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authorized shall be entered into by the Authority. The faith of the United States is solemnly pledged to the payment of all annual contributions contracted for pursuant to this section, and there is hereby authorized to be appropriated in each fiscal year, out of any money in the Treasury not otherwise appropriated, the amounts necessary to provide for such payments.

"(f) Payments under annual contributions contracts shall be pledged as security for any loan obtained by a public housing agency to assist the development of the housing project to which the annual contributions relate: Provided, That annual contributions shall be used first to apply toward the payment of interest or principal as same mature on any loan due to the Authority from the public housing agency. The term 'any loan due to the Authority' as used in this section shall apply to any loan made by the Authority (including any bonds or other evidences of such loan which are resold by the Authority) to assist the development of the project to which the annual contributions relate."

SEC. 4. Section 20 (a) is amended to read as follows:

"SEC. 20. (a) The Authority is authorized to issue obligations, in the form of notes, bonds, or otherwise, which it may sell to obtain funds for the purposes of this Act. The Authority may issue such obligations in an amount not to exceed $1,000,000,000. Such obligations shall be in such forms and denominations, mature within such periods not exceeding sixty years from date of issue, bear such rates of interest not exceeding 4 per centum per annum, be subject to such terms and conditions, and be issued in such manner and sold at such prices as may be prescribed by the Authority, with the approval of the Secretary of the Treasury."

Mr. Straus, will you be heard first?
Mr. STRAUS. Thank you, sir.

Mr. GOLDSBOROUGH. Just proceed in your own way, and take your own time, please.

STATEMENT OF HON. NATHAN STRAUS, ADMINISTRATOR, UNITED STATES HOUSING AUTHORITY

Mr. STRAUS. Thank you, sir.

Let me say in the first place that I find myself in a somewhat novel position. I never have appeared in this role before, and I want your guidance in helping me to present the material in the way it seems best to you.

I have not prepared any formal speech. I thought that I would outline a few matters of experience for about 5 or 6 minutes, explaining briefly the amendments that we are seeking, and then let you gentlemen ask me questions, if that procedure is agreeable. Is that all right?

Mr. GOLDSBOROUGH. It is entirely agreeable.

Mr. STRAUS. When the law was enacted, I had some misgivings personally as to its feasibility and as to its workability, and I so stated frankly to the President at the time I was appointed.

I want to say as a matter of justice, and in order to get the record straight, that I was wrong, and that you gentlemen who amended the bill and passed it the way you did were right, because it has proved thoroughly feasible and thoroughly workable. There are provisions of the law which make it perhaps a little slower in operation than we would have wished, but there is nothing which has proved impracticable or unworkable.

May I be specific on that point? You inserted a provision, as I recall it, limiting the costs per room and cost per dwelling unit to a certain amount in smaller cities, and to a certain amount in the larger cities. In the light of previous experience, it seemed to me and to many of us that it was difficult if not impossible to achieve those costs, but it has not proved impossible, and we have achieved

them in each of the projects for which we have made contracts. I see no reason why we cannot continue to do so.

In the second place, the provision that there must be a demolition of an equivalent number of slum units to the number of new units to be built seemed to be very difficult to achieve, because we did not see how we were going to compel localities to agree to that demolition. Again that has not imposed as serious an obstacle as I thought it would, and we have succeeded in every case, and in every case where we have so succeeded, we have made an agreement with the locality for the demolition of a number of slum units equivalent to the number of new units to be erected.

The third matter as to which all of us were somewhat skeptical was whether we could under the act achieve the rentals which were low enough really to rehouse slum dwellers. One of the criticisms of these programs has always been that you do not get down into the rental pocketbooks of the people who you are trying to rehouse.

I have a table here (exhibit I) of the rentals which I want to call to the attention of you gentlemen, because I think it is important.

EXHIBIT I

Loans and earmarkings of the United States Housing Authority, Department of

the Interior

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There are not so many projects.

$643,000

186

$2.75

1,017,000

216

4.00

8,411.000

1,397

3.90

3,930,000

678

4.25

2,835,000

600

4.25

1,369,000

335

3.50

1,027,000

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In New York City, which is at the top, the rentals are going to be from $5.12 to $5.18 per room per month; Louisville, Ky., $4 per room per month; Jacksonville, Fla., $3.82 per room per month; Augusta, Ga., $3.33 per room per month, and so on down. I do not want to take your time reading them all, but they go down to a low, which I am rather proud of, at Austin, Tex., of $2.64 per room per month. Mr. MCKEOUGH. May I ask a question right there? Mr. GOLDSBOROUGH. Certainly.

Mr. McKEOUGH. Are those the projects that you took over from the housing section of the P. W. A., or new construction?

Mr. STRAUS. No; I am not discussing them at any time. These are entirely new construction. All of my remarks are addressed to that, except insofar as you gentlemen may question me with respect to the P. W. A. projects. I am not addressing myself to the old P. W. A. projects.

Mr. KOPPLEMANN. Under this provision, have you gone into the State of Connecticut yet?

Mr. STRAUS. There is here a complete list of the States that we have gone into. Take Bridgeport; we have earmarked there 61⁄2 million dollars.

Mr. KOPPLEMANN. But under the statute, we will have to obtain that 10 percent. Would it be impossible to do it unless the city or the community borrowed that 10 percent? Do you know anything about that?

Mr. STRAUS. I am very familiar with the Bridgeport situation, and I would be glad to give you any information I can about it, but might it not be more fruitful now if we did not go into a discussion of that kind? I do not want to cut you off, and I would be very glad to give you that information afterward. I wanted to point out that the act to date has been, in my belief as administrator, proved thoroughly workable and thoroughly practicable, and that the costs achieved, the rentals achieved, and that the degree of slum clearance which has been agreed upon are entirely in conformity with the principles of the act and with what is necessary to rehouse the slum dwellers.

Now, as to our achievements to date, and I hope that you gentlemen will interrupt me at any time if there is any question that I am not making clear, our earmarkings to date total over $310,000,000. What is an earmarking? Perhaps it may be well for me to explain that. We observed in the early stages in this program that communities would come in and want to know whether we would reserve some funds for them. They said that they could not make a contract then, that they did not have any material to enable them to negotiate a contract; but they said that if we could earmark some funds for them, they would go back to their communities and get local authorities set up, and they had local authorities in most cases, but that they would get the local authorities properly equipped to make the necessary surveys and meet the other provisions of the act in regard to local participation. But that they could not do that until they knew that they could get the money.

Mr. GOLDSBOROUGH. Is it in the nature of a gentleman's agreement? Mr. STRAUS. Exactly; that we will set aside these funds and hold them for them.

Mr. FARLEY. How long a time do they have to set up this local authority, or to meet the requirements?

Mr. STRAUS. Well, I may have done some threatening, but have not canceled a single earmarking.

Mr. WILLIAMS. How many contracts have you actually entered into?

Mr. STRAUS. We have entered into nine contracts, with nine public housing agencies.

Mr. WILLIAMS. What are your commitments on them?

Mr. STRAUS. The total project cost under these contracts will be about $60,000,000, and our commitment is 90 percent of that, or $53,493,000.

Mr. GOLDSBOROUGH. Mr. Straus, would you prefer to complete your statement before you are questioned, because

Mr. STRAUS. Would it be all right?

Mr. GOLDSBOROUGH. Yes.

Mr. STRAUS. It will only take about 5 minutes. I want to do it the way you think it is best for you, but I have not much more to say.

I wanted to point out that we have earmarkings of over $310,000,000, and wanted to tell you what these earmarkings are.

Now, the next thing that I wanted to point out is that the number of local housing authorities, which was just under 50 last November, is now 140, and new ones are coming in at the rate of a little over 1 a day, indicating the extent of local interest. The number, in other words, has trebled since last November.

The next question that I am usually asked is if we have paid out any money, and I am happy to say that we have within the last week or 10 days. We have paid out a total of $440,000. It is a small amount, but it is the beginning of money commencing to flow. The

The sums paid out are $53,000 to Youngstown; $114,000 to Syracuse, N. Y.; $279,000 to New Orleans, La.

Mr. SPENCE. Has construction on those projects been started? Mr. STRAUS. No, sir; but I hope it will in a week from now. Youngstown and New Orleans look very much alive.

The natural question in my mind, if I were sitting in your place, would be that this man comes along and tells us that everything is going fine; what is the matter? What does he want?

I want to make it clear at the outset that I believe that if you did not give us the amendments we ask, this program would work; but with the President and Congress interested in expediting it and putting men to work, we cast about for and discussed with some leaders of your House and leaders of the Senate methods of modifying the act to a minimum degree in order to expedite the program, to speed it up; that is, I asked myself, and I was asked by Members of your body: "What are your obstacles? What is holding the thing up?"

Now, what are those limitations? In the first place, we can earmark today only $500,000,000. That is all there is in the bill. If we could spend that $500,000,000, it would do a lot of good, but we cannot. Only $300,000,000 can be spent under the present act before July 1, 1939.

In terms of that, in terms of the $300,000,000 which may be spent before July 1, 1939, I do not believe that you can conceivably put more than $125,000,000, maximum, into circulation during this calendar year. After all, the expenditure takes place over the period of a year or 18 months after the contract is entered into, and under the present situation we cannot conceivably spend more than $125,000,000, according to my best judgment.

Putting it another way, only $325,000,000 in loan contracts can be entered into before July 1, 1939, because of the limitations in the act on the amount of annual contributions or subsidies.

Now, at the peak of employment, in 1938, if we were to spend $125,000,000, we would put about 125,000 men to work, both on the site and in factories. If we had an expanded program such as I am suggesting in the amendments, we could earmark this year $900,000,000, keeping $100,000,000 for States not now having housing legislation and for cities that have not yet housing authorities, and we could actually enter into $800,000,000 worth of loan contracts, which would make possible something under 590,000 man-years of work, and we could put into circulation this year in employing people a total of $300,000,000, over double what we could at present. I made a note here, which I think is a very good one, that at the peak of employment during next winter, we would have 300,000 to 350,000 men employed on projects and in the factories.

The obvious next question is well, if you think you could do itWhat amendments do you want?-and here are the amendments, a copy of which appear before me, and I assume that you have copies, that are proposed, amendments which will speed up the program and in no way constitute a departure from the present general picture. There is no radical alteration of the course on which the U. S. H. A. is at present embarked.

The first amendment removes the 10-percent requirement. At the present time there is a requirement in the act that we may loan not more than 90 percent of the cost of the projects, which means that 10 percent must be contributed or loaned locally.

I thought that that would be a more difficult provision of the act than it really is. We are able to work at present in loaning 90 percent and getting the 10 percent raised locally, but it would undoubtedly speed the thing up if we were able to loan 100 percent of the cost of the project.

I want to speak on that for just a minute. We have got an extraordinary amount of local participation in this program, a really impressive amount. You will recall that the act requires that for every $5 of Federal subsidy annually the local community must put up $1, 20 percent of the Federal contribution. Actually the amount of the local annual contribution that we have succeeded in getting on these first nine contracts constitutes 61.9 percent of the Federal contribution. That is an extraordinary degree of local interest which I did not believe could be achieved.

Mr. FORD. I do not understand that.

Mr. STRAUS. That for every dollar that the Federal Government is paying out in annual subsidy, the law requires the locality to pay 20 cents, instead of which the localities, on the average, are paying 61.9 cents for every dollar put up by the Federal Government.

Mr. McKEOUGH. Is that an actual money contribution, or is it in service?

Mr. STRAUS. Almost entirely in local tax exemptions, because that is the only thing that they have to give. They are mostly broke, as you know. I could read the cities off to you, but I do not want to take up too much time. It is interesting, however. The high mark is in Augusta, Ga., where the local annual contribution is 73 percent of the Federal, and it ranges all the way down to 28 and 30 percent. Mr. GOLDSBOROUGH. I was probably out when you said it, but why is that? Why are the local contributions higher than they are supposed to be?

Mr. STRAUS. I suppose that it is a matter of explaining to the localities how they would reduce their own rents by reason of making this local contribution, and I repeat that there has been an amazing local interest in rehousing slum dwellers and getting people to work. I have been rather hardboiled about it, perhaps a little more than the act called for. We have difficulty in one city, where they only want to make the minimmu contribution under the law, and I explained to them that we cannot get down to rentals that will rehouse their slum dwellers, unless they contribute more than 20 percent.

Mr. REILLY. Then the local contributions consist principally of exempt taxation? Mr. STRAUS. Correct.

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