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and have been such for the past 25 or 30 years. I have been especially interested in housing policies and legislation and their results in European countries as well as at home. I think that is all you want.

Senator WAGNER. Yes.

Mrs. Wood. I do not want to take but a very little time, nor to say more generally in regard to the bill than that after a very careful study of it, I want to give it my unqualified commendation, for its breadth of view, its recognition of the fact that there are not one way but a number of ways in which the housing problem can be attacked, for the care with which it provides that the benefits under the act shall be received only by that low-income class for which it was intended, and its care in protecting legitimate private initiative from Government competition in the field which it can and should оссиру.

The method of defining families of low income and low-rent housing are admirable in their clearness and in their adjustability to different conditions throughout the country, and to different conditions in the families, between large and small families.

Two points on which I would like to dwell for a moment are not criticisms of the bill. On the contrary, I want to point out the importance of retaining the provisions found in the bill on these two points, in spite of considerable criticism that has been made, especially by representatives of the construction industry and of real estate. The first provision is a part of the flexibility which is so important in the bill—that provision which permits, along with decentralization, the continuance of demonstration projects by the Federal Housing Authority. The second provision is the one which provides that the subsidy, which everyone admits is needed, may be given either as a lump sum or in fixed annual grants for a fixed number of years.

I would like, in this connection, if I may, to put into the record a reprint from a very short article of mine in the last Survey Graphic on the Rent Subsidy Peril to the Housing Movement.

The CHAIRMAN. That may be included in the record. (The matter referred to is as follows:)

THE RENT SUBSIDY PERIL TO THE HOUSING MOVEMENT, REPRINTED FROM SURVEY tary of the Treasury. His final report to the President is not yet completed, but in the Times of March 1 appeared some of his intended recommendations. This suggests a trial balloon to invite comments. The enemies of public housing will not be slow in making them. Its friends should do the same.

[graphic]

GRAPHIC, APRIL 1936

It is inevitable that any genuine progress toward a national program of slum clearance and low-rent housing should involve a series of skirmishes on the flank even when no frontal attack is in progress. It is gratifying that during the past year so much has been conceded by important business, real estate, mortgage-lending, and construction groups, previously unfriendly. Many of them now admit that our cities have slums, that slums are detrimental Rud should be removed, that private enterprise cannot handle the task, and tlat some form of subsidy is necessary. (See, for instance, the reports of the O mittee for Economic Recovery.) But they always make conditions, and see of their conditions would be lethal, as that the whole subsidy must be locally, or that all tenants must have incomes under $1,000.

The future of the housing movement in this country depends on bill, which at this writing has not been introduced, nor have its been made known. If it is to win out, it must have the P support, and his policies, if decided on, have not been mar official adviser in housing matters is the Hon. Peter Gr

1 As we go to press Mr. Grimm's resignation is announced completed and submitted to the President.

Mr. Grimm's summary in regard to slums, rentals, and public responsibility is admirable, including the statement : "It seems to me that the solution of the problem lies in a sharing in the responsibility of the construction by the municipal, the State, and the Federal Government.” When he goes on to say: "If to the low cost of financing thus made possible, there is added an annual money grant sufficient to bring the rents within the means of families of limited incomes, we should have a politically sound and economically workable slum clearance and low-rent housing plan," we should continue to applaud, provided he means a fixed annual grant for a specified number of years which the local authority can count on, after the manner of the £9 per year for 40 years assured local authorities for each house they built under the British Wheatley Act of 1924. But we should be discriminating enough to ask that he make his meaning clear. And if he has in mind some variation of the much advocated rent subsidy, which appears to have as many meanings as there are persons discussing it, we should lose no time in warning Mr. Grimm, Senator Wagner, and the President of possible danger.

Subsidies may be (1) lump-sum grants, (2) interest subsidy, (3) fixed annual grants, as mentioned above, (4) tax exemption, or (5) rent subsidy.

Holland uses a safe and sane rent subsidy in housing families removed from slums. The National Government shares with the city on the basis of 3 to 1 the difference between economic rents on the new housing and what average transplanted families are presumed able to pay.

No one in this country seems to be advocating that sort of rent subsidy. The United States Chamber of Commerce special committee favors rent subsidy and means thereby that local relief agencies should give rent allowance to families unable to supply themselves with suitable homes. The directors of the United States Building and Loan League agree with this.

This must have been also the thought behind the 28 percent of answers to the American city's questionnaire, which favored “no subsidy throught grants or tax reduction on real estate, but financial aid to individual families unable otherwise to pay an economic rent, similar to the aid given to families unable to buy food or clothing."

Harold Riegelman proposed another variation at a luncheon of the National Republican Builders. The Federal Government was to participate for 5 years to the extent of 50 percent in covering the difference between economic rent and what the tenants could pay, after which the State and local housing authorities were to carry the burden alone.

None of the foregoing can be described as friends of the public-housing movement. But others within the movement whose loyalty cannot be questioned are advocating rent subsidies and quoting what they appear to believe is the latest blossoming of the British national policy. As a matter of fact, what has caught their attention is a very recent local experiment by the municipal housing authority in Leeds, made possible by a provision in the 1935 National Housing Act, put there for quite a different purpose, which permits local authorities to pool all subsidies received under the various national acts from 1919 to 1935 and to redistribute them at their own discretion. Leeds is trying the experiment of distributing them according to family income and family need (for fuller information, see Proceedings International Housing and Town Planning Congress, London, 1935, pt. I: Rehousing the People in Great Britain, the City of Leeds, pp. 273-279). But it is much too soon to claim success for the experiment, and if success comes, much of it must be ascribed to long years of experience in dealing with municipal housing and municipal tenants. There has been no shift to rent subsidy on the part of the National Government of Great Britain. There would be no subsidy pool for the city of Leeds to experiment with if the national government had not pursued a policy of fixed annual grants.

It is to be hoped that Mr. Grimm, Senator Wagner, and the President are on their guard.

The absence of any accepted definition of rent subsidy constitutes its greatest peril. Friends of housing who advocate it are leaning on misinterpretation of British policy. Opponents stand ready to give it a meaning which would write finis to the housing movement.

a

Mrs. Wood. I think it is logical to continue the demonstration program during the transitory time when the local housing agencies are being set up all over the country and are acquiring the knowledge and experience necessary to make decentralization complete. As a matter of fact, immediate decentralization, if the demonstration part were cut out, would mean that the benefits of the bill would be confined to a very few centers.

It does so happen that New York City, which is Mr. Grimm's home town, is one of the very few in the country which has a public housing authority qualified and ready to act under the decentralization part of the program, but the enabling acts permitting the set-up of such authorities are only found in 20 of the 48 States. So that instead of this being a bill which would result in Nation-wide activity and in something being done toward improving housing conditions in every State—and there is no State in the Union that does not need it-it would result in the whole of these benefits being concentrated for the first few

years

in a handful of States which have been most advanced in developing local authorities.

In regard to the peril in connection with the rent subsidy, the chief trouble is that every human being who uses the word, and it has been very much used of late, seems to give a different meaning to it, and until there can be an accepted meaning, it is rather useless to talk about changing what is in this bill to something which is called a rent subsidy.

As Mr. Grimm defined his idea of a rent subsidy, I cannot see that it differed in the least from fixed annual grants, instead of a lumpsum grant as defined in the Wagner bill.

Toward the end of his talk some of the things Mr. Grimm said, if I caught him right, sounded as if he meant something a little different from that, and it is because of that sliding meaning I am tremendously afraid of it.

The housing committees of the United States Chamber of Commerce and of the building-and-loan associations have gone on record in favor of rent subsidies, and what they meant was family relief locally administered.

At the risk of repeating somewhat what Miss Bauer said, I want to state emphatically that to give any such trend as that to our legislation would be to defeat the whole purpose and end in view. It is not family relief we are after; it is the beginning of remedying a Nation-wide condition, the housing of a very substantial share of the population not people on relief; not the people who are going to be on relief but the unskilled and semiskilled labor classes, who are unable to pay a high enough rent to induce private enterprise to build modern houses for them.

In the recent New York Court of Appeals decision, which was of such great value to the cause of housing, Justice Crouch said that the fundamental purpose of government is to protect the health, safety, and general welfare of the public. On that basis, if we are

. to clear the slums and put up low-rent housing, it is justified as a public health and welfare measure, and not a measure of family relief.

One of the painful things in connection with this, which makes discussion so futile, is that there has been a tremendous amount of quoting the British example, and so very few of the people who quote what they call the British example have any adequate knowledge of what the history of British housing legislation has been, or what the provisions of the existing acts are.

As a matter of fact, during the whole series of post-war housing acts, from 1919 to 1935, the aid given by the National Government, except where it was in the form of lump-sum grants to provide builders, to encourage building of small houses, has always taken the form—however much the quantity and however much the main purpose of the act varied—it has always taken the form of fixed annual subsidies to the local authorities which build and operate the houses, and also fixed for a given number of years, so that in undertaking any housing projects the local authority could know exactly what it had to count on per

house. Of course, the local authority had to enter into this agreement with the ministry of health as to the standards of health, rents, and everything else.

The much quoted Leeds example is an entirely local and very recent experiment. It is only some 15 months old.

It is made possible to carry out through a pool of these various national subsidies, which was provided for in the 1935 act. Previously, all of the subsidies under the 1919 act had to go to reducing the rent in the 1919 houses, and so on.

The 1935 act, in addition to pooling the subsidies received by any authority, authorized redistribution at the discretion of the local authority, and that is particularly important because of the changes in cost of building during those years.

Just after the war building costs were four or five times the prewar rate, and they have now gotten back to only about 20 percent above the pre-war rate; consequently, exactly the same kind of houses had to be rented at different costs if they were built at times when building costs were different. That can now be changed.

There are one-thousand-seven-hundred-and-odd out of 1,802 local authority in England and Wales which have built or are building and are operating municipal or county housing schemes, not one of which, except Leeds, has tried the Leeds differential rent policy.

The CHAIRMAN. May I request you to submit in writing the rest of your statement?

Árs. Wood. I haven't it in writing.
The CHAIRMAN. Will you put it in writing ?
Mrs. Wood. I would be glad to.

The CHAIRMAN. I will appreciate it if you will, and it will be printed in the hearing with your testimony. Mrs. Woop. May I simply state before I go, I very much regret

, to state that nearly everything Mr. Grimm said in regard to limited dividend housing under the Government was wrong. There are not five, but seven, projects under the Public Works Housing Division, and one additional under the Reconstruction Finance Corporation. Not a single one of the seven is tax exempt, and Mr. Grimm said they all were. He stated very positively that all are in financial difficulties. Although someone from the Housing Division could answer this more authoritatively, I know that only two of them ever had

Thank you.

any financial troubles, and I know that none of them are in any financial difficulties at the present time.

The CHAIRMAN. Someone here will give us that information.

Mrs. Wood. I would like, if possible, for you to call on Mr. Robbins, counsel of the New York State Board of Housing. He can officially point out some of the inaccuracies in Mr. Grimm's statement.

The CHAIRMAN. Is he here?
Mrs. Wood. Yes; he is here.
The CHAIRMAN. Thank you very much for your statement, Mrs.
Wood.

(The written statement of Mrs. Wood, supplementing her oral testimony, is as follows:)

Various erroneous statements are in constant circulation in respect to English experience and practice.

(1) It is frequently stated that the British tried subsidized housing by local authorities after the war, but have now discovered their error and abandoned it, and that the recent great activity in building by private enterprise is the result of this abandonment of the previous policy of subsidy.

The facts are that private enterprise was completely paralyzed at the close of the war, in spite of the great housing shortage then existing. In 4 years it was able to produce only 30,000 dwelling units. If, during that time the Government itself had not produced 180,000 dwelling units, the unemployment in the building trade would have been almost complete and suffering caused by the housing famine exceedingly acute. A glance at the accompanying table I will show how slowly private enterprise recovered its confidence. The cause was not Government competition, but the extremely high building costs which obtained at the beginning of the period and gradually decreased almost to normal. It will be noted that it was not until 1930 that private enterprise was able to pass the output of the local authorities' building. It made rapid strides in the next 2 years and, as will be seen by reference to table II, increased its output still further in the next succeeding years. It shows symptoms now of having passed its peak.

It is not true that State subsidies to housing have been terminated now or at any time since they were inaugurated. The provisions of certain acts have come to an end so far as continued building is concerned, but their place has always been taken by new provisions in another act. Thus, at the present time, slum clearance projects are heavily subsidized by the National Government, which contributes three-fourths and the local authority one-fourth of the sum required. This is under the act of 1930. Projects for the abatement of overcrowding, which do not involve slum clearance (act of 1935) receive a substantial, but lesser subsidy. In this case, the National Government contributes two-thirds and the local authority one-third.

Changes in the provisions of the various housing acts since 1919 have been due both to changes in construction costs and to changes in the political complexion of the Government. Thus, it will be noted that the first big program was undertaken by the coalition government under Lloyd George. Since that time there have been two Labor governments and three of the Conservative Party. Conservative administrations have naturally emphasized aid to private enterprise, while Labor governments have placed their greatest reliance on housing by public authorities. Neither party, however, has dreamed of denying the need to eliminate slums and overcrowding or the responsibility of the Government to shoulder the necessary costs. Neither party questions the legally established responsibility of local authorities to furnish working-class housing themselves where private enterprise has failed to supply a sufficient number of dwelling units of adequate standard at suitable rents.

The private-enterprise building of the last few years has met the needs of a higher income group than that to which the local authorities cater.

By all analogy, when the present private-enterprise building wave subsides, or when the Labor Party returns to power, new provisions will be enacted to stimulate building for the working classes by local authorities where neither slum clearance nor overcrowding is directly involved.

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