Hon. DAVID I. WALSH, PHILADELPHIA, PA., May 1, 1936. Chairman, Committee on Education and Labor, Washington, D. C. DEAR SIR: In objecting to this bill I do so on general grounds, as it is an act of appropriation not within the scope of authorized government; and even if it were within the scope of the Federal Government's authorized powers, the findings are incorrect (sec. I) and the act itself prejudicial to the general welfare, to the classes sought to be aided, to those who will be assessed directly or indirectly for the projects, and will also be prejudicial to the standard of living and employment generally. I can understand the intent of the bill if it is what it avowedly purports to be, that is, one of a series of interlocking bills designed to centralize control of the people and their affairs in the Federal Government. Otherwise I cannot understand the bill or the intent of its sponsors. As an owner of housing, my observation over the past 8 years is that the Federal, State, and local governments absorb not only the direct income of housing but its indirect income also, that is the ability of the people to pay adequately for any kind of housing, be it elaborate or modest in its accommodations. A great many conflicting statements have been made as to housing and the status of employment in that and allied industries, but the simple fact remains that, as Federal, State, and local governments persist in their demands for more and more of the labor of the people, for the support of the tax-supported and tax-exploiting classes, the people's ability fu'ly to employ one another in trad3 and to buy or rent suitable dwellings will remain at a low ebb. Unless the present trend is checked, but few will be able to occupy a dwelling of any sort or to pay the gas, electric, and water and sewer services appurtenant thereto, except the tax-supported and tax-exploiting classes. This may seem to those in government or government employ an exaggerated statement, but I call to your attention the facts as they exist. In a period of 8 years the demands of government have risen from a demand for 20 percent of everything produced to a demand for 60 to 65 percent of everything produced. The economic return to the people from this great mass of government activity is negligible. As a consequence, the effective buying power of the people for each other's products and services has been cut in half. Whatever the object on which taxes are laid, the taxes find their way back to the housing of the people, hence the unemployment in housing industries and collateral pursuits. If it were not for the taxes in the cost and rental of a dwelling, rents would be an insignificant item in anyone's budget. Therefore, any plan to produce low-cost housing is impractical unless made tax-free, as proposed in the bill. This is not a solution of the housing matter. It merely shifts the burden to other real estate and so pauperizes another segment of the population, a condition from which we are trying to escape. Consideration therefore should be given to basic principles of government. Whenever government has relaxed its demands on the people, low incomes have not only increased but the employment base has widened, as gaged bv a living wage. As matters stand now, with government demanding 60 to 65 percent of everything produced, wages, to spread employment, must be low, as the whole burden of support falls on 35 to 40 percent of the population, who are obliged to share that which they produce with the 60 to 65 percent of government-supported. The effective amount of income produced is therefore less than one-half of normal, that is to say, some $800 to $1,000 less per family per annum. The income deficiency therefore about equals the rent of a good house for every family in the land. Contrary to popular opinion, the tax-supported and tax-exploited classes are absolutely without buying power, as they contribute nothing tradeable wherewith to buy the product of another. Government, in appropriating or borrowing money, provides for them the very houses in which they live, their clothes, food, heat, light, water, and sewerage, the education of their children, their items of recreation and travel, and even the money with which they pay their taxes for the public services which they enjoy. It has been conservatively estimated that each dollar in taxes destroys from 2 to 5 dollars of spendable income and employment. In other words, the whole number of citizens in the country have to get along with less to live on under additional government takings by from two to five times the additional sums taken in excess of economic return from government expenditure. This comes about from the turnover of the dollar before its commodity value is exhausted. A tax dollar is turned over from two to five times in negative turnover until all the commodities represented by the value of the dollar have been delivered, Its whole course is a series of one-sided transactions in which neither goods nor commodities have been generated, whereas, the expenditure of the same dollar in the hands of those who gained it or earned it by fair exchange of goods and commodities generates goods or commodities at each turnover until its full value in commodities is exhausted. Its course represents a series of two-sided transactions which have generated in goods several times its commodity value and in addition its expenditure has caused to be reproduced all the commodities it originally represented. Its course gives employment and raises the standard of living of from two to five families, whereas a tax-expended dollar gives employment to only one family and deprives several families of their employment and standard of living by demanding its full turnover in goods and commodities without compensation in kind. This basic relationship between the ratio of governmental takings and the maintenance activities of the nation determines both the amount and quality of the housing which a nation can purchase or maintain. To attempt, as this bill does, to force a nation to buy more housing for those whose incomes do not admit of buying or renting any housing to speak of is an admission in itself that the general income is below the housing level and has been forced to that level by the takings of government for purposes extraneous to the self-maintenance efforts of the people, which, if undepleted by excessive government takings, would enable them to provide suitable housing for themselves. Careful investigation reveals that rented housing is perhaps about one-half of the total housing in use. The tax situation is such that this vast business is conducted as a charity to the people. Housing renting above $50 per month is conducted on a pure charity basis equally with housing renting for less than $20 a month. In neither case does the income above taxes warrant the erection of housing except for quick sale. All housing erected since the war has been a total loss to those who chose to invest their money in that way. There are of course minor exceptions. The fact that Government appropriation and borrowing for unidirectional transactions has forced the people to such a low income level that they cannot buy housing to any appreciable extent or rent it, accounts for much of the unemployment in the Nation; nor is there any possible way to correct this condition except by reduction of taxes and borrowing, in the amount necessary to permit earned income to rise above the housing level. The contentions in section I of this act are ridiculous. If the Nation's spendable income is so low that it cannot spare itself enough above bare living to buy housing now, including the taxes in the housing, how then can the business activity in "the construction, durable goods and allied industries" be forced to a higher level by forcibly appropriating from a people now unable to buy or rent housing on the former scale? And, what is to become of those in the housing business who have not already been ruined by the demands of the tax-supported and tax-exploiting classes? Would it not be well for Government to pay more attention to the suffering of the people at large and less attention to the clamor of the tax-exploiting classes who now outnumber and outvote the self-supporting population? The latter have no one to support them. In addition, they support the abovementional governmental classes. This bill is merely one more step in the direction of driving the people to a lower income level. It will then be declared that industry has again failed and that government must take over all business. As stated (p. 2, line 23, etc.) this bill commits Congress to a misstatement of facts. Private industry has not failed to provide adequate and cheap housing. There is a great excess now of this commodity for which people are unable to pay. As I own some of it, I ought to know. Industry is merely the medium through which people exchange the value of their physical and mental labors. Government, in taking 60 to 65 percent of this labor or its value for support of activities which contribute no re plenishment in the way of goods of maintenance and commodities, keeps their production and exchange at subnormal levels. For Congress to state that "private industry", which is but the trading of the people, cannot produce and trade enough to maintain the people above the housing level is an admission that 35 to 40 percent of the population is unable to provide for themselves and the other 60 to 65 percent now saddled on their backs by unlawful use of the appropriative powers vested in government. The further statement (p. 3, lines 1 to 3) is another misstatement, in view of the fact that any moneys taken by the Federal Government are taken from the people of the several States and their political subdivisions. The fact that the Federal Government appropriates it merely lessen the ability of the States and their political subdivisions to care for their needy. Inasmuch as the need for relief is the result, in the main, of excessive and unlawful exercise of the power of appropriation, and inasmuch as it is wellknown that the people's distributable income increases at about the rate of a billion dollars a month whenever substantial tax reductions are inaugurated, it would seem to be the lawful duty of government generally to reduce taxation within the economic limit, that is, within the limit which permits a surplus over and above the housing level for those pursuits and employments which cater to minor luxuries and necessities of living. These ordinarily give employment to the bulk of the population. Industry, in the sense used in this bill, never did and never can employ the bulk of the population. Next in ability to employ are the housing owners. With these two main avenues of employment cut off by taxation it is idle to accuse industry of inability to employ. The people of this country have great reason to resent the numerous statements attacking their ability to provide for themselves and each other by mutual exchange of product and services. We are permitted to exchange with one another only 30 to 35 percent of our produce. Government appropriation limits us to this figure, Eight years ago Government permitted us to exchange 80 to 85 percent of what we produced. At that time there were twice as many of us producing and exchanging items of maintenance or luxury. It has been contended that at that time there was a shortage of housing and ability to buy or rent it. Such was not the case, but it was the case that people generally sought housing far beyond their means on terms of purchase predicated on continuous earnings. These earnings would have continued unabated had not Government stepped up its demand at a far faster pace than either the growth of population or of income. The mere fact that so much additional housing required expansion in streets, sewers, etc., automatically increased the cost of government. The primary duty of government is therefore to maintain taxation in an even ratio to the people's income, otherwise the people have no certainty as to what income they may expect when it comes to buying or renting a home. I invite the attention of the committee to the predicament of a real-estate owner when Federal and State Governments join hands to raise taxes, thus cutting off the income wherewith people pay rents. The owner has already had his direct taxes increased. His customers all seek smaller quarters or less rent or no rent. The person who has purchased subject to mortgage is similarly affected. The housing industry disappears overnight, as it were, and yet those who sponsor this bill have the effrontry to tell us that private industry is to blame. Throughout the period of my life, efforts have been made to eliminate slums. As matters now stand, the interference by government between employer and employee affects the upkeep of a house and has much to do with curtailing the higher conditions that would exist if costs of upkeep were not so high. Any owner who improves his property in a slum district is also immediately faced with increased assessments, which fact is also in line with the high costs of improvements. As a result of these things, in the course of time such properties become dilapidated and are abandoned. No one will rebuild them under our existing tax system which demands the entire income of all real estate. The slums, therefore, move into another section which has lost its character as a preferred residential district and the same factors in the course of time have the same effect. People of low incomes can get more for their money in such a district than in any new building, whether privately or governmentally owned, especially one built at the present high level of prices. In the sense used in this bill, "industry" does not build and operate housing. The housing owners are employers of industry. The housing owners are in turn employed by the renters. It might be worth the attention of your committee to recognize the fact that real-estate taxes now demand the entire income of real estate, regardless of whether it is a $50,000 or a $5,000 house. It is furthermore a fact that the slum districts of Philadelphia were being rapidly eliminated when the tax ratio was 20 to 80, and that a tax ratio of 65 to 35 is now driving people back into them. I know this to be so as in my practice of engineering I had on one or more occasions to be consulted as to improvements in slum areas. Then, too, people, as their incomes increased, sought better quarters in the suburbs or elsewhere, leaving the slums vacant. Taking the whole problem of good housing for low incomes into consideration, it hinges entirely on two factors, to wit: (1) A low-enough general tax ratio to permit the general distributable income to rise above the housing level. It is generally recognized that in rounding or circling annual income, the segment that can be apportioned to housing cannot exceed 25 percent of the whole. If the cost of living due to taxation raises the prices of the necessities for existence, such as food and raiment, such excess automatically invades and cuts down the portion which may be alloted to shelter. (2) A low-enough rate of real-estate taxation on both low-rental and highrental properties to permit operation of such properties on an investment basis. That is, if well-improved properties are too highly taxed, people are forced back to the slums. If these in turn are too highly taxed, people are forced to move into packing-house and tin-can colonies. Respectfully submitted on behalf of myself and others. WAGER FISHER. Hon. DAVID I. WALSH, MARYLAND LEAGUE OF BUILDING ASSOCIATIONS, Washington, D. C. MY DEAR SENATOR WALSH: On behalf of the thousands of home owners in Baltimore, particularly those now in the process of paying for their homes, we respectfully urge vigorous action on your part in opposing passage of the Wagner housing bill in its present form. We feel that any further participation by the Government in the housing business should be limited to elimination of slums and improving the living conditions of slum dwellers. To go beyond this, as it has done in practically all projects already completed or under way, would tend to remove all incentive for home ownership and seriously menace the billions of savings now invested in home mortgages, including the 3 billion dollars now due the Home Owners Loan Corporation. We sincerely hope you will make every possible effort to see that any new legislation on this subject will definitely limit any future governmental housing activities to the razing of slum housing and providing better living conditions for slum dwellers, instead of competing with private property for tenants who can pay from about $6 to $14 per room per month for living quarters, as has been done in the past. Yours very truly, MARYLAND LEAGUE OF BUILDING ASSOCIATIONS, Hon. DAVID I. WALSH, Washington, D. C. REAL ESTATE BOARD OF BALTIMORE, May 2, 1936. MY DEAR SENATOR WALSH: The Wagner housing bill leaves the way wide open for wholesale initiative in the home-building industry, which, if carried far enough, would destroy all incentive for home ownership and break down that great barrier against the spread of communism. We feel that the Government should get out of the housing business as speedily as possible, but, if the administration insists upon some sort of a housing program, it should be limited to genuinely honest slum clearance the razing of slum housing and providing better housing which would be available to slum tenants and those now on relief rolls. The provisions regarding "demonstration projects" in the Wagner bill should be eliminated. The Government has already expended or allocated huge sums of public funds on demonstration projects which demonstrates nothing except its inability or unwillingness to provide decent housing for the underprivileged slum dwellers and those on relief rolls who, unfortunately, due to their inability to pay rent for proper quarters, are crowding together in inadequate quarters and contributing to the further extension of slum areas. The tenants in all of the numerous "demonstration projects" already completed are made up of families with proven ability to pay rent at rates ranging from about $6 to $14 per room per month and not by slum dwellers and relief clients. Any extension of this sort of Government competition with private property will obviously serve as a material factor in retarding recovery in the homebuilding industry. We hope you will make every possible effort to see that any new housing legislation will limit the use of public funds to the elimination of slums and improving the living conditions of slum dwellers. Yours very truly, X GUY T. O. HOLLYDAY, President. |