Mr. DEMUTH. Because under that act you are giving them housing at no cost, and no taxes.

The CHAIRMAN. All right. Thank you very much.

STATEMENT OF HON. EDWARD W. CURLEY MEMBER OF THE HOUSE OF REPRESENTATIVES FROM THE STATE OF NEW YORK

The CHAIRMAN. Gentlemen, you do not need to have Congressman Curley introduced. We are very glad to hear you, Mr. Curley.

Mr. CURLEY. In the beginning, Mr. Chairman and gentlemen, I want to extend to you my appreciation for the invitation to be here. I was here before this morning and was unable to remain. I have already appeared before the Banking and Currency Committee of the Senate.

I represent the highly industrial section of the country, New York City. In the situation we have there I believe that this new proposed legislation, the Wagner-Steagall bill will be the medium by means of which the condition existing especially there in that big city will be materially benefited. We have something like 66,000 tenement houses in the city of New York, "old law tenements" so-called, of which some 37,000 are obsolete and should be torn down and scrapped. With the permission of the committee, I would just like to read off those figures. It will not take but a minute. [Reading:]

For the information of all concerned in this humane legislation it might be interesting to know that there is a fertile field for new construction by private industry in the city of New York, which under the terms of the Wagner-Steagall bill, investments will be secured by the Federal Government insurance feature.

Rents a surprising thing-the rents now are rising in the city of New York, and especially where the tenants live in these tenement houses.

Mr. McGRANERY. That is due to the fact, I suppose, of the shortage. Mr. CURLEY. The shortage in houses, exactly. [Reading:]

Rents are now rising in the city of New York, especially among the tenement houses. There are five counties in the city of New York, in which are located the following old-law tenements.

I will give you a picture of the city. I do not know how many of you are familiar with the topography of the city of New York, but at any rate in New York county there are 29,056 "old-law" tenements, containing 335,042 flats. In Kings County there are 31,353 tenements, containing 148,199 flats. In Bronx County there are 4,620 tenements containing 31,317 flats. In Queens County there are 1,632 tenements, containing 7,044 flats, and in Richmond County there are 291 tenements, containing 1,164 flats. That completes the five counties. This makes a total of 66,952 of these "old-law" tenements, with a total of 523,386 flats. These flats house approximately 1,500,000 in the city of New York. Now it is, in my humble opinion, due to the fact that the building-trades department of the American Federation of Labor was the first industry in this industry to feel the effects of the depression, and it is the last to be helped financially. There are I will say about a million craftsmen in the building-trades department of the American Federation of Labor, and there are also some 3,000,000 to 4,000,000 other workers who are interrelated to the building industry.

I think that the Wagner-Steagall bill will be the magnet which will attract the finances of the money lenders in the city of New York and other sections of this country, who I think should have no objection to coming to the front, because in the early days of the depression if my memory serves me correctly Uncle Sam treated them very kindly, because we bailed out some 16% percent of the mortgagees, which amounted to something like $3,000,000,000, and thereby gave them a wonderful blood transfusion. Now I think the picture is turned around, and while the Nation is in a recession somewhat it is like a patient who is sick and convalescing, and who did not obey the orders of his physician and probably "stepped out" a little bit too much and is now suffering as a result of it, but it is only temporary.

Mr. MCKEOUGH. Will you guarantee that? [Laughter.]

Mr. CURLEY. I tell you what I will do, Mr. McKeough, I will refer you to what one gentleman said back in 1929, and what he says today. Back in the summer of 1929 we were startled by a prediction that our Nation would be enmeshed in a panic within 6 months. That prediction was made by an internationally prominent statistician and economist. His name is Roger W. Babson. We know how accurate he was then, when the uncanny truth dawned on the American people in the fall of that dark history-making year of 1929. He was in a pessimistic mood at that time. Now he is back again in the limelight, taking the lead this time of the optimists in ridiculing the present-day pessimists who seem to be suffering from stage fright over the Nation taking time out to take inventory of the state of the Union. While this necessary economic step is in progress a so-called recession took place, and the weak elements in the life of the Nation lost their nerves. Well, let us see what that great statistician-economist has to say now on this state of our affairs.

In an interview at his Wellesley Hills home near Boston, upon his return from a 5 weeks' visit to England, Roger W. Babson, statisticianeconomist, expressed every confidence that despite troubled waters in the sea of economics, business conditions in this country are basically sound. I quote:

The

Babson predicts that business in 1938 will be better than it was in 1937. Our Nation today is swept by the epidemic of a new disease-it is the jitters. English and other Europeans think this slump is only stage fright on our part.

I read that because Mr. McKeough asked the question. Now, Mr. Chairman, without attempting to abuse the privileges you have accorded to me, I speak for a number of builders in the city of New York and I do not speak from a lack of experience, because I put in 35 years as a practical builder in the city of New York, supplying the key craft of the building industry, the hoisting machinery, so I have had my ups and downs, too, in the business, but I can appreciate the fact, from my experience in the building business, that it is stymied as my friend said, and I think this bill is a step in the right direction and will be a medium by which this country will be brought back to normal economic condition. I hope that this bill will be reported out favorably, which I approve very heartily.

The CHAIRMAN. Thank you, Mr. Curley.

(The prepared statement submitted for the record by Congressman Curley is as follows:)

Mr. Chairman and gentlemen, back in the summer of 1929 we were startled by a prediction that our Nation would be enmeshed in a panic in 6 months. That prediction was made by an internationally prominent statistician-economist. His name is Roger W. Babson. We know how accurate he was then, when the uncanny truth dawned on the American people in the fall of that dark historymaking year of 1929. He was in a pessimistic mood at that time. Now he is back again in the limelight taking the lead this time of the optimists in ridiculing the present-day pessimists who seem to be suffering from stage fright over the Nation taking time out to take inventory of the state of the Union. While this necessary economic step is in progress, a so-called "recession" took place, and the weak elements in the life of the Nation lost their nerves. Well let us see what that great statistician-economist has to say now on this state of our affairs.

In an interview at his Wellesley Hills home, near Boston, upon his return from a 5 weeks' visit to England, Roger W. Babson, statistician-economist expressed every confidance that depsite troubled waters in the sea of economics, business conditions in this country are basically sound. I quote:

"Babson predicts that business in 1938 will be better than it was in 1937. Our Nation to day is swept by the epidemic of a new disease; it is the jitters. The English and other Europeans think this slump is only stage fright on our part."

Mr. Babson and I are in agreement as to the present and future state of the Union.

Tonight I wish to speak in reference to the Wagner-Steagall housing bill which, in my humble opinion, is one of the most important pieces of major legislation yet introduced, to convey to the minds of those engaged in finance, the administration's effort to provide a basis for sound investment in an important major industry * * * an investment which carries with it the guaranteed security of Government insurance * * * another new milestone in our Nation's recovery program.

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The first thought that President Roosevelt expressed back in 1933 was "All we have to fear is fear." With a heavy national deficit aggregating $7,000,000,000 as a legacy, and facing almost a complete paralysis of business in general with banks closing in every State in the Union * * * with railroads badly crippled and the whole economic structure in a tailspin heading for collapse, the body politic required a major operation to check and restore it to a normal condition. Over a million home owners faced bankruptcy and foreclosure. The nerves of the American people were shattered by misery and distress. Millions of farmers were crying for help. Captains of industry were on their knees begging for financial assistance from our Government. Railroads, insurance companies, and business in general, pleaded for financial help from the Government, and it was granted.

The Government came to the rescue of the farmer, did it not? Over a million home owners, all over the country, were financed by Uncle Sam to the tune of $3,000,000,000, which went to liquidate the frozen assets of the mortgagees and lenders all over the land. All of this governmental relief expenditure primed the pump sufficiently to check the downward spiral of industry by means of this financial blood transfusion, which saved the day for the American people.

Now it is the private institutions which must furnish the financial sinews of war against the existing recession we read so much about. No plan to restore prosperity will work if the people can't. The only remedy for the solution of the unemployment problem is the distribution of the wealth of the Nation in work and wages and this is the basis of all prosperity. It is estimated that six and a half millions of American citizens are now unemployed. The only common-sense solution of this problem, therefore, is the initiation of a large-scale housing program of construction by private industry which will stimulate the dormant elements of that vital cog in the economic life of our country the building industry.

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The building industry was the first to be paralyzed by the depression, and it is the last to receive practical financial assistance. There are a million craftsmen in the building trades, and there are three to four million other workers indirectly affected by this proposed amendment to the National Housing Act.

President Roosevelt's housing program calls for reductions of one-half or threequarters of 1 percent in the total charges on insured mortgages. At the present, banks or others, lending under the Federal Housing Administration plan are permitted to charge a maximum of 5 percent interest, plus one-half of 1 percent service charge. They also collect for the Federal Housing Administration its insurance premium of one-half of 1 percent. That makes a total of 6 percent.

President Roosevelt proposed that the total of both interest and service charges be limited to 5 percent, in effect wiping out the amount of the present service charge. On homes costing less than $6,000, he suggested that the insurance premium also be reduced to one quarter of 1 percent. Another but smaller saving would apply the premium rate to the unpaid balance of the mortgage instead of to the original amount of the loan, as at present. Thus, every time a home owner paid part of the principal on his mortgage he would reduce his insurance cost a few cents a month.

The paralyzing effect which the crisis of the depression produced between the years 1929-33, inclusive, on the building trades department of the building industry, is colossal, when a view of the statistics is placed before us, namely:

BUILDING CONSTRUCTION IN THE UNITED STATES

The number of families provided for in new dwellings in 257 identical cities are as follows:

Bradstreet's estimates of building expenditures in 120 cities of the United States were given as follows:

In 1929, $2,489,553,000 were spent.

In 1933, $262,942,000 were spent.

The foregoing statistics indicate expenditure of money in private industry for housing construction took a toboggan slide from a peak in 1929 and zigzagged to almost a zero point in 1933, because the financial institutions were on the verge of bankruptcy when the "Life Saver" Uncle Sam, stepped in and rescued the very institutions which primarily brought on the business collapse. The builders of the Nation were handcuffed and could not obtain loans for private construction. It is conceded by those who are experts on housing, that approximately 750,000 dwellings per year, for the next 10 years, must be built to supply the essential human needs in this field of construction.

The rise in the Nation's jobless is put at 290,000 in a month. This unemployment in the United States in October 1937, advanced 293,000 over the September level, to an estimated total of 6,350,000, according to the latest report of the National Industrial Conference Board, made public on November 31, 1937. This represents a resumption of the upward swing that took place from July to August, after a succession of monthly declines since January 1937. The total employment in all fields of private enterprise and in permanent Government agencies, aggregating 46,836,000 persons in October, showed a decrease of 243,000 under the total for September 1937.

The housing problem in the city of New York, and throughout the Nation, is of more commanding importance just now to the public interests than any other subject requiring legislative action by the Congress. How can we hope to stamp out disease, insanity, and crime unless we take practical steps to remove the causes of such a serious social maladjustment? The new proposed amendment to the National Housing Act sponsored by Senator Wagner is the answer.

For the information of all concerned in this humane legislation, it might be interesting to know, that there is a fertile field for new construction by private industry in the city of New York, which, under the terms of the Wagner-Steagall bill, investments will be secured by the Federal Government insurance feature. Rents are now rising in the city of New York, especially among the tenement houses. There are five counties in the city of New York, in which are located the following old-law tenements:

First. New York County: There are 29,056 old-law tenements, containing 335,042 flats.

Second. Kings County: There are 31,353 tenements, containing 148,199 flats. Third. Bronx County: There are 4,620 tenements, containing 31,737 flats.

Fourth. Queens County: There are 1,632 tenements, containing 7,044 flats. Fifth. Richmond County: There are 291 tenements, containing 1,164 flats. This makes a total of 66,952 of these old-law tenements, with a total number of 523,386 flats. These flats house approximately 1,500,000 people in the City of New York. If the social reformers really seek the fundamental cause of crime in all its ramifications, here is where it will be found, in all its vicious environment. The remedy lies in a drastic slum clearance and new housing program of new construction.

According to the statistics of the Federal Emergency Administration of Public Works "the total volume of all construction in 1929 in the United States amounted to $12,000,000,000. In 1932, before the establishment of the Public Works Administration, the pendulum had swung so far in the other direction, that the volume of total construction was less than $4,000,000,000.

"To understand the importance of construction in our economic system, it is necessary to recall that of 49 million persons in gainful occupations before the depression, more than 3 million worked at construction sites. In addition to these were millions of other workers whose employment depended directly on orders for material used in construction. The depression was ushered in by a letdown in building, from boom activities to a comparative standstill. The first of those to be laid off were the men engaged in the building trades, the masons, bricklayers, steel workers, carpenters, plasterers, and plumbers. As construction slowed down, there was a gradual corresponding decrease in orders for materials, and the employees of the mills and factories joined the ranks of the jobless. With mills and factories shut down there was obviously no call for raw materials to be fashioned into supplies for construction. Work ceased in the forests. The long lines of freight lines and trucks transporting raw materials, from their source to the mills and factories, which fabricated them, and thence to construction sites, became shorter and shorter.

"Evidencing the decreased activities in these industries is the fact that retail sales for 1933 dropped 47.7 percent from their 1929 total. In 1934 when the benefits of the first program undertaken by Public Works Administration were being felt, there was an upward movement for the first time since 1928. The Congress accepted the theory of public works and appropriated for all construction purposes $3,151,681,565 of which less than half went to Public Works Administration, of which $130,937,289 went for Federal low rent housing projetc." This gives us a precedent for Federal aid for low-rent housing construction. There should be no objection now by private investors, to release their idle funds for investment, in a proven sound business enterprise as is proposed by the Wagner-Steagall bill. The quicker the purchasing power of consumers is spread over a wider area than it is now, the sooner the Nation will balance its Budget. You can do this if you adopt the worth while building program that is proposed for the elimination of slums and the erection of new houses in place of them. Let us start the production program going, by stimulating the dormant building trades industry by means of a financial blood transfusion. Give these millions of workers the same opportunity that the banks, home owners, farmers, railroads, and business in general received from the Government. The city worker needs the farmers' help just as the farmers need the help of the city worker. Their mutual interests depend or each other.

The Wagner-Steagall bill is a humane, constructive measure and deserves the wholehearted support of the Congress. The sponsors of the bill are to be congratulated for their long, tireless efforts to salvage the poverty-stricken from the slum tenements and dwellings of the country and provide them with new, decent housing besides cooperating for the revival of business industry.

Inasmuch as experts say that families with incomes under $1,500 constitute much more than half the population of the cities, the cooperation of the Federal Government insurance policy is the stimulating magnet which will attract private investment of capital. Why shouldn't the banks and other lending corporations cooperate with the rest of the country elements in such a constructive program of housing construction throughout the Nation, when their invested money will be guaranteed and protected by Federal insurance?

Under the provisions of the existing National Housing Act to encourage improvement in housing standards and conditions and to provide a system of mutual insurance, the single long-time mortgage has been standardized as the basis of private home financing. One could borrow up to 80 percent of the cost of the improvement and have it secured by Government insurance. This was a decided gain for the home owner.