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It is expressly provided in section 1 of title I of the First War Powers Act, "that the authority by this title granted shall be exercised only in matters relating to the conduct of the present war.” Accordingly, the power conferred upon the President by that act, “to make such a redistribution of the functions among executive agencies as he may deem necessary” could only be exercised for the purpose of promoting the successful prosecution of the war.

Under title IV of the First War Powers Act, it was provided as follows:

"Titles I and II of this act shall remain in force during the continuance of the present war and for 6 months after the termination of the war, or until such earlier time as the Congress by concurrent resolution or the President may designate."

It is further provided in section V as follows:

“Upon the termination of this title, all executive or administration agencies, governmental groups, departments, commissions, bureaus, offices, or officers, shall exercise the same functions, duties, and powers as heretofore or hereafter by law may be provided, any authorizations of the President under this title to the contrary nothwithstanding."

It thus clearly appears that the National Housing Agency is purely a war agency, and goes out of existence 6 months after the termination of the war under the express terms under the act under which it was created and it is also perfectly clear that the functions of the agencies consolidated into the National Housing Agency return to their prewar status.

When the Acting Solicitor General of the Department of Justice was asked how this National Housing Agency could be set up under the reorganization plan, he gave the entirely unsound and specious justification by saying that while its functions ceased its “shell" remained. Under the authority of what act, or what provisions of the First War Powers Act does any shell remain?

We therefore submit that when the existence of the National Housing Agency terminated under the provisions of the War Powers Act it completely went out of existence, and it cannot be re-created without an act of Congress. The functions undertaken to be conferred on the National Housing Agency by this Executive order are powers that only can be conferred by Congress.

We now come to the consideration of the reorganization plan itself.

I have carefully studied the Reorganization Act of 1945, the so-called plan No. 1, and particularly part V thereof, the reports of the committees of the House and Senate in reporting the bill, and all the debates which took place in both the House and Senate when the bill was being considered.

It is shown by these reports and debates that Congress in passing the Reorganization Act had in mind three broad objectives :

(1) to produce economy in the operation of governmental agencies ;
(2) to promote efficiency in their operation; and
(3) to prevent duplication and overlapping by the consolidation of agencies.

It is perfectly clear from these debates and reports that Congress did not intend to authorize the creation of new agencies or functions, and it is also perfectly clear that in passing this act Congress was dealing solely with the regrouping of permanent agencies. These conclusions result from a study of these debates and reports, and are borne out by the provisions of the act itself. These objectives are stated in section 2 (a) of the act, which is as follows:

"SEC. 2. (a) The President shall examine and from time to time reexamine the organization of all agencies of the Government and shall determine what changes therein are necessary to accomplish the following purposes :

“(1) to facilitate orderly transition from war to peace;

“(2) to reduce expenditures and promote economy, to the fullest extent consistent with the efficient operation of the Government;

“(3) to increase the efficiency of the operations of the Government to the fullest extent practicable within the revenues ;

“(4) to group, coordinate, and consolidate agencies and functions of the Government, as nearly as may be, according to major purposes ;

“(5) to reduce the number of agencies by consolidating those having similar functions under a single head, and to abolish such agencies or functions thereof as may not be necessary for the efficient conduct of the Government; and

“(6) to eliminate overlapping and duplication of effort.”

On the question of economy, I would like to call attention to some interesting figures which I have obtained from the Budget estimates of the National Housing Agency for the fiscal years 1946 and 1947.

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The National Housing Agency estimated the expenditures of the Office of the Administrator for the fiscal year 1946 to be $3,750,903; while, for the fiscal year 1947, it is estimated they will be $8,085,000-an increase of $4,434,097, or more than 100 percent. And this, I understand, does not include the cost of administering the so-called Veterans' Administration program.

The same estimates show that the number of employees of the office of the Administrator of National Housing Agency for the year 1946 were estimated at 626, while for the year 1947 the number is estimated at 1,397.

Does this indicate economy? As a matter of fact, every cent of it could be saved without any loss whatever in the efficiency of the operation of the constituent units. As a matter of fact, both the Home Loan Bank Board and the Federal Housing Administration have contributed from their net earnings (and both operate at a profit) substantial funds to the administrative expenses of the National Housing Agency. These contributions are estimated in the same Budget estimates as follows:

For 1946, the Federal Housing Administration contributed $119,988 while it will be called upon to contribute $180,000 in 1947. In 1946, the Home Loan Bank Board contributed $99,992 to the administrative expenses of the National Housing Agency, while in the 1917 estimates it will be called upon to contribute $67,500.

It is pertinent to ask wherein is there shown here any economy.

As to the question of promoting efficiency and preventing duplication, my experience as Commissioner of the Federal Housing Administration was that the efficiency of the Federal Housing Administration was clearly impared and duplication greatly increased by the operattions of the National Housing Agency.

As a matter of fact, there was no duplication of function between the Federal Housing Administration, the Home Loan Bank Board, and the National Public Housing Authority, because their functions were althogether different and they operated programs which had no administration connection.

I should particularly like to call the attention of the committee to several provisions of the Reorganization Act of 1945, which, in my opinion, definitely and expressly prevent setting up such a reorganization plan as is attempted to be set up under part V of this plan No. 1.

Subsection 3 of section 5 (a) of the Reorganiaztion Act directs that no organization plan shall provide for and no reorganization under the act shall have the effect of

“(3) continuing any agency beyond the period authorized by law for its existence or beyond the time when it would have terminated if the reorganization had not been made."

Is there any doubt in the world that this plan undertakes to continue the existence of the National Housing Agency as a permanent agency of the Government, although that Agency came into existence as a purely temporary war agency. It might be contended that the reorganization plan does not undertake to make the National Housing Agency permanent, but undertakes to set up a new organization to take its place. Such a spe ious argument as this hardly deserves refutation. A permanent agency can only be created by act of Congress.

Again we find that subsection (4) of section 5 (a) prevents

“(4) continuing any function beyond the period authorized by law for its exercise, or beyond the time when it would have terminated if the reorganization had not been made, or beyond the time when the agency in which it was vested before the reorganization would have terminated if the reorganization had not been made.”

Can there be any question but that this plan continues functions of the National Housing Agency beyond the period authorized for their exercise? We have shown that under the First War Powers Act, the existence of the functions of the National Housing Agency terminated 6 months after the end of the war and that the agencies that had been consolidated to form it at that time would assume their prewar status and functions. The attempt to convert the National Housing Agency into a permanent agency is therefore in violation both of the First War Powers Act and the Reorganization Act of 1945.

We submit further that this reorganization plan violates subsection (6) of section 5 (a). This subsection provides that no reorganization shall provide for or have the effect of

“(6) imposing, in connection with the exercise of any quasi-judicial or quasilegislative function possessed by an independent agency, any greater limitation upon the exercise of independent judgment and discretion, to the full extent

authorized by law, in the carrying out of such function than existed with respect to the exercise of such function by the agency in which it was vested prior to the taking effect of such reorganization; except that this prohibition shall not prevent the abolition of any such function.”

The Home Loan Bank Board, under section 17 of the Home Loan Bank Act, is directed by Congress to make such rules and regulations as may be necessary or proper to administer the Home Loan Bank Act, and the National Housing Act under section 211 expressly directs the Federal Housing Administrator to make similar rules and regulations. They are functions given to these agencies by express acts of Congress, and are beyond question quasi-legislative functions. This reorganization plan imposes a very serious limitation upon the exercise of these functions by giving the National Housing Administrator the authority to approve or disapprove all such regulations as may be made with the result that the real power to make regulations is transferred from the agencies created by Congress to an agency created by the President.

We respectfully submit that Reorganization Plan No. 1 should be disapproved by the Congress, because it is not in accordance with the terms of the Reorganization Act of 1945, and the concurrent resolution disapproving it should be passed.


Washington 25, D. C., June 13, 1946. The Honorable CARTER MANASCO, Chairman, House Committee on Expenditures in the Executive Departments,

Washington, D. C. DEAR CONGRESSMAN MANASCO: I understand that in testifying before your committee on June 7, Mr. Frank Kirkpatrick, of Milwaukee, stated that I have long been committed to a “war against free enterprise.” In support of this charge, he referred to a paper I had written in 1937 for the Annals of the American Academy of Political and Social Science, and made the following statement :

“He says a housing shortage 'emphasizes the need for a practicable working arrangement between private and public enterprise in the production and control of housing space.' Then, he goes on to say: 'Although such a policy in respect to private and public enterprise in housing seems most desirable from many points of view, it does not follow, necessarily that it can be made under our present scheme of economic organization. It is entirely possible that private and public enterprise in housing cannot enjoy a vigorous life at the same time. Many persons dislike to face the fact that a highly desirable or even necessary social result cannot be obtained under the present economic order, with modifications that are possible within the near future.'” [Emphasis supplied by Mr. Kirkpatrick.)

In the article to which Mr. Kirkpatrick referred, I pointed out a large and increasing demand for private building and the existence of considerable areas of substandard housing lived in, by, and large, by families whose incomes were so low that they did not constitute a profitable market for private building enterprise in their localities. Calling attention to public housing, which was then the subject of lively public discussion, as a means of meeting this latter need, I raised the question whether we could expect from the evidence then at hand that private building could go ahead vigorously in the immediate future if, at the same time, a public-housing program were undertaken to improve the condition of these low-income families. Because I thought that this question had not been sufficiently considered, I stated my opinion that it was an inportant question-a question that should be examined on its merits and the answer not taken for granted. The sentences quoted by Mr. Kirkpatrick appeared at this point in the article, and when read in context have this meaning and no other.

If Mr. Kirkpatrick had been interested in giving you and your committee a fair summary of my views on private and public housing as set forth in this article he could scarcely have avoided quoting the following sentences from the summary section of the article:

Avoiding the assumption that the need would necessarily create a practicable, working arrangement between these types of agencies, I have examined their chief: relations to see if there are any basic reasons that would

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prevent the actual integration of their activities. Although the evidence avail. able on the major question is scanty, it does not bear out the claim that both of these two types of enterprise cannot be pushed vigorously in the immediate future. It is true that the method of determining the relative fields of these two kinds of agencies must be the subject of careful and critical study.

“The following statement has been suggested as a guide or principle for public policy: Public enterprise should be limited to developments to house those families whose normal incomes do not enable them to afford the soundly constructed product of private building enterprise, meeting modern minimum standards, produced in substantial volume at prevailing wages, in the localities in question

I believe it is also pertinent to point out that the Congress has adopted, in the United States Housing Act of 1937, a similar definition of the need to be met by public housing. As you know, this act provides for Federal assistance to State and local public agencies that are empowered to provide housing for families of low income. In the act Congress defines families of low income as "families who are in the lowest income group and who cannot afford to pay enough to cause private enterprise in their locality or metropolitan area to build an adequate supply of decent, safe, and sanitary dwellings for their use.".

I am calling this matter to your attention not because I believe that my opinions on housing or Mr. Kirkpatrick's opinions of me are of any particular importance to you or to the Congress. I feel sure, however, that your committee does not wish its public hearings on any matter under its jurisdiction to be used as a forum for distortions or misrepresentations. Under the circumstances, I hope that your committee would permit this letter to be inserted in the public record as a part of the hearings, preferably as a footnote on the page where there appears the statement by Mr. Kirkpatrick quoted above.

I understand also that Mr. Kirkpatrick stated that I have been and am in a position to influence considerably the present and future policies of the National Housing Agency. As a matter of fact, in accordance with my intention when I came to Washington in 1942 to do what I could to help the war effort, I resigned as Assistant Administrator of the National Housing Agency in early March of this year. Since then my sole connection with the Agency has been as a consultant, and I have not played a major part in the development of the Agency's policies and program for the present or immediate future. Within the next few days I shall be leaving Washington for my home in Illinois.

I hope that you will be willing to have this letter made a part of the public record of your committee's recent hearings. Sincerely yours,




The National Public Housing Conference, a 15-year-old consumers' educational organization with the objective of promoting the principle that every American family should be decently housed at a rent or price it can afford to pay, is grateful for this opportunity to submit a statement in support of the President's reorganization plan consolidating permanently in one National Housing Agency the main activities of the Government relating to housing.

The conference has long felt that all Government aid to housing-direct subsidies, insurance, credit, or loans-should be coordinated, through a top policy officer high in Government councils with constituent units handling operations in their respective spheres. Convinced that such a plan makes for administrative, operating and coordinating agencies, the conference strongly endorsed title 1 of S. 1592 when that bill was being considered by the Senate Banking and Currency Committee. For the same reasons, because this reorganization plan is substantially the same as title 1 of S. 1592, the NPHC repeats its approval of such consolidation.

The National Public Housing Conference is satisfied that your committee will not be misled or misdirected by the irresponsible and distorted arguments which have been advanced against the reorganization plan.

Some of these arguments—such as the contention that the plan was too hastily presented-are simply not in accord with the facts. As is perfectly well known, the principle of unification of the housing agencies has been discussed as far back as the 1944 hearings by the Taft Subcommittee on Housing and Urban Re

development of the Senate Special Committee on Postwar Economic Policy and Planning. The principle was elaborately discussed when S. 1592 was being conconsidered by the Senate Banking and Currency Committee; it has been the subject of comment, study, and planning for several years. It is perfectly obvious that any charge now that the unification of the Federal Government's housing agencies is an idea too hastily conceived can better be described as an argument too hastily conceived.

Some of the arguments—such as the contention that the plan is illegal or that it is not a purpose of the Reorganization Act-are so palpably frivolous as to merit no attention at all.

Some of the arguments such as the contention that no economies would result, coupled with a recommendation that a board would be better than a single administrator—are so inconsistent that merely to express them in conjunction is to disclose their weaknesses.

Some of the arguments—such as the contention that FPHA was wastefulare not only inaccurate, are not only addressed to the wrong forum, but reveal a frame of mind calculated to make unsupported charges against an efficient agency in the apparent thought that some advantage must accrue to those who stop at nothing in order to prevent unification of the Government's housing agencies.

Some of the arguments—such as the contention that under the reorganization plan private housing would be subordinated to public housing—constitute nothing more than a reflection on Congress. Obviously, any program by any of the constituent units would have to be within the area defined by Congress, with funds made available by Congress, under limitations prescribed by Congress, and for objectives declared by Congress.

The conference does not feel it necessary to elaborate on the arguments which have been advanced against the reorganization plan. Many of them, as the above sketch indicates, are the desperate contentions of interests to whom the idea of a unified National Housing Agency, with all of the advantages which would result from such a unification, is so repugnant that in order to attack the reorganization plan they must avoid discussing it.

To the conference the proposition appears simple: The basis of the Federal Government interest in housing—whether it be insurance of loans, aid to distressed property owners, facilitating financing by private lenders, subsidies for low-income families—is the public welfare. That congressional concern with. public welfare takes the form, through the channel of various programs, of making it possible for American families to live decently at prices they can afford to pay. The object of our Government's concern in this field is not primarily to protect a lender, to make financing easier, to get local housing authority bonds in the hands of private purchasers, but rather the single, direct purpose of making it possible for Americans to live as Americans should.

Once this fundamental proposition is understood, it follows that the Government can do no less than to mobilize all its resources toward accomplishing this objective. The wartime experience, as the President has said, has fully demonstrated the necessity for unifying the Government's housing functions. The best proof is the effectiveness of the housing consolidation in 1942.

A national housing program, no matter how well conceived, is only as good as the machinery provided for its execution. Any national housing program, worthy of the name, will attack the problem in every level where the attack is needed-public and private, lowest and middle-income groups. A unified national housing organization is absolutely necessary if a national housing program is to be achieved and if a national housing catastrophe is to be avoided.


Washington 6, D. C., June 11, 1946. Hon. CARTER MANASCO, Chairman, Committee on Expenditures in Executive Departments,

House Office Building, Washington, D. C. DEAR MR. MANASCO: In connection with the hearings before your committee on the President's Reorganization Plan No. 2, I wish to file the following statement:

“The department I represent serves over 600 American insurance companies, as well as serving the entire membership of the national chamber, comprising

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