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Moreover, as you all know, about a year and a half ago, a special subcommittee, with representation from this committee, the Education and Labor Committee, and the Postwar Committee, commenced a thorough study and investigation of the whole postwar housing problem. The report and recommendations of that.committee, filed on August 1, 1945, is one of the foundations for the bill now before
Another foundation, of which I am deeply appreciative, is the work done by the sponsors of the bill in its preparation. The length and depth of the interest of these sponsors in the whole housing problem, and their experience with housing legislation, is even better known to all of you than to me. I can only say that the unity of outlook on their part, which this bill represents, testifies to the caliber of their work and their realization of the seriousness of the problem with which they have been wrestling.
This bill reflects the work of its sponsors, and of other Senators who joined with them in the investigation preceding it. At the same time, we have, when called upon furnished information and technical assistance supplementing our recommendations before the Senate Subcommittee on Housing and Urban Redevelopment.
I am, of course, appearing in general support of the bill, and believe that each of its titles will serve a useful and necessary purpose. In the course of my testimony, I shall make recommendations where I think improvements might be made. However, I have nothing new or different of a fundamental character to present at this time. At the end of the hearings, when the committee as well as I will have had the benefit of testimony and suggestions from many sources, I should appreciate an opportunity to make or file a final statement, bringing together for your consideration our very latest ideas about the details of the bill on the basis of what the hearings reveal
The bill before you is extensive, but in its entirety it clearly seems to be a proposal which arises out of facts, out of experience, and out of a realization that we must look at the whole housing picture in order to make an intelligent appraisal of necessary action. When the underlying facts and framework in back of this bill are examined, I think the essential unity and simplicity of the bill becomes very clear.
I should like to begin, therefore, by giving you the factual background which high lights the important role of housing in our whole national economy. Supplementary to that, I should like to make a few remarks about the importance of housing in the municipal economy. Then I should like to set before you the over-all housing situation as it existed before the war. Following that, I should like to reveal, as best we can delineate it, the American housing need in the first 10 years of this postwar period. After revealing the need, I should like to appraise briefly our present tools and resources for meeting this need. And finally, I should like to analyze how, as I see it, the specific provisions of the present bill are directly pointed toward filling in the gaps and shortcomings in our present tools and resources, so that the need can be met.
Some of the background materials which I shall now present will be familiar to the members of the committee who participated in the study by the Subcommittee on Housing and Urban Redevelopment.
However, since these background materials are basic to the proposals with which the present bill deals, I feel that I should discuss them with this committee now, and do it briefly and relate them more specifically to the present bill.
First of all, I have here a few charts intended to condense a few well-known facts-to review clearly how closely the health of residential construction is tied in with the health and welfare of our economy in general.
Chart VI-A, designed for this purpose, shows the annual volume of new nonfarm residential construction for the 20-year period 1920-39. (See chart VI-A in appendix.)
TABLE VI-A.-Annual volumes of residential construction: Number and Construction cost of new nonfarm dwelling units started, 1920-39
1 Estimated construction cost, exclusive of land cost.
Source: National Bureau of Economic Research, and Bureau of Labor Statistics.
The left-hand side of this chart tells the story according to number of units; the right-hand side tells the story according to construction costs. Certainly no one can be satisfied to allow the phenomena which this chart depicts for the past to be extended into the future-phenomena which resulted in 937,000 units, costing almost $4,500,000,000, started in 1925, and only 93,000 units, costing only about $285,000,000, started in 1933. Certainly we will all agree, at the very least, that a stable prosperity in the future depends upon a much greater stabilization of house production, which is one of the most vital of our economic processes. Further on, I hope to be able to reveal the reasons, or at least the central reasons, for this extraordinary fluctuation-and through revealing the reasons, to point toward a remedy. Chart VI-B goes a step further.
(See chart VI-B in appendix.)
TABLE VI-B.-Residential construction compared with industrial production: Indexes of the number of new nonfarm dwelling units started and industrial production, 1920-39
Source: Industrial Production; Board of Governors, Federal Reserve System; index converted from base as published to 1920-39 base by National Housing Agency. Number of new nonfarm dwelling units started: National Bureau of Economic Research, and Bureau of Labor Statistics. Index computed by National Housing Agency. National Housing Agency, Office of the Administrator, Housing Market Service, Nov. 27, 1944.
It shows that the fluctuations in residential construction were far more extreme and far more severe than those in industrial production. It shows also that violent changes, both downward and upward, in residential construction have frequently run ahead of similar though less violent changes in general industrial trends. This gives substance to the belief that smoothing out the residential curve would make an important contribution toward smoothing out the general industrial
Chart VI-C tells pretty much the same story, by contrasting trends in residential construction with trends in department store sales and trends in the volume of the gross national product.
(See chart VI-C in appendix.)
TABLE VI-C.-Residential construction compared with general economic activity: Indexes of expenditures for new nonfarm residential construction, gross national product, and department store sales, 1920-39
1 Includes expenditures for new construction and additions, but excludes maintenance, repairs, and value of land. The expenditure figures on which this index is based attempt to measure the value of work done or put in place, and are estimated by applying time lag factors to construction starts. For this reason the dollar figures for expenditures for new nonfarm residential construction differ from those on construction cost of new nonfarm dwelling units started as shown in table VI-A, and also because the data for expenditures for new nonfarm residential construction include expenditures for additions as well as new construction. For dollar figures on expenditures, see table VI-F.
Source: Gross national product: 1920-28 figures, National Planning Association; 1929-39 figures, Bureau of Foreign and Domestic Commerce.
Department store sales: Board of Governors, Federal Reserve System.
Expenditures for new nonfarm residential construction: Bureau of Foreign and Domestic Commerce. Index for department store sales converted from base as published to 1920-39 base by National Housing Agency; other i idexes computed by National Housing Agency.
National Housing Agency, Office of the Administrator, Housing Market Service, Nov. 27, 1944.
The next chart, VI-D, makes the same case in the area of employ
(See chart VI-D in appendix.)
TABLE VI-D.-Employment in residential construction compared with total nonagricultural employment: On- and off-site employment in nonfarm residential construction and total nonagricultural employment, 1930-39
1 Estimates include a!l full- and part-time wage and salary workers in nonagricultural establishments who are employed during the pay period ending nearest the 15th of the month. Proprietors, self-employed persons, domestic servants, and personnel of the armed forces are excluded.
The employment figures are monthly averages and do not indicate the total number of workers actually dependent in any one year upon residential construction for all or a major part of their livelihood. Residen tial construction includes new construction, additions, alterations, and major repairs for which building permits are usually issued. but does not include maintenance and minor repairs.
Includes all wage earners, salaried workers, supervisors, and contractors' office staff.
Includes workers in mines, forests, factories, transportation plants, and wholesale and retail establishments, estimated to be engaged in the production and distribution of building materials and fixtures in their raw or finished state, together with the number of workers estimated to be engaged in the replacement of capital equipment depreciation arising in connection with the performance of the above functions. The off-site estimate for any given year reflects the employment that would have been provided if the building materials and fixtures put in place by on-site workers had been produced and distributed during the same year, rather than the actual off-site employment during that year.
Source: Bureau of Labor Statistics.
National Housing Agency, Office of the Administrator, Housing Market Service, Dec. 28, 1944.
By contrasting the trend in total nonagricultural employment with the trend of employment in nonfarm residential construction, the black being the employment curve, and the red the nonfarm residential construction, this chart again shows that when depressions come they hit the worker in residential construction more severely than almost anywhere else. Or, even more significantly, we might say that stabilizing residential employment might be a major single step toward stabilizing general employment.
Thus far, I have emphasized the importance of residential construction in terms of trend relationships with other activities should like to illustrate its importance to the national economy in terms of absolute magnitudes.
Chart VI-F shows total gross capital formation, or investment in capital goods, for the 20-year period 1920-39.
(See chart VI-F in appendix.)