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(6) Be empowered to enter into contractual obligations with State and local authorities for the payment of the Federal rent subsidies in accordance with schedules provided by law. Contract should cover subsidy payments for a particular project during the entire period necessary to amortize the cost of the project. The rental subsidy should be made in proportion to numbers of families rehoused. The English system as provided in the 1935 act provides a model that can be adapted to American procedure. Under this act the Government subsidy is based upon a fixed amount per dwelling unit. The remainder is paid by the local communities. The rent subsidy system places upon the local community the responsibility of proper management, inasmuch as the deficits remaining after the fixed subsidies are paid by the Federal and State authorities become the liability of the local community.

(c) Promote research in and disseminate information on standards of design and construction, public housing management, land usage, city planning, etc.

(d) Encourage local chambers of commerce and other local nonpolitical civic organizations to form committees to study local housing conditions and develop housing agencies and projects.

(e) Secure cooperation of labor through the Department of Labor.

(1) Cooperate with agencies in the private housing field to secure for public housing projects full advantage of all possible construction economies.

The Federal Public Housing Authority should aid, advise, and stimulate public housing, but should not become a dominating paternalistic agency which dictates because of its financial contribution. This agency must be clothed with permanency and must not be a temporary undertaking.

(5) FINANCING OF PUBLIC HOUSING PROJECTS Financing of public housing projects requires funds for construction and rent subsidies in connection with their management and operation.

The following method of financing should be adopted:

(a) Funds for construction of local housing projects should be obtained through the issuance of securities by municipal or local housing authorities as is practiced in England.

The committee recommends the creation of a security similar to the bonds of the Port of New York Authority. Such bonds should be tax-exempt.

For a time it will probably be difficult to persuade private investors to accept a new type of security such as the one proposed. Consequently, it is necessary to provide a more definite market until these securities receive popular acceptance. The committee therefore recommends that the Reconstruction Finance Corporation be empowered, for a limited period, to purchase a specified amount of the securities of local housing authorities, upon approval by the Federal Housing Authority.

(b) Rent subsidies should be provided for in appropriate legislation.

We recommend that, in accordance with basic principle no. 7 stated on page 6 of this report both Federal and State public housing legislation include detailed schedules of rental subsidy payments, similar to the general outline of the English 1935 act as adapted to our Federal and State governmental limitations. The English plan was evolved after years of experiment and is based upon actual experience. Our plan should take into careful consideration the results of their experience.

(6) A FEDERAL PROGRAM OF HOUSING EDUCATION AND RESEARCH Proper educational and research machinery should be provided by the Federal Government in order to make the program effective on a national basis. A successful program must be coupled with efficient management, which can only result from education and research. Qualified personnel should be obtained without regard to political affiliations.

In its educational and research activities, the Federal Public Housing Authority should place the greatest possible emphasis on the encouragement of studies and surveys by qualified State and local agencies, both public and private.

The types of projects that should be fostered would include

(a) Education in public housing management: Since very few people in this country understand the problems of public housing management, the Federal Public Housing Authority should further develop the excellent management training programs started by the Housing Division of the Public Works Administration and the Resettlement Administration.

(6) Real property inventories: The Federal Public Housing Authority should employ every means of encouraging continuous real property inventories. The

1932 survey.

real property inventory of metropolitan Cleveland has set a most desirable standard of procedure. The overhead expense of this project (which has been in existence since 1932) is regularly met by subscriptions of local business, real estate, finance, and public utility interests. Practically all of the field work is done by mail carriers, at no cost to the project. The only other Federal contribution consisted of lending a technical expert to assist in organizing the initial

(c) Institutes of urban research: The Federal Public Housing Authority should assist in the foundation or urban research institutes (such as the Institute of Urbanism of the University of Paris), to study problems of building codes, community growths, community finance, and community planning. Grants could be made (from a research fund appropriated for that purpose) to selected colleges and universities, in line with precedents established by the Federal Government in furnishing financial aid to agricultural and military colleges. Grants to nonprofit research institutes wholly independent of particular schools and colleges might also be made. The precedent established by the National Resources Board in making grants to State planning boards might also be extended to embrace a system of grants ot regional, city, town, and community planning boards.

(d) Coordination of research activities: In addition to encouraging local planning and research studies, the Federal Public Housing Authority should

(1) Coordinate such research activities.
(2) Establish standards of accomplishment.

(3) Disseminate such information by making available to other communities the procedure and results of successful local programs.

(4) Suggest the initiation of programs in various localities and, where necessary, lend services of its experts for organizing local research projects.

(7) MODERNIZATION AND REHABILITATION This field of operation lies more in the province of slum clearance, city planning, and property rehabilitation, than in the sphere of public housing.

In working out actual local programs, however, modernization and rehabilitation will provide adequate housing in many cases for the lower income groups.

Entire block, district, or neighborhood rehabilitation under one agency, which may be in either corporate or trustee form, to include management and progressive development of the properties as a unit, may serve in many cases to prevent wholesale removal of tenants and consequent further blighting of areas, which have not yet reached the limit of permissible obsolescence. It may also permit the utilization of the residual values remaining in the better buildings of a district.

There are largely local problems to be dealt with locally, under such State enabling legislation as may prove to be necessary.

The Federal Housing Administration now extends financial aid to rehabilitation of individual properties, by insuring modernization loans. This could be extended to insurance of district rehabilitation projects, when local and State governments have provided the corporate machinery for such undertakings.


The committee reiterates the statement it has repeatedly made, that it does not put forward any program as the only possible method by which desired results may be achieved. Our program is a simple, practical outline of policies and recommended procedures to remove public housing from the fog of confusion and political conflict. Our efforts are directed toward a clear visualization of objectives in a desire for early action.

We do hope, however, that when the Nation finally adopts a long-term publichousing program, it will be designed as part of a complete home-building program rather than another disjointed effort. Under a capitalistic democracy, public housing must always supplement the efforts of private enterprise. Competition by Government in any field of economic activity will finally, even though the purpose be most worthy, retard more activity on the part of private enterprise than government, through competition, can possibly generate.


The recently introduced Wagner-Ellenbogen public-housing bills aim to achieve results that the committee considers desirable. We deeply appreciate the efforts of Senator Wagner and Representative Ellenbogen in the cause of a sound national housing policy. We advocate, however, basic principles and methods of procedure which differ in certain respects from those embodied in the bills as introduced

We agree on the importance of decentralization in public housing and the rights of the local or municipal authorities to determine the amount and type of housing to be provided. Likewise we agree on the need of careful selection of those to be housed and the necessity for providing public housing only for the lowest income groups. The bills, however, leave these important safeguards to administrative rather than necessary legislative control.

The committee differs with the bills in three basic principles: (1) We are opposed to direct grants on any basis other than for rent subsidies.

(2) We are opposed to loans to private corporations for purposes of public housing.

(3) We are opposed to any demonstration projects on the part of the Federal Government, particularly in relation to so-called public-housing societies.

Among our important reasons for disagreement are


These provisions will react adversely upon both public and private housing. They will permit and encourage the encroachment of Federal authority upon the domain of the States and the municipalities. They will stop private enterprise from the development of a large scale home-building industry, and also discourage the flow of funds into the field of finance. Such facilities are indispensable to a real home-building program for all income groups.

(2) UNDUE BURDEN ON FEDERAL GOVERNMENT These provisions serve to encourage the States and municipalities to avoid their proper responsibility in public housing. The vital needs of the people should be served by cooperative action of Federal, State, and local Governments. The Federal Government alone should not be expected to assume the degree of responsibility provided by these bills.

(3) DISADVANTAGES OF CAPITAL GRANTS Capital grants have proven a failure in America as well as in other countries. Subsidies other than on a fixed rent basis result in waste and inefficiencies in the construction and management of the properties. The benefits of such grants are not extended to the families who are being rehoused. Our preference for rent subsidy is amplified in basic principle no. 7 of this report.

(4) LOANS TO PRIVATE CORPORATIONS Our objections to loans to private corporations for public housing are partially derived from the utter failure of the limited dividend projects, financed by the Federal Government, to provide housing for the low-income groups. Furthermore, such practice would cause all new large-scale housing on the part of private enterprise to cease. Private interests cannot compete with the chosen few who would, under this provision, receive interest subsidies that are not otherwise available. Fear of this competition would undoubtedly stop projects that are now contemplated, particularly those fostered by the Federal Housing Authority in their excellent large-scale housing division.


The demonstration projects authorized under these bills give the Federal Government authority to build and operate in any territory. The Public Works Administration experience has proven that it is impractical for the Federal Government to undertake the construction or operation of housing. This provision will cause the existing clash between local communities and the Federal administration to continue.

(6) EXCESSIVE ADMINISTRATIVE AUTHORITY The bills convey almost unlimited administrative power to the Federal Housing Authority with an absence of definite standards. For instance:

(a) Low-income groups could, in many areas, even include families with incomes up to $2,500 per annum.

(b) A "public housing society” might be composed of three persons in a city of 7 million. Regardless of the desires of the community, these three individuals with no financial responsibility could administer millions of dollars of Federal funds.

(c) A "limited-profit housing agency" under the bills could build almost any type of private enterprise rental housing project.

(7) CREATION OF SEPARATE ORGANIZATION The Federal Government already has too many agencies who report directly to the President. The public housing authority should be responsible to a Cabinet member, preferably the Secretary of the Interior.

(8) EFFECT ON UNEMPLOYMENT The bills assume that their passage would mean increased employment. In reality, they would cause a net decrease in employment, due to the fact that private enterprise would contract its housing efforts at a time when it would otherwise expand. Such loss of employment would greatly exceed the purported gain.


Charleston, S. C., May 2, 1936. Hon. David I. WALSH,

United States Senator, Washington, D. C. DEAR SENATOR WALSA: Permit me, in my capacity as president of the board of trade, as well as a member of the local housing authority, to respectfully urge your support of the Wagner-Ellenbogen bill, now being heard before your Committee on Education and Labor.

It is my opinion that this legislation will stand out, along with such acts as the Federal Deposit Insurance Corporation and Securities Exchange Commission, as a permanent monument to the Democratic Party during this period of depression. With kind personal regards, I am Respectfully yours,


BETHLEHEM, PA., May 5, 1936. Senator David J. WALSH, Chairman, Senate Committee on Education and Labor,

Washington, D. C. DEAR SENATOR: This is to advise you that the city council of the city of Bethlehem, after a careful study of the Wagner-Ellenbogen United States housing bill, has endorsed this measure and is in sympathy with its provisions and will appreciate your hearty support in urging action on this bill, which will without question, promote the general welfare of our Nation. Very truly yours,



Philadelphia, May 5, 1936. Senator David I. Walsh, Senate Committee on Éducation and Labor,

Washington, D. C. MY DEAR SENATOR Walsh: I want to urge your interest and support of the Wagner-Ellenbogen housing bill which is now before the Committee on Education and Labor, of which you are chairman. From our daily experience in the Family Society we are very keenly aware of the necessity for the Federal Government to assume responsibility for low-cost housing.

It is gratifying to see that the Wagner-Ellenbogen housing bill recognizes this responsibility of the Federal Government by establishing a permanent Federal Housing Authority and empowering this authority to make grants and loans to local public housing authorities and to other groups interested in housing. Very truly yours,





Washington, D. C. The committee met, pursuant to call, at 10 a. m., in room 212, Senate Office Building, Senator David I. Walsh presiding.

Present: Senators Walsh (chairman), Donahey and Davis.

The CHAIRMAN. The committee will come to order. The committee has met this morning to hear witnesses in opposition to S. 4424.



The CHAIRMAN. Your name?
Mr. Nelson. My name is Herbert U. Nelson.
The CHAIRMAN. Your residence?
Mr. NELSON. Chicago, Ill.
The CHAIRMAN. Your official position, if any?

Mr. NELSON. I am secretary of the National Association of Real Estate Boards and of the American Institute of Real Estate Appraisers, and Institute of Real Estate Management.

The CHAIRMAN. Are you appearing for the purpose of expressing your views or the views of the members of these organizations!

Mr. NELSON. Both.
The CHAIRMAN. You may proceed with your testimony. .

Mr. NELSON. Mr. Chairman, I have read the bill and I am sympathetic with its fundamental purposes, but I feel that in some degree it fails to achieve those purposes.

The bill begins, Mr. Chairman, with the statement concerning the existence of a present acute dwelling shortage in the United States. On the second page it refers to such a dwelling shortage.

I assume that in legislation you desire to deal with facts as they are. We make each year—when I say “we” I mean the association, which is a federation of 431 local real-estate boards—we make, with the help of the Post Office Department, an occupancy or vacancy survey of dwelling facilities in every city, and we are now engaged in making our annual checkup of the existing vacancies. I have in my hand at the present time the report from some 30 cities which are representative of all parts of the country, including the East Bay District, California, Alameda, Berkeley, and Oakland, and such cities as Des Moines, Baltimore, Kansas City, and so on, 30 representative cities throughout the country. In the next few weeks I will have in hand some hundreds more of these.

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