year to changes in project costs (1) if, for example, maintenance expenses should vary in relation to the purchasing power of rental income.

2. Arguments against rental subsidies:

(a) They are unpredictable, because (1) it is impossible to foretell the amount of deficit in advance, and, hence, (2) impossible for any Government agency to undertake a specific obligation in advance;

(b) Rental subsidies are difficult, if not impossib to guarantee in advance, because (1) it is difficult to contract to meet an unpredictable obligation, and (2) a subsidy granted one year by a favorable legislature might be refused ihe next year by one that is hostile;

(c) Rental subsidies widen the opportunities for political influence, because (1) being unpredictable and unguaranteed they must be negotiated periodically, and (2) with every new negotiation comes an opportunity for political maneuvering;

(d) Rental subsidies do not contribute at all to the major problem of public low-rental housing-i. e., the financing of original costs (land and construction); and, finally,

(e) Rental subsidies cost the Government more than original cost loans at less-than-market rates.

(1) On projects costing $100,000,000 the two forms of subsidy would cost per year: Rental subsidy

$2,600,000 Low-interest subsidy---

1, 800,000 (2) These figures are based on the assumption that $6 rentals allow for only 0.9 percent interest on original cost loans and are computed as follows: (aa) Other factors being equal, rental subsidies would have to equal the difference between the interest payments necessary on funds borrowed from the private capital market-i. e., 3.5 percent-and the 0.9 percent which the project could

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