groups, consisting of the problem of the units that are overcrowded and the units unfit for use.

In addition to appearing here as a member of the city council of Cleveland, I am also appearing as president of the National Association of Housing Officials.

The National Association of Housing Officials, as its name implies, is a voluntary organization of Federal, State, and local officials and employees of public agencies dealing with the investigation, regulation, planning, finance, construction, and management of housing for families of low and moderate income. The number of these officials has increased rapidly during the last 3 years. There are over 400 full-fledged housing officials, the great majority of whom are not Federal employees. In addition there are another 400 persons who are members of quasi-official advisory and fact-finding bodies having to do with various aspects of housing. An indication of the scope of the work of housing officials and of the interest in public housing is contained in the Housing Officials' Yearbook, for 1935, published by the National Association of Housing Officials, a copy of which I leave with the committee and marked "Exhibit E." Since its beginning the association has recognized that governmental activity and housing should take many forms. The decent housing of some income classes requires a minimum of Government regulation and direction. Adequate housing for other classes requires further aid in the form of assistance to lending institutions and Government insurance of loans. Still other classes can be satisfactorily housed only if Government aid takes the form of loans at low-interest rates and subsidies to supplement the rent-paying ability of these families. Various combinations of these kinds of governmental assistance can and should be made. The primary purpose of the association is to assist all classes of housing officials to discharge their duties as effectively as possible and to help them perfect. the administrative machinery that will make them, in effect, partners in the important task of providing adequate modern housing for all American families.

The association has always taken the positon that private and public enterprise in housing can be combined in a comprehensive, long-range program. The job is a difficult one and progress in it is slow. It can be done, however, and it justifies continued effort. Probably nothing will contribute more to the economic and social life of the country than a carefully-planned and vigorously-prosecuted housing policy.

The participation of the association in all types of Government activity in housing is shown by the personnel of its executive committee. At present it is made up of representatives of Federal, State, and local housing agencies, to wit, Horatio B. Hackett, Assistant Administrator of Public Works; Will C. Alexander, Assistant Administrator of the Resettlement Administration; Miles L. Colean, Chief of the Technical Branch, Federal Housing Administration; John Fahey, chairman of the Federal Home Loan Bank Board; Langdon Post, chairman of the New York City Housing Authority; George Gove, director of the New York State Housing Board; Nicola Giuli, president, Los Angeles Municipal Housing Commission; Alfred Stern, chairman of the Illinois State Hous

ing Board, and Ernest J. Bohn, chairman, Housing Committee, Cleveland City Council.

In my opinion the bill introduced by Senator Wagner is in remarkable accord with the experience of housing officials to date and the lessons they have learned during the last few years about the housing of families of low income. It contains the principles laid down in A Housing Program for the United States, published by this association, a copy of which I hand you to be marked "Exhibit F." This report often referred to as "The Baltimore Report" was prepared and issued in the fall of 1934 after a tour of the principal centers of the United States by a group of European and American housing experts. The findings of this group were discussed at a conference held in Baltimore and attended by the leading housing authorities from some 40 American cities. Their agreed conclusion is in a large part incorporated in the Wagner bill. I point this out because it has been reported in the daily press that high officials of the Federal Government are of the opinion that those interested in a housing program, are not in agreement among themseves. The contrary is the fact. It may be that those persons who are not concerning themselves with a program of improving the housing conditions of the low-income group through Government assistance cannot agree with a program offered by those of us whose job it is to administer Federal, State, and local laws dealing with improvement of housing. That is to be expected, but the testimony that will follow the next few days will show that those concerning themselves with carrying out a low-cost-housing program pretty much agree with the provisions of the Wagner bill.

I wish to mention several aspects of the bill that are particularly noteworthy.

1. The Wagner bill states clearly and unmistakably that decent housing of the low-income families is a matter with which the National Government should be concerned. This is not to say that the Federal Government is solely concerned with the improvement of bad housing, nor that it should be responsible for all steps in a long-term housing program. It does imply that housing affects so markedly the social and economic health of the country that the Federal Government cannot stand aside and allow the bad-housing conditions of the past, both urban and rural to grow slowly but surely worse.

The

2. This bill faces squarely the fact that the root of nearly all housing problems is the disparity between the costs of building and operating decent housing and the ability of many families to pay for housing. It is based upon the sensible proposition that both factors-costs and ability to pay-should be dealt with. United States Housing Authority provided for in the bill has power to reduce housing costs by lowering the cost of money for housing construction, by research, study and experimentation in the building of new dwellings. This includes the testing of new materials and methods of building. It also involves determining the most economic units for construction. On the other hand, the Authority has the right through subsidies to supplement the meager amounts that many hard-working, industrious families are now able to pay for housing.

The granting of subsidies is properly limited to the housing of families of low incomes. This term is clearly defined in the bill as "families who cannot afford to pay enough to induce private enterprise in their locality to build an adequate supply of decent, safe, and sanitary dwellings for their use." The Authority is given broad powers to make sure that all housing assisted by it is maintained in low-rent housing.

3. The special and difficult problems of housing familes of low income require a full-time agency. This has also been realized and provided for by Senator Wagner. As he stated yesterday, the provision for decent, low-rent housing can proceed at the same time that improvements are being made in the business and governmental machinery for housing more well-to-do families.

Despite the progress made to date in low-rent housing, much remains to be learned and much more to be done. Nearly all problems in housing are found in their most aggravated form in the housing of low-income families. Experience to date, both here and abroad, indicates that these problems cannot be solved without aggressive and unremitting thought and action. They are so difficult, their solution so important, that they demand the attention of a full-time agency not concerned with the financial and construction problems of housing families who can be served by intelligent, regulated private enterprises.

4. Senator Wagner's bill makes possible a flexible procedure for private, low-rent housing. In my opinion this is a great virtue. Too many mistakes have been made in this country by assuming that housing conditions and problems are almost identical from city to city and from one section of the country to another. Housing interest very naturally has been greatest in the largest cities, particularly New York, in which the amount of the very worst housing is greatest. Too often remedies devised to meet particular conditions have been applied in localities where they were not at all effective.

As an officer of a national organization I wish to stress this point. All the steps in housing practice vary in some degree from one locality to another. Location, types of units provided, living habits of prospective tenants, land values, building and maintenance costs, the financial condition of local governments, the effectiveness of municipal services, and other factors in housing are all clearly subject to change from time to time and to variation from place to place. Sometimes these changes and variations are not great enough to affect general discussions and proposals. They are always great enough, however, to influence actual practice and procedure in the production and management of housing. The United States Housing Authority called for in the Wagner bill has wide and flexible powers that should enable it to cope successfully with nearly all of the housing conditions that it will have to face.

5. The Wagner bill makes possible a combination of private and public funds in low-rent housing. The need for better housing for low-income families is so great that both of these sources of funds must be tapped. The bill contemplates that most low-rent housing over a period of years will be provided by local housing authorities with loans and subsidies from the United States Housing Authority. In practice, these Federal loans and grants should be supplemented

by loans from private individuals and institutions, probably on mortgage security on the local authority's projects.

These mortgage loans, as soon as lenders become accustomed to them, will be recognized as unusually safe. The chief hazard in private mortgage lending has been the ease with which the market for high-cost housing can be overbuilt. Such overbuilding has occurred often in the past with disastrous results both to owners and mortgagees. Subsidized housing, however, will reach down the economic scale into a vast market untouched by modern building enterprise. It cannot be overbuilt for years to come. The subsidies that will make it possible to reach this market will be definite in amount and contractual in nature. As soon as the novelty of the machinery and method has worn off, private investors, who are now looking high and low for safe investments, will see that low-rent housing will provide such investment for very large sums of money.

In addition, housing projects assisted by the United States Housing Authority undoubtedly will be mostly large-scale, neighborhood developments, whether the individual units be free standing houses, group dwellings, or apartment houses. Because of their relatively large extent, they will have a definite unity and a high resistance to the encroachment of blight and economic decay. In this respect they will be noticeably different from small houses in individual lots in varied ownership. This physical characteristic of the developments will increase the security of all loans on them.

I am confident that with intelligent administration the United States Housing Authority, working with local agencies, will convince conservative private lenders of the soundness of mortgage loans on their properties. When this is accomplished we can stop thinking and talking about separate, isolated housing projects and begin to work for adequate housing on a scale commensurate with the need for it.

6. The Wagner bill encourages local initiative in the attack on the problems of low-rent housing. This is now recognized as essential by practically everyone who has studied or worked in this field. Secretary Ickes yesterday spoke of it at some length. The terms of the bill clearly accord with the fact that although Federal-owned demonstration projects will be needed in some localities in the near future, the chief work of the United States Housing Authority in the long run will be to assist local housing authorities. This is a sensible recognition of the fact that the conditions surrounding all housing are largely, by their very nature, local. This is so evident and now so universally agreed upon that I need not argue for it at length here.

7. On the other hand, the Wagner bill quite as realistically provides that at the beginning most of the public funds for loans and for subsidies must come from the Federal Government. This is justified by the present financial condition of most municipalities, particularly those in which low-rent housing construction is now most sorely needed. As a municipal councilman and a local housing official, I hope that in time most State and local governments will be able to contribute sizeable amounts for housing loans and subsidies. This not only would give added life to the program but might make for a deeper sense of responsibility on the part of local

housing agencies. The financial condition of local governments, however, is a fact and not a theory, and for some time to come it seems bound not to be a very unpleasant fact.

That municipalities are already overburdened in the matter of debt is a fact known to most of us. In the State of New York, for example, the New York State Conference of Mayors reports that the debt of all cities in that State increased 28 percent from 1929 to 1935. The present debt load of New York State cities amounts to 14 percent of the total assessed valuation of real estate. This compares to approximately 12 percent for the 35 largest cities in the country.

The per capita debt for all cities over 50,000 population amounts to $109.33. Nineteen of these large cities have a debt of over $200 per capita, and this is the recent history of those 19 cities: Eight have been in default and 4 of these are still in default, 3 others have found it necessary to refund maturing bonds, 5 have been forced to engage in extensive funding of operating deficits, while only 3 have pulled through successfully with only temporary operating difficulties.

Frederick L. Bird, director of municipal research for Dun & Bradstreet, said in a recent address on the increase in municipal debt burdens that

to prevent this trend is one of the biggest and most difficult problems confronting municipal administration. Yet its solution seems necessary to preserve the vitality of local self-government.

In other words, when, in the opinion of this expert, whose opinion is supported by most other students of municipal finance, we are already reaching the breaking point in municipal debt, how can we expect municipalities to go further into debt?

Real estate is already overburdened, and we must not forget that any further municipal debt is only an added burden on real estate, for taxes on real estate represent the principal source of income to our cities.

Analysis of real-estate valuations shows that last year over half of the cities continued to reduce real property valuations. The medium valuation decrease for all cities over 50,000 population was 18.2 percent, while the decrease in some cities amounted to over 70 percent.

Another factor in this picture is the increasing tax rates. Let me read for you the 1935 tax rates for the cities over 500,000 population, as reported by the Detroit Bureau of Government Research:

In estimating contributions made to housing programs it is very easy to overlook some of those made by local governments, even under present conditions. For example, although my city of Cleveland has not had funds for investment in, or subsidies to, housing, it has assisted materially the three projects now under way by the Housing Division of P. W. A.