Also, there were a few families we found were paying as high as 50 percent of their income for rent, and that makes for a very bad condition. I think it is generally acknowledged that somewhere between 20 and 25 percent of your income is about all that should be spent for living quarters.

Very close to 90 percent of the tenants were taken out of the old lower tenements where the average income is $23.20 a week-the average rent they were paying before was $21.25, and most of them, you understand, were without heat. The average rent they are paying now is $18 a month.

The types of people in it are interesting. You will find 54 skilledlabor families, 42 families unskilled, 29 clerical, 5 professional, and that sounds as though it might possibly be beyond our regulations, but that professional means a barber, or somebody in such a small skilled profession.

Proprietory as used here refers to peddlers-street peddlers. Trade unions were represented by 27 families, and 10 different nationalities are represented in the project.

We have collected the rent once a week, the collecter going around to the apartments rather than having the people come in to the office to pay up the rent. This is done for two reasons-one, we want to have opportunity to getting into the apartments and see how they are kept, and, two, we want to see if we can have a personal contact between the tenant and the proprietor, rather than have it artificial. We have been operating now 5 months and we have had only one instance of arrears, and that was for 24 hours. In some cases where the tenants have to go out at the time the collector comes around, they leave the money across the hall with a neighbor and it is collected that way.

The raising of the morale of the people in the project is difficult to describe in words, but I can give you an instance of one individual whom the investigator stated on the card was rather a cranky person, but she lived in an old lower tenement that had been condemned by the tenement house department. She came in the income bracket and could be taken care of, so we took her in. She is now probably one of the happiest people in the whole project, and one of the most active in the organization. This is only one instance, but there are many others, and I assure you that the coal and bathtub theory had been completely knocked on the head from our experience with this small project.

One of our problms at the moment is to keep them from scrubbing the floor too hard and taking all of the polish off.

As an example of an answer perhaps to the cry we are going to compete with private enterprise; about the time we started the First Houses another development of fairly large proportions about a block away was started by private enterprise. When they heard about the First Houses, they were very much afraid of the competition and they were prepared to bring out a blast against us to try to stop us from continuing the building as they thought their project was going to be jeopardized.

I talked to the man at the bank who handled the mortgage and he told me the other day that not only was there no competition but they have rented their apartments at $18 a month, and there is not a

single vacancy, and the First Houses has helped to reclaim the neighborhood and make a better neighborhood out of it and better for their own tenants, and there is absolutely no competition.

There is not a person in the city who could possibly have moved into those houses, there is not a person in the city who could possibly have moved into any house that private enterprise built today, no matter how cheap the land is.

I think that completes the question of the First Houses, unless you would like to ask some questions, but I do feel, although it is small, it has proved a laboratory and has proved some of the things we have been talking about for a long while.

The CHAIRMAN. I think this testimony with the testimony given by you a year ago gives your views amply.

Mr. PosT. May I leave this document with you as a matter of interest. I think it puts in graph what Senator Wagner spoke of yesterday on the matter of construction.

The CHAIRMAN. Thank you very much. Madam Perkins, will you please come forward?

STATEMENT OF HON. FRANCES PERKINS, SECRETARY OF LABOR

The CHAIRMAN. Madam Perkins, as Secretary of Labor, you are familiar and have some knowledge, I presume, of the introduction of S. 4424?

Secretary PERKIN. Yes, sir.

The CHAIRMAN. The committee will be pleased to have your views with reference to this legislation.

Secretary PERKINS. I should like to say I have examined this bill with a good deal of sympathy and interest, because as you know, I have long been interested in the possibility of providing through definite Government activities a channel whereby funds could flow into the promotion more or less of the building industries.

I think it has become clear that in the revival of economic activities in this country which is recorded by all of the charts and diagrams of employment, business activity, carloading and all of that thing, that in that revival, there has been a definite lag in the employment and activity in the building-construction industries, and that the group that today suffers the largest proportion of unemployment in comparison with other groups, literally is the groups that are attached to the building industry either directly or indirectly.

We have for many years depended largely upon the activity in that industry, not only in giving employment in the building itself, but for giving employment, life, activity, and trade in the provision of building supplies and materials and the, trucking and carrying of building supplies and material, so that it is a part of a vital program for recovery that there should be a stimulation of the building. industry.

It is also clear, as one looks at the problem of housing in America, that there are two aspects of the housing problem. There are a considerable number of people in American life who are quite able to afford to pay the economic rent upon new buildings properly constructed under modern conditions. There has been a lag in the

building of that type of building. As a matter of fact, there has not been what one would regard a desirable level in the building activity in the number of houses, both multiple and single houses, for moderate income groups who are able to pay economic rent.

Therefore, it would seem that there ought to be a continuation and expansion of the stimulation by the Government and encouragement by the Government for that type of building.

The Federal Housing Administration, which has been primarily concerned with the repair, expansion, and modernization of existing structures, could easily, it seems to me, have its function-not its organization, but its function-brought into relationship with the bill which has been here proposed, so that you could have the stimulation of that kind of houses at the same time you were providing for the direct provision of housing that was to be made available to the lower income groups.

I would like to say fundamentally I am very much in sympathy with the principles and purposes of this bill, and I should like at some later date to give you and your committee a memorandum of certain specific items within the wording of the bill or the program or procedure indicated by the bill, of detailed changes which I think would be wise and helpful and would work out practically.

However, I believe, personally, that the provision of subsidized housing for low-income groups by direct activity of the Government, cooperating with the States and the municipalities, and cooperating with local groups that are self-developed, is a very good one. I mean, the provisions that money can be loaned to persons who are in limited-dividend or no-profit-making enterprises, I think is a desirable one because it stimulates building, and makes possible cooperative housing and cooperation with various trade groups, and groups that have a natural tie that binds them together, and links up living in the same way, and carrying on the maintenance of the social life that goes with a multiple operation.

One of the items I would like to suggest to you is this: Your committee should consider a somewhat different approach to the method of determining who is to live in the subsidized houses, because I think we get a more definite economic situation in the encouragement of housing where the persons or tenants who live in it can be an economic unit. That is one phase, and the other is of proper housing for persons who can not pay rent.

As Senator Wagner pointed out yesterday, and as is verified by all of the Government reports and statistics, the very large number of persons of an income of $1,000 or less indicates the necessity of planning for suitable housing for them.

The CHAIRMAN. Do you think the Government should lend itself and its funds to promote buildings that will house those groups that can economically pay a reasonable rent?

Secretary PERKINS. I do not think the Government should subsidize houses to be used by persons who can reasonably pay an economic rent. I think the Government might promote activity in the building of such houses, first by standardization and improvement of design which will be shown by demonstration houses provided for in this bill; and second, by perhaps providing through

banks, cooperation for loans at reasonable rates to promote building of that kind of houses.

I do think, however, there is a field for the subsidized house, and more subsidized houses, in the lower-income groups, who under the present rate of earnings cannot pay an economic rent, for a type of house as we regard in America essential to provide a decent standard of living.

There is another approach I would like to present to you. I find it difficult to accept the provisions in this bill on a permanent basis which would imply that there should be a so-called means test for determination of who should live in the subsidized houses. I think that is very difficult to administer, and very repugnant to our ordinary point of view in American life, and it is an extraordinarily difficult thing to determine by a means test who ought to live in the particular building.

I think it would be a much better approach if the Government provided for it on a basis of, say, an annual subsidy of the difference between the economic rent on the building which is built under the stimulated plan and the rent which those living in it can afford to pay.

If you provided that your test could be developed throughout by providing that the buildings which had the Government aid, and therefore a Government subsidy, should be built in the slum area and should be definite replacements of existing slum structures, and that the persons who were displaced by the tearing down of the slum structure should be the ones who were to live in the new structures, and that for that they should pay the rent which they were accustomed to pay and able to pay, and the subsidies would be the difference between what they paid and what the economic rent in the structures would be.

This would provide, it seems to me, an assurance that the buildings would be used by the very low income groups which I have in mind in the bill, and at the same time there would be a minimum of interference with the economic values of the land and buildings in the immediate vicinity, because when a slum was condemned, so to speak, and marked for replacement by one of the new type of buildings the people who formerly lived in and paid rent in that area would not be thrown upon the market looking for other still lower cost houses and moving into other dilapidated buildings, but would be temporarily housed looking toward the time when they would move into the new building.

Moreover, that would mean that the slum clearance itself would stabilize the value of the land in the vicinity, and you would get the cooperation of the owners of adjacent land and buildings, who would make them relatively or practically as attractive as those buildings under the Government subsidy. I think a part of the value of this program is the recognition in the demonstration houses of principle of thinking of them as public works, and applying the general policies of the Davis-Bacon Act with regard to prevailing wages and labor conditions. I think that is an important item, as it assures us that work done on the houses will be done not under substandard conditions, but under normal conditions, and

that there will flow out of the activity a purchasing power among this class of workers which will enable them to sustain an ordinary market in American life.

The relatively low state of employment in the building-trades industry is a matter of extreme importance to all of us today, but I want to point out to you that there are signs that here is an improvement in the building industry, and this therefore is perhaps the most suitable, the most favorable, and the best time for the Government to stimulate it a little by building the demonstration houses, and by making funds available to localities for low-cost housing projects.

In other words, there is already a slight rise, and if it is stimulated at this time it may develop rather quickly into a major industrial activity, which is of major importance.

The establishing of a Housing Authority I think is important, but I would like to call your attention-on the administration side it seems to me very important this should be attached to and within some one permanent department of government. I think the difficulties of administration and coordination of a great variety of accepted independent agencies of government are very great. I think much better results in administration and coordination with general government programs are obtained if any agency is within one of the permanent departments of government which has direct access to the President, and therefore is kept under the eye of the Executive in such a way as to make sure its programs are in harmony with other activities of the Government, and I would recommend that to you most sincerely. I am also of the opinion in an administrative body, and in this I agree with Secretary Ickes, a one-man administration is extremely desirable if we are to have effective action. I do think there should be an advisory board which can pass on matters of policy, which are perhaps quasi-judicial matters, and matters of that kind, which would be the function of the board, and I think the board should be representative of all of the groups that are concerned with and interested in this type of activity, and particularly adequate and substantial representation of labor should be on the board.

I think it is extremely important that in planning this type of legislation and the activity that will come under its administration, that there be a consistent program for bringing in the labor groups into the original planning. It is true that a large part of the low-cost housing done in the past has been done without any reference to the ways of living, the needs and desires of the people who are going to live in those houses, and the result is we have seen houses go up presumably for working people, the cost of maintaining which, and the awkwardness of living therein was such that they never were comfortable or convenient.

I think the bringing of the groups that are represented not only by the unions themselves but by the women's auxiliaries, the people who live in the houses, is extremely important, in the plans, and I think the device set up here is adequate to attract into the original planning the labor groups for whom the houses will be erected fundamentally.