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THE HOUSING BILL
Growing out of that report, the bill was prepared which was introduced by Senator Wagner, Senator Ellender, and myself last year and passed by the Senate substantially as we proposed it. That bill, or something very much like it, will be introduced again at this session and we will have before us the general problem of the permanent housing policy of the United States.
The problem has been very much complicated, and was complicated last year by the extraordinary emergency situation which arose, the fact that we had rent control, the fact that we had a large amount of housing occupied as a result of the low rents, the fact that practically every unit of housing was occupied at the time when some 10,000,000 veterans were coming out of the Army and coming back and finding all houses occupied and the tenants frozen in by the OPA regulations. So, we had an extraordinary situation and that was aggravated by the fact that we couldn't find materials or there weren't enough materials to build more houses. It was probably no time to consider the question of a permanent housing policy which was, of course, worked out and developed from the point of view of the ordinary condition in the United States, when there was no shortage of materials, when all the contractors and all the builders and all various kinds of materials and lands could be found to build the houses which anyone willing to buy could obtain. Our difficulty for many years has been a shortage of buyers rather than a shortage of materials. That was very evident in 1926 when we reached a peak in housing, long before the final crash of the rest of the economy, because we got to a point where there weren't people left with money enough to buy the houses, pay the cost of the houses.
COST VERSUS INCOME
Basically, the whole housing problem arises out of the fact that the cost of housing is out of proportion to the income of the people. That was true before the war and is probably even more true now. Assuming that a man can pay 25 percent of his income for rent (he can't very well pay more than that), not more than half of the families of the United States can afford to buy a new house. More people can buy automobiles than can buy houses. That results, of course, in a hand-me-down theory; that is, people buy and live in second-hand houses. They can't buy a new house, and it means, in effect, that they cannot pay the rent on a new house. They live in second-hand houses. If they are in good condition, it ought to cost about as much as a new house. The mere fact that a house is old is not in itself any assurance that you are going to be able to rent it for a cheaper price than a new house. I say that unless it has deteriorated in the neighborhood or in physical condition, there is no particular reason why it should not cost about as much as a new house.
Of course, what has happened is that there has been a certain amount of handme-down houses which are perfectly satisfactory, either houses within cities or surrounding cities, but there have been something like 8,000,000 families who before the war paid less than $15 a month in rent, and for $15 a month they couldn't rent a decent house. About six or eight million houses are distinctly substandard and are not the kind of houses in which a family which grows up can assure to its children any equality of opportunity.
HOW TO DO IT
The problem is how do we get the cost of houses down and what do we do with the people who are below the cost that can be possibly met by private industry. Well, when we considered the whole problem, we presented the bill which has in it a fair number of controversial matters. In the first place, we created one national housing agency. Personally, I feel very strongly that the housing problem is one problem and that somebody in the Federal Government ought to see that all the policies of the Federal Government with regard to housing are coordinated and directed with a single purpose in view, to secure adequate housing for the people of the United States.
In this bill we have a National Housing Administrator. I don't care very much myself whether it is a National Housing Administrator or a National Housing Board. There is more to be said, perhaps, for a board than in most cases of administration, because you have these three units which do most of the administration. Those are the Federal Home Loan Bank System, the FHA, insuring
mortgages, and the Federal Public Housing Authority. Those three are the principal units and they each have their own law with rather elaborate provisions for administration and what you need is a coordination of policy in the administration of those laws. I have no objection to the board idea. At one time our committee recommended a board rather than an administrator. That is not a particularly important point to my mind, but I do feel very strongly that we should have a single Federal housing department, if you chose to call it that, with a single head and a single operating policy. That was opposed very strongly by the so-called private housers. They want the FHA and the Home Loan Bank and the Treasury Department and the Public Housing and the Public Works. It seems to me that the various systems must be coordinated.
FILL THE GAP
The only justification for public housing is to fill the gap, so to speak, in the other policies of the Government and the two ought to be coordinated from a single standpoint. The Board might consist of the heads of these three agencies plus some man from the Treasury and the Federal Reserve and men appointed specifically for the purpose of sitting on the Board. I belive it should certainly head up all the departments of the Federal Government under the subject of housing. In the bill we presented we tried to work out the improvements for all of the different systems of government. We proposed a number of changes in the Federal home loan bank system, giving more power to the building and loans, more power to the Federal savings and loan associations (the new ones), and putting them in a position where they could finance on a more liberal basis, perhaps on a more risky basis than they have been able to do in the past, particularly making them eligible to assist the various veterans' programs and the various forms of loans which are conferred especially on the veterans.
MONEY NO PROBLEM
The second feature, of course, is the FHA, and a good many controversial matters got into the FHA provisions in our effort to extend the power of the FHA to assist in lowering the cost of houses. There is no trouble today in getting money; financing is no problem, even under FHA. Before the war there was completely adequate financing, and with the additional money available for veterans there really is no difficulty since.
How far can we reduce the cost of financing and thereby the cost of rents, and thereby make housing available to more people? A very large job was done by the Government. It was not done by private industry or anybody else; it was done by the Government under FHA in reducing that feature of the cost of rents before the war. FHA put into effect forms of financing which gave a very reasonable cost to that feature in the total cost of rents.
Could it be pressed somewhat further, was the question we had.
it could be. We thought the interest rate had come down since the FHA was passed, so that the interest could be somewhat lower. In particular we felt that there were various matters which even now are of interest to Mr. Foley, the increase of the power to loan money for remortgage, to extend that somewhat, particularly to something more than one-family units.
I was interested very much in giving the special rate to the lowest-cost house, in order to induce the builders to put their money into the lowest-cost house that could be built properly and substantially and soundly, rather than to put it into a more expensive house. We proposed, therefore, to give a special low rate on such houses and to give builders a somewhat higher percentage of the commitment for that cheapest type of house, which might be $6,000 in one place and $5,000 in another and $4,000 perhaps in some of the extreme southern parts of the United States.
We have various provisions, therefore, to improve the power of the FHA. Opposition was directed at some provisions to give especially low rates to mutual housing associations where a large number of people join together to set up an improvement. I think perhaps the rate of interest in the bill last year was a little low. I think perhaps we might well stick to a 4 percent rate instead of some of the 32's that were in that bill last year. That, after all, is a question of
detail. That money also is available not only to mutuals but also to universities and any other nonprofit institutions which want to provide large-scale housing.
In the bill we also provided a plan of urban redevelopment which has been criticized as being somewhat too complicated, and I think perhaps it is. But the principle of it, I believe, is sound. It is that the Federal Government assist the municipalities in a somewhat similar way to public housing but in cases where public housing need not necessarily be involved.
That is, they assist the various municipalities if they make a plan to buy up a large amount of slum area to be resold for commercial purposes, to be used for public purposes, to be resold or rented for private housing development, or resold or rented for public housing developments. The provision which we made provided in effect, when we got all through the complications, that the Federal Government put up about two-thirds and the municipalities one-third.
I think certainly it is open to argument whether the Federal Government should put up so much, whether they should perhaps require at least a half to be put up by the municipalities, which may be put up, of course, by buying the ground, by using what they pay the project, so to speak, for their public works, their playgrounds, their schools, or their various public works and boulevards, and so forth, which they may take out of the property that has been condemned
There is a rather strong feeling, I think, among municipalities that it is going to be pretty hard even to put up the one-third, and I think it is a matter which is worth consideration by the committee. I never have quite understood it. There are people who want to do it a different way, and the project has been criticized. But in my opinion all of the criticism of the bill really, while this piece is picked out and that piece is picked out, comes from people who want no more public housing. That is the real basis for the opposition to the bill. So that, after all, is the test question as to whether we want public housing or not, and whether the Federal Government shall assist in that project.
I think my own view has always been that public housing is justified. In fact, in our study we could not see any other way in which you could solve the slum problem. As fast as you build houses-as I say, no private housing that I know of can be built at such a cost that more than half the families of the country can buy that housing or live in it. The other half have incomes below the point at which they can live in that new private housing. So the whole private housing theory must be that you hand down the old houses to people in the lower-income groups until you get down to the lowest.
WILLING TO AGREE
No doubt there
I am willing to go along with that to a considerable extent. are a great many older houses in less desirable districts which bring less money, do not have the most modern improvements, and pay a little less; but it does not work down to the bottom, because at the bottom we still find today probably 20 percent of the families who live in wholly impractical housing, indecent housing, if you please, in slums for the most part, in cities to some extent, in the regions around cities. Private development and perfectly free enterprise in the United States you could not have had any freer enterprise have never eliminated those slums, and I see no reason to think they ever will, because they simply cannot reach that income group.
Even the people who own those slums cannot improve them, because the people who live in them cannot pay any more rent than they are now paying. ˆI am willing to help in every way to get the cost of housing down, and I think a great deal more can be done, a great deal that cannot be done in a Federal legislative bill. It can be done in cities by change in codes, by some more reasonable attitude on the part of labor unions, perhaps by the annual wage. Those are things that we cannot very well legislate about, but when you get all through, I still do not think you can reach the lowest 10 to 20 percent of the people.
So I have felt that the only way we could do was to have some form of subsidy, if you please. On the general question of subsidy we have always recognized in the United States that in the lowest-income group the Government would assist.
We have always had poor relief in the United States and in England; ordinary food and clothing and the necessities of life have been provided when people through their misfortune or through their low income or otherwise not able to get it. The free enterprise system produces the highest average in the world, but it necessarily is a graduated income. People only get their wages in accordance with their ability. That is the basis of it, and it is the incentive provided by that idea which provides the energy; but it leaves at the bottom, I say, something like 20 percent of the people who are below standard. In our country the people seem to feel, as I sense it-and I see it whenever I come up against the actual problem that in a country as productive as the United States we ought to be able to eliminage extreme hardship and poverty and put a floor under that, whether the people deserve it or whether they do not. I think on the whole it is a sound theory.
I see a lot of economists. There is a school of economic thought that says, "Let the devil take the hindmost." A book I read the other day says slums are like the sewers; you have to have them do train off the evil. The American people do not believe that. I do not know whether ultimately we might be better off economically if we just let them starve, but the American people are a humane people and are not going to stand for such a policy. As a matter of fact, they never have.
DUTY OF GOVERNMENT
We have recognized the duty of the Government to provide the necessities of life in food and clothing. We have recognized it in medical care. There is no
city in the country that does not give free medical care to the poor if they need it. We have recognized the idea, of course, in education as a basic policy of the United States for many years. Regardless of whether a man can pay or not, it has been furnished. The only thing we have not recognized is shelter. As far as I am concerned, it seems to me shelter is just as important as the other items of necessity, perhaps more important. What we are most concerned about, I think, is perhaps the opportunity of the children in poor families to at least get a start in life and get a chance to know what is going on and what their opportunities are; and I think from the point of view of the children the shelter is just as important as food and clothing and education. It is a more complicated problem when you come to try to work it out. You cannot just do it by furnishing relief.
We went into the question of trying to give rent certificates. I do think rent certificates will do it. In the first place you do not know whether it just is not going to enrich the people who own the slums without improving the living quarters. In the second place, if it is based on some income, it is going to be very much more expensive than any public housing program even. We have considered subsidizing private housing outfits, but we could not find that that was practical. Nobody wants to build houses if you must have complete regulation by the Government, if you have to be told what tenants you can take, when you must fire them, what you must charge them. No private outfit wants to get into that kind of subsidized housing for the lowest-income groups. At least we could not find that there was any demand for it that would be likely to be used.
So we came to the general theory of public housing, that is, of subsidized housing owned by a Government unit of one sort or another. It seemed to be the best solution to take the edge off this pressure at the bottom. Working from the bottom, together with the efforts of private enterprise, we would gradually try to fill up the entire gap. We put into this bill a provision which, of course, is temporary, for 125,000 units a year for 4 years. That was one-tenth of what we estimated should be built in the United States during the next 4 years. We estimate that we should build about 12,600,000 homes in 10 years, 6,000,000 for new families since the war started, and about 6,000,000 for replacements of existing houses, slums, and others, which were completely worn out. One-tenth is to my mind about the limit of what we should ever build in public housing. I would certainly be willing to limit housing, as was expressed in our report, to one-tenth of all the houses that are built. But without it I do not think we can solve the problem.
A NECESSARY PART
So it seems to me that public housing should be a part of any over-all housing program. One of the objections to public housing which, I think, perhaps was legitimate was that if you had a Government favorable to public housing and had a shortage of material, such as we had last year, all those materials wuld be channeled into public housing, and thereby the private housers would be deprived of those materials. I think perhaps there was something in that point I think that might well have happened. The bill was not designed particularly to deal with the condition in which there was a shortage of materials. It was designed to deal with the ordinary conditions and tried to eliminate the slums which do still exist and which up to date have not been substantially lessened. I think probably during the past year the administration made a mistake in starting so many houses that there were more houses than you could supply materials for. If we had been able to get a ration system for houses limited to the materials that were likely to be available and then limited to one-tenth of the total materials for public housing, perhaps we could have removed that objection and I think we would have had a reasonable program.
I see no particular reason why public housing should not now go ahead with other houses although, again, I think we should be careful to restrict the materials so that not more than one-tenth of the materials go into public housing. I greatly regret that we went into all this temporary housing, but there seemed no alternative. The veteran situation was such that there were so many thousands of veterans coming back unable to get anywhere to live that there seemed no choice except to use what temporary housing there was, to try to set up housing to meet their requirements. I think as far as the colleges were concerned, it has been a reasonably successful program. The balance may have taken the edge off the burden. Most veterans can, after all, live with their families, perhaps should, until they find themselves able to buy a house and know what they want, but there were a certain number that simply had to be taken care of. I think if we can judge by the reduction in complaints, the edge has been taken off that situation.
I hope very much that we may proceed with the bill substantially as I have described it. I have hoped that those who are opposed to it would come in and make these suggestions to protect themselves from what dangers they seem to fear, but instead of that, they have chosen to completely oppose the bill. I feel that housing has suffered because it has been a Federal project in the beginning: It was not undertaken-in every other case in this field the local people had started, the local governments did it first. They started all health care, they run all education. In this case you had the Federal Government coming in and trying apparently to impose a program on people who did not want it. Unless the people want it, they ought not to have it. Unless the people take enough interest to put up some money of their own, then the Federal Government has only a secondary interest.
We tried in our bill to make it certain that it could not be done unless the municipality itself as well as this metropolitan housing authority came in and asked for the extension of public housing. That certainly is the principle, I believe, on which we should build. If it is not strong enough in the bill, it ought to be made stronger.
FOR THOSE WHO NEED IT
In the second place, this whole theory rests on providing this housing only for people who cannot possibly afford to get decent housing otherwise. Of course, we have had that before us during the war. These were used for war workers, so when income got up, the whole income restriction disappeared, because you could not put a war worker out, no matter what he earned, under the war housing program of the Federal Government. But under this bill it is intended that nobody shall live in such public housing unless their total income is well below the figure necessary to buy or rent decent housing in other parts of the city. If those who oppose it do not like that, they ought to tell us how to make it better. I personally would like to write a dollar figure in, vary it perhaps according to the size of the municipality. But I think it ought to be so tight there would not be any doubt about whom public housing is for.
Gentlemen, all I can say is that we intend to reintroduce a bill along this line very briefly, and we hope very much that it may be adopted by Congress.