Furthermore, if we build low-cost houses in the outlying boroughs we are then faced with another expenditure which will increase the cost of living and increase taxes by being compelled to extend our water systems, to build new subways, which cost all the way from $14,000,000 a mile up, and it takes a lot of money to build them.

As Mr. Pedersen says, the transportation payment by the passengers is just about one-third of what the actual cost of operation is. It is going to impair land values, and if you impair land values in one section you are bound to impair the land values generally throughout the city. There is no question in my mind that that is going to follow if we have low-cost housing.

The city will be compelled, with the expansion of the city, to increase its police department, its fire department, its sanitary department, and in fact will have to increase its budget, which will bring on another increase in taxation.

If we keep the rate at what it is constitutionally, at 2 percent, exclusive of debt certificates, why then we have to increase the assessed valuation, and if we do that then we are going to bring on in a very short time a condition that cannot be tolerated.

Real-estate values will be so high that they cannot be purchased Private individuals will not take them over, and then they will fall back into the hands of the smaller people, and the people who have their deposits in the savings banks, and who have policies in the life-insurance companies, those who have money in the building and loan associations and in the investments by executors, guardians, and other fiduciaries, there is no question in my mind but what they will be impaired.

We have another difficulty in New York on the question of lowcost housing, and that is we have a multiple-dwelling law. That is a law that has been passed by the legislature, that affects only the city of New York, and under that law we are restricted in the area of the land that can be occupied by a building, we are compelled, when we build the building, above 11⁄2 times the width of the street to build setbacks, which increases the cost of the structure and also reduces the rentable area. That is bound to affect rentals.

Under the building code that the city of New York has, why, it is so drafted that a building constructed under the New York City Building Code I think would last as long as the pyramids of Egypt, but in enforcing the building code the cost becomes so great, because they insist that in construction that building must be built according to the code, that it means more brick and mortar and lumber, more iron, and more tensile strength, and that brings the cost up.

So I am afraid that low-cost housing cannot be done in the city of New York under this bill. The only remedy there is is for the city or the State to revamp the law so that the houses that are now built, and some of them that were built 70 years ago are still habitableI lived in one for 43 years-so that the houses that are now built will not be affected.

Of course the complaint is made that we do not have cross ventilation. We have railroad apartments, four rooms or five rooms through, and the intent and purpose of the proponents of this bill means that you have got to have cross ventilation, and you have got to have all the conveniences in the world, you have got to have tile baths, tile kitchens, marble halls, and panelled walls, all the elec

trical equipment that can be had and produced today, and they do not want to pay any more rent than they are paying now, and I am afraid that this thing cannot be carried out successfully.

There is another thing that I want to call your attention to. In looking over these definitions I do not see anywhere here where it says anything about a slum, except something about a slum area. Now, I have been trying hard to find out what a slum really is and to get a good, sensible definition for the word. Of course, you made a remark that it would mean probably insanitary rooms, or a little dirt in the corners here and there, but we must realize that the owners of the property, and those whom I represent are a class who have worked and labored for 25 or 30 years in butcher shops and bakeries, and delicatessen shops, and have saved their money and have bought these properties, figuring that they are going to have some income in their old age, so that they would not become wards of the State or of the city, and that they would be able to take care of themselves so that they would have a happy ending to a long life.

Those houses are still habitable and they are in good condition. They are places that anybody can live in. Of course, they do not fill the requirements that are demanded under this bill, the requirements of those people who are the proponents of the bill, if they put it into effect. They think that a man that is working today under W. P. A. at $55.50 a month, who can contribute 25 percent of his wages for rent, that makes it $13.50, who has a family of two children, that he must have at least three rooms. He cannot get three rooms with steam and hot water supplied, with bath and electric light, refrigerator and electric or gas ranges, for that sum of money.

One trouble with all this proposition is that nobody is educating those people who are so unfortunate that they cannot earn enough to get all these things, but to educate those people, to show them what they can have from what their earnings are. Nobody seems to take that end of the question into consideration, and I think what we need in this proposition more than slum housing or slum clearance, is the education of the people who are not fit, you might say, to live in any kind of houses. They would still have some of the old buildings, no matter what you would do.

Now, we had this question come up of the renting of apartments. You spend $25 to $50 in putting the apartment in shape, and they come in and in 2 months' time when they go out you have got to send the same mechanic in to do the same work over again.

Now, if there was some organization that would teach those people to live decently, that they must be clean, why I think it would solve this problem of low-cost housing, and I think the older houses could be used for that class.

I want to go on record as being opposed to the bill.
The CHAIRMAN. Are there any other witnesses?

STATEMENT OF FRANK CARNAHAN, SECRETARY, NATIONAL RETAIL LUMBER DEALERS' ASSOCIATION, WASHINGTON, D. C.

The CHAIRMAN. State your full name.

Mr. CARNAHAN. Frank Carnahan.

The CHAIRMAN. Where do you live?

Mr. CARNAHAN. Washington, D. C.

The CHAIRMAN. Whom do you represent?

Mr. CARNAHAN. I am the secretary of the National Retail Lumber Dealers' Association.

The National Retail Lumber Dealers' Association is a cooperative group representing 23,000 retail lumber dealers throughout the United States, and every State in the Union.

At our annual convention in Chicago last week we passed a resolution, after considering the Wagner and Ellenbogen housing bill, and with your permission I will read it in the record.

The CHAIRMAN. You may read it.

Mr. CARNAHAN. (Reading:)

Resolutions adopted by the board of directors, National Retail Lumber Dealers' Association, Blackstone Hotel, Chicago, April 21-22, 1936.

WAGNER HOUSING BILL

Whereas there has been introduced in the Congress of the United States a companion bill known as the Wagner-Ellenbogen housing legislation, and Whereas this legislation purports to establish a housing authority providing for grants up to 45 percent as Government subsidies, and loans for a period of 60 years to local housing authorities, and

Whereas said legislation will vitally interfere with the present Government housing program as set up under the National Housing Act and now in successful operation through private financing and private initiative of industry; therefore,

Be it resolved, That the National Retail Lumber Dealers Association, in convention assembled, April 21-22, 1936, in Chicago, is opposed to this legislation, and that it use its entire organization to defeat its enactment, inasmuch as its continued agitation is bound to affect the present housing program which is going forward rapidly under private financing and initiative.

It is the thought of our organization, Mr. Chairman, that the housing problem can solve itself, that capital and private initiative will solve the housing problem.

Two years ago our organization took a survey of not the need but of the demand for homes in this country, and we presented to the President of the United States an actual survey of $300,000,000 to $500,000,000 worth of houses to be built at that time, with actual applications from people in the field throughout the United States. Since that time we have been trying, through various means, to get these houses financed through private capital and under the F. H. A. plan. That program has been, in a measure, disappointing to us, as well as it has been disappointing to the American Federation of Labor, who backed the original legislation.

However, there has been a lot of educational work going on that has brought this thing to a place now where we feel that if we are permitted to go along and finance these houses in the proper way, that private initiative and private capital can do it.

Now, the Senator spoke about the small-house program. That seems to be the thing that is in most everybody's mind today. What can be done with the small-house program? I want to tell you the Retail Lumber Dealers Association are already solving it. We have built thousands of small-cost houses, and I have this cut of a house, the picture of a house that I will submit to you for your information, or if you want to put it in the record, for the information of the committee I will leave it with you. There is the type of Cape Cod

63408-36-23

cottage that our dealers have been building in the Northwest, they have built thousands of them. Not particularly that same design, they change the design slightly in order to effect a different structure in different areas, but they have built thousands of these.

That house can be built at a varying cost from $1,390 to $1,700, and they are sold on payments of $14, $15, and $16 a month to people with incomes from $90 to $100 a month.

One retail dealer that got that pamphlet out a year ago-you notice it is dated October 1935-financed 169 of those houses under the Federal Housing Act, and many other dealers built hundreds of them throughout the country.

The CHAIRMAN. Are there cellars in these houses?

Mr. CARNAHAN. In some cases there are and in some cases there are not.

The CHAIRMAN. How much more would it cost for the cellar? Mr. CARNAHAN. It would cost no more than $40 or $50. Those houses are now being built all over the country.

Those houses are houses that at first could not qualify under the property standards of title II of the Federal Housing Administration, but the dealers came to the Federal Housing Administration and demanded to be taken care of, and as the result many of the dealers, bankers, and so forth, conceived the idea that they can take care of that kind of financing under title I of the National Housing Act, and through a payment of 9.7 percent interest the houses were built; they were furnished under the 20-percent guarantee clause of title I of the National Housing Act.

In a recent modification of title I the F. H. A. felt that that was not the proper way to handle those houses, and they have recently changed the regulations, which will permit the building of small houses of that class on small loans; $200 or $300 would take care of the down payment.

It is our information that at least 60 to 75 percent of the building today is of houses up to $2,500 that can be taken care of through private financing.

The CHAIRMAN. The chairman would like to call the committee's attention to the pamphlet, "The Housing Problem: A Concise Survey", by Sir Francis Fremantle, M. P. This pamphlet contains a survey of all English legislation on this subject. The legislation seems to be divided into three periods: pre-war housing, the war period, and post-war legislation. It seems to be an interesting and informative document, and it ought to be read in connection with any study on this subject. It is available at the British Information Bureau, New York City.

Senator DONAHEY. I would like to ask a question.
Mr. CARNAHAN. Yes, sir.

Senator DONAHEY. Do you believe that when slum elimination takes place, the slums that all these cities have to contend with, the unsightly and insanitary places, when an old shack of that character is torn down and a new one is put into its place, do you think you would be hurt by that?

Mr. CARNAHAN. I do not think we would be hurt, except to the extent that they would be drawn on to pay additional taxes to subsidize them.

Senator DONAHEY. Would it be worth it? That is the question. Mr. CARNAHAN. That is the question. I think you have plenty of examples on the books today. I refer you to the slum-clearance project in Atlanta, Ga. The record is complete on that, at least the record that I have had on it. They built those projects to take care of the slums in Atlanta, Ga. This statement was given to me by one of our directors at the present time. When they got it built they could not get the people who built the slums to move into them, because they were the kind of people that did not want to move into them. That is over 2 or 3 months ago, and the project remained empty. There were plenty of applications from school teachers that wanted to go into those buildings.

Senator DONAHEY. I am glad to have that information.

Mr. CARNAHAN. I would be glad to give you the complete report and put it in the record.

The CHAIRMAN. It is quite apparent from the testimony here that very definite and very positive and well-defined provisions must be inserted in any bill for slum clearance, so as to prevent these houses that the Government may build or subsidize, from becoming inhabited by other than people who now live in slum areas.

Mr. CARNAHAN. That is true.

The CHAIRMAN. It is quite apparent to me that unless that is taken care of there will be tremendous pressure upon local and State and national officials to turn these rather new and modern homes over to tenants whom they were not intended to be built for.

Mr. CARNAHAN. That is just the whole answer, Senator. That is just the very thing that is causing the slowing up of this whole housing problem. This legislation has been on the books of this Congress for the last 2 years, and every once in a while we have real live prospects for houses of that type, and a little more expensive type. They say, "We will wait and see what the Government is going to do. If the Government is going to subsidize the program, they are going to give me a thousand dollars to build the house with", and right away the prospect flies out of the window.

The CHAIRMAN. I am of the opinion that the Congress never intended money to be used for housing or building except for slum clearance, and yet the record before us is that none of these houses have been used where they have been built for slum clearance; is that not the fact?

Mr. CARNAHAN. That is a fact. I do not know whether you heard Senator Barbour in the Senate yesterday talking about the Heightstown, N. J., project. That thing wrote off the books $13,000,000 for allowances to the lumber business. They were going, to build a resettlement group of houses all over, that the people thought they were going to be able to rent for $4 or $5 a room. The Government was interfering with our business in that way.

The CHAIRMAN. I do not want to be considered as prejudging the issue here, but I do think that there is a very serious problem involved in this matter of slum clearance, and I think in going into it we have got to be sure that it is slum clearance and not simply building houses to rent in competition with private property. Mr. CARNAHAN. That is our problem.