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by, say, one-fifth. There is no essential reason why the house owner should borrow from one to pay off another the present value of the land with all attendant trouble and expense of survey, proof of title, recording, etc. The use of the site for the house can be granted either for a term or without term, subject to no great difficulties as to adjustment, termination, or continuance. The terms I suggest would be an agreed net periodic percentage of the assessed value, not including liability for special improvement assessments. The lessee should assume the general taxes and insurance of the liability to the public. I would suggest that this net ground rent be the average productivity of the local municipal, the State, and the National general lien bonds. The cost of the house will be about one-third for materials, one-third for direct labor, and one-third, the balance, for interest, insurance fees during construction, for plans. The interest should not only cover the rate on the money used for the necessary unproductive period of construction, but also 1 percent for an interim between completion and occupancy. The service of a supervisory architect, surveyor, etc., should be charged into the labor. At least 10 percent of cost should be put up in cash by the purchaser or promoter.

Amortization should, in my judgment, be at least one-third of 1 percent per month for the first year and one-fourth of 1 percent thereafter, plus additional amortization by the difference between the interest on the initial mortgage and that on its monthly declining sum. In other words, if interest be at the rate of 4 percent, plus one-half of 1 per cent for mortgage and term life insurance and mortgage service, the whole charge for the first year, outside of ground rent, fire and other insurance, taxes and repairs, would be 892 percent and for subsequent years 772 percent on the amount borrowed.

Public Works Administration housing.—The Public Works Administration has undertaken "a national demonstration of low-rent housing” by 50 projects. Let it be noted these are no longer described as low-cost projects. But let us also discover how the lowness of the rent is to be achieved.

By the way, what is rent? Perhaps simply what is agreed and expected to be paid for the use of the dwelling place. In making comparisons it is important to know and consider whether supply of heat and water is included, as it generally is in apartments and generally is not in houses. For comparative purposes this may, in the northeast, be calculated at $1 per room per month, which is about its money cost when adequately provided by individual supply. (Average through 6 years, 11 projects, 6,851 rooms, reported by New York State Housing Board, for fuel only, $13.06 per room.) But rent is commonly conceived as a payment intended to cover interest on investment, taxes, water charges, insurance, maintenance and operation, administration and general expense, depreciation (in which may be included amortization and obsolescence) and reward for enterprise, direction, and risk.

The Public Works Administration housing includes no interest or amortization on 45 percent of cost which Uncle Sam writes off at once to profit and loss. It includes no taxes, city, county, State, or National, and, I understand, no water charges or insurance. It will not include as an expense against the project any of the inevitable cost of corporate direction and will compete with private property, which would not enter into provision of housing for others without hope of reward for enterprise and the risk involved in an immovable long-term investment. This suggests that the charge for the use of these Public Works Administration dwellings ought to be called something else than rent.

According to the official statement of December 18, the Ten Eyck project in New York will provide 1,625 dwellings at a cost of $12,783,000, or more than the combined costs of the Hillside and Boulevard projects in New York, plus the Mackley in Philadelphia, all built under Public Works Administration supervision and with its funds, plus the Camden project which between them have 3,256 dwellings, or over twice as many. It will house 67.7 families to the acre, including the 3.9 acres of closed streets added to the site, or 80 per acre of the original site.

The rents are set in advance at $6 to $7 a room per month. At $7 the potential rent income is $479,304. There are 1,400 front feet of stores. Experience of the Brooklyn Garden Apartments indicates they may bring in $36 a foot per annum, or $40,000. Both figures are maxima disregarding vacancies, interim losses, and uncollectibles.

Having written off 534 millions of the cost Public Works Administration calls for 3 percent interest and 135 percent amortization on the balance. This will require $327,628 and leave a possible $202,076 for operation and maintenance. This equals $2.95 a room per month. The realized cost of maintenance and

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operation for 11 limited dividend projects, reporting to the New York State Board of Housing for 6 years, ending November 30, 1934, was $3.59 a room after eliminating water, elevators, and legal and auditing expenses.

Of course, no one can achieve such an airtight result as no vacancies or rent losses. It remains to be seen whether the Public Works Administration will be able to hire help, or buy, or manage more efficiently than the quoted projects. Otherwise who will pay the deficit?

The tax and local assessment rate is $2.92 per $1,000 of value. Assessed value is usually taken at a cost on new developments. The State corporation, mortgage and other taxes escaped have been carefully reckoned as at least 0.3 percent per annum. No account will be here taken of the value of United States taxes escaped by this enterprise but borne by its competitors. The above rates combined and applied to the estimated cost equal $411,600, or over $6 a room per month. This does not account for water charges equal to 20 cents a room per month.

It costs $6.40 a person per month to run the city of New York. (See tax bill.)

We were told, “The Ten Eyck houses, the largest slum-clearance and low-rent housing development of the housing division of the Public Works Administration, is a practical answer to the great national need for better homes and housing conditions.

Senator Wagner said at the opening, “Generalizations are often dangerous but it is safe to generalize about housing conditions in the United States one-third of the population live in homes injurious to their health and endangering their safety and work.” Was this site a slum? Perhaps. It was antiquated. It was largely frame. It needed paint.

But it was not an unhealthy area. The United States death rate in 1934 was 10.9 per 1,000, lower than any year prior to 1932. Infant mortality was also lower than any year prior to 1932. The rates for the health area, including this site, were lower than for the United States. There is no unit cause of disease, or crime, or other social ill.

Dr. Haven Emerson, the eminent public health administrator and educator, says:

"Lay opinion is firm in the belief that poor housing is a cause of ill health. Architects, settlement workers, and other social agencies take it for granted that the reasons for high sick and death rates among the badly housed are the buildings inhabited.

“There is no such strong conviction among physicians, sanitarians or statisticians. A close analysis of causes and results tends to confirm those professionally concerned with health in a belief that the construction is of less concern to health than the occupancy of a building. It is not so much in plan, materials, proportion or prospect, but in the use, and by the nature of the users, that buildings contribute to preventible disease and premature death.

“Without abandoning the valid conviction that well-planned, well-built, wisely spaced houses, at rentals within the means of the prospective tenants, are a better social investment than their opposites, we may still be intellectually honest in weighing the reasons which convince us.

“There is hardly a factor offered for proof of relation between housing and health which cannot be explained on the basis of earnings, intelligence, education, or that quality so wisely termed 'maternal efficiency.'

The Real Property Inventory says that near 3 percent of the housing in 64 main cities is unfit to use. How safe does this make Senator Wagner's generalization? “How practical" does the P. W. A. demonstration now look? It will be good housing but without any economic base at all.

Prof. Ernst Kahn says rightly that government rehousing of a few selected tenants does more harm than good. If done at all, especially in a democracy, it should be done for all the lower group. This group may in New York be taken to be the 190,000 families (10 percent) who now pay less than the Ten Eyck rents and assuredly get less than these privileged tenants will. Mr. Ickes won't admit that money is wasted or that the Ten Eyck scale is extravagant. But to apply Ten Eyck costs to 190,000 families in New York would be so burdensome that you could not even propose it to the Legion as a legion benefit.

Imagine the effect of asking everyone of the Philadelphia workmen, now bravely struggling to house his brood, to carry $800 tax in order that every tenth other family might have such extravagant housing at a fraction of cost. The cost would be sufficient to double the independent man's rent.

Misleading people to accept first or Țen Eyck houses as something that can and ought to be had for the rent is a serious mistake, chiseling on cost. Freeing that many people of their share of city expense (5674 millions), plus service of this much extra debt (at 3 plus 144 percent on $1,500,000,000), would add $196 to the annual burden on every other member of the population, or $800 for each family.

Lest it be thought that I have exaggerated the number, let it be noted that the principal proponents of Government housing claim that it will be necessary to rehouse 500,000 households in New York City and upward of 33 percent of those in the United States.

Lest it be thought that the instance of Public Works Administration housing is unfair, it may be noted that the Harlem River houses, in New York, for Negroes, is still more expensive per unit and that 10 other Public Works Administration projects exceed $6,000 a unit.

Public Works Administration proved, in my judgment, the unique incompetence of a continental central government to enter municipal subdivisions of the sovereign States and do a practical job of planning, locating, and constructing housing for the civil residents.

What will become of the Public Works Administration housing? I believe it will be liquidated as the war housing was. I believe it is possible to combine private management under a lease from, or supervision by, the Government and, particularly, for tenant cooperatives to be developed into useful instruments.

I do not believe in any form of subsidy. I think they are all snares and delusions. But if any public assistance is to be given I would limit it strictly to self-liquidating loans. Supplementing the Federal Housing Administration with a mortgage discount bank would give us the best time-tried facility for economic housing.

I would permit localities to grant a limitation of taxation to the normal rate on the land value and special assessments, providing the construction cost is limited to 2 years' income of the group for which it is intended and the rent to 12 percent on the cost, this to be applied only to the reconstruction of slum and blighted areas.

I believe that the provision of any public recreational or educational facilities is the business of the school system. Of course, I would encourage the cooperation between housing authorities and the school authorities in the provision of facilities at cost.

I favor the provision of housing for all income groups by private enterprise, though I believe it is possible to govern this enterprise on public-utility principles to encourage sufficient and discourage excessive development. I believe this should be accomplished without any Federal Government aid whatever but, if there were any such, it should take the form of Federal Housing Administration self-sustaining, or mutual, insurance fund, applicable to loans not exceeding 90 percent and not exceeding 2/2 years' average earned income per family unit.

I believe that the Port Sunlight, Letchworth, Wellwyn, Cincinnati Model Homes, Washington Sanitary Dwellings, City & Suburban Homes, Brooklyn Garden Apartments, and Octavia Hill Association have provided such housing of satisfactory standards.

Octavia Hill principles.-We can, with full sympathy for the common disgust over the environment of many families, with full recognition of the desirability of doing away with structural unfitness and the supply of fundamental equipment, still keep a level head and say that most of the people who have had to get along without bath tubs, inside toilets, and central heat have still managed to be wholesome citizens.

As Miss Hill said, “Almost the worst house, if the household be wisely managed, is better than ever so costly a one ill-managed.” She was most anxious to leave not a tangible thing so much as a sound system of human relations.

As former Minister of Health Neville Chamberlain said of her work, “No scheme of slum clearance or reconditioning will solve the problem, or prevent its re-creation, unless followed by enlightened management."

Miss Hill said further: "The houses we acquired were well built but in a dreadful state of dirt and neglect. The necessary repairs, deverminization, opening of drains, water supply were put in. No new appliances were added as we were determined that our tenants should wait for them till they proved themselves capable of taking care of them. They prize the evenness of the law that is over them. They have been used to alternate scolding and tolerance of vice. They expected a greater tolerance, ignorant indulgence and frequent alms but in spite of not realizing this have recognized as a blessing a rule which is strict, but the demands of which they know, and a Government that is true in. word and deed.

“My ideal is the utmost possible independence of the person in charge of the houses. Each block is placed under a worker who has the duty of collecting, superintending, keeping accounts, advising repairs and improvements and choice of tenants. All the kingdom is theirs while they hold it.

"Every owner receives a fixed percent on the investment (a pay-off on the investment where that is agreed) and any balance is held as a reserve for improvements.

“Subdivision of our work is the object I have most deeply at heart. If we cannot subdivide we must deal with tenants collectively, not individually—by routine instead of by living government.

As owners will have lawyers to do legal business they will have managers to supervise in detail the comfort and health of their tenants, so far as these depend on proper conditions in the houses.

"Miss Hill and her assistants were at the local managers' service to any extent the managers deemed advisable, but take the initiative yourselves,' said she.

“The present tenants were always given a chance. In letting in new tenants one must discriminate against the drunkard, the thriftless, the dirty. Lady managers were preferred 'for it is detailed work, it is household work, it needs persistent patience, gentleness, hope.'

"In all the new cottages I am introducing the plan that the tenants should pay their own taxes, the rents being fixed lower, and I feel that such an arrangement is of deep moment. Our tenants are now keenly alive to many of the facts about the taxes which they, and they only, can alter.

"Referring again to owner 'compounding for rates' (i. e., paying the taxes and recovering from tenants), 'the practice is, I feel sure, at the root of reckless and useless expenditure incurred by local authorities. The moment the body of electors felt they paid the rates that moment we should have deliberate expenditure. Weekly tenants have votes but don't realize that their rents include rates (taxes).

For some years we have arranged for a considerable number of tenants to pay their taxes direct. We also have a great many paying a weekly installment of taxes.'

"The Peabody Trustees have adopted such an arrangement. The artizans, laborers, and general dwellings have arranged in 2,100 tenants that tenants should pay their rates (taxes) direct.

"The greatly increased costs of building have disappointed us in our hope of letting tenements at a low rent if we are to adhere to the principle we think so all-important, that the houses of working men are to be on an economic basis, not charities."

In 1899, she wrote: “Housing is occupying the attention of many, some of whom know very little about it.

The municipality cannot, in my opinion, be good landlords to its own constituents.”

Again in 1905: “There has been a very wise Mayor of Kensington during the past 5 years and we have heard nothing of extension of municipal schemes.

“Building was never what I felt our main duty. It was always the right management which I felt the greatest used.”

Herbert Spencer said before Octavia Hill Association of Philadelphia was founded: “The struggle of a new idea with the old, whose peaceful reign it disturbs, almost invariably passes through two stages: 1. Positive antagonism; 2. Conciliation. Champions of the old are intent to prove not the untruth but the inexpediency of the new. Before the world realized the vastness of the change that has been wrought in its midst the truth becomes recognized." Let us hope that the new idea you have been demonstrating these 40 years will be more generally recognized in the near future.

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Memorandum for Hon. David I. Walsh
Re: S. 4424.
Presented by Herbert F. Taylor, president, Cooperative Central Bank, and

Boston Cooperative Bank, Boston, Mass., and Raymond P. Harold, treasurer,
Worcester Home and Equity Cooperative Bank; Director District No. 1,
United States Building & Loan League.

Our cooperative thrift and home-financing institutions are not opposed to measures designed to clear slums and blighted areas and to assist in the housing of worthy underprivileged families. We do feel, however, that such legislation should be given a most thorough study and be so limited as to confine the benefits to the persons and families who are in need of public assistance. We further believe that, unless such assistance is confined to the 10 percent of the population

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in the lowest income group, the general effects may be detrimental to the efforts of the cooperative, or quasi-public, institutions which for many decades have served the working classes and helped them to achieve a higher standard of housing and home ownership than is known anywhere else in the world.

It is our belief that there does not exist the same justification for public or subsidized housing in this country as exists in European countries. However, it is undoubtedly proper that some efforts be made in regard to this question and, in consideri ig the Wagner bill, S. 4424, we suggest some limitations which will direct or confine the activities to the class of persons for which the extensive expenditure of public funds can be justified. The following suggestions are made in the hope that the activities under the bill can be so directed as to avoid interference with the work of private enterprise and our cooperative institutions in encouraging and financing home ownership.

1. The definitions of "low-rent housing” and “families of low income” should be restated in more definite terms, in order to limit and direct subsidized publichousing activities to the benefit of the underprivileged group or the lowest 10 percent in the income scale. The present definitions are broad and would permit the administrative body to solely determine the groups to be served. It is our judgment that, under the present definitions, it would be quite possible to ercct structures for the use of middle-class groups who can be served by private enterprise if competition by public subsidize housing is avoided. Considerable study should be given to this question in order that the public housing be used only to service persons removed from slum or blighted areas who merit public assistance in obtaining better housing.

2. It is suggested that some advisory body, with moderate authority, be included in the legislation to protect the interests of communities and areas in communities. Such an advisory body should be representative of the interests affected by public housing and some deliberate procedure should be established in connection with the decisions to place public housing in communities.

3. In connection with grants by the Federal Government, it is our judgment that such assistance or subsidy should only be made available on condition that a fair proportion or similar grants be contributed by State, city or local interests sponsoring such projects. It would seem most important that local interest and local responsibility at least match the generosity of the Federal Government in connection with such housing activities. It is suggested that some definite restraints be placed upon the powers of the Authority with regard to percentage of financing and terms and rates (sec. 9 (c)).

4. The wisdom or necessity of demonstration projects is doubted, as a substantial number of such projects have been completed, or are being completed, with public funds in over 30 cities in the country. The authorization of demonstration projects violates the rather sound principle which is generally found in the bill of local participation and responsibility.

5. There is a real question as to whether we have the facts and information uj.on which to base a public-housing policy, sponsored and financed by the Federal Government. British experience, in which they were dealing with housing conditions much worse than anything found in the United States, does not indicate that financial assistance as extensive as j roposed in this bill is necessary. There is the further thought that, if the Federal Covernment is going to take the lead and make funds available, many additional phases should be dealt with... For exam; le, the national housing problem will not be solved by the mere building of a relatively few housing projects unless local governments take the responsibility for controlling blighted areas, for checking over-crou ding, for the prohibition of renting und occupancy of insanitary quarters, and a whole group of matters which can be dtalt with only through enlightened and vigorous action on the part of local authurities. The experience of the i 'ederal Covernment in housing to date would suggest that the volume of employment that might be obtained through public housing will not be a major factor in recovery. The clear increase in private building activity, if encouraged and protected, will probably absorb a substantial number of the building trades workers in the coming months. Private construction of residences has doubled so far this year over 1935 activities, and the whole trend is upward and encouraging.

In conclusion, it should not be overlooked that the British Government has practically eliminated all forms of subsidy and the inspiring activity in housebuilding during the past 2 years has been due entirely to the work of private enterprise, financed largely by building societies, which are the English counterpart of our cooperative thrift and home-financing institutions.

We believe these views express in the main the views of practically all the cooperative banks of the country.

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