The Honorable BRENT SPENCE, NATIONAL COUNCIL OF NEGRO WOMEN, INC., Chairman, Committee on Banking and Currency, House of Representatives, Washington, D. C. DEAR SIR: The National Council of Negro Women, with 85 metropolitan councils and 23 affiliated organizations, representing 800,000 women in every State of the Union, again strongly urges the House of Representatives to enact the Housing Act of 1949. Our council has consistently pressed for passage of the bills, similar to H. R. 4009 and S. 1070 because we believe that the Federal aids for slum clearance, urban, and rural public housing are vital and imperative. It is with greater urgency than ever before that we beseech prompt and favorable action upon this legislation. Almost 4 years have passed since I personally appeared before a congressional committee with a statement, the validity of which still stands. (hearings before the Committee on Banking and Currency, U. S. Senate, 79th Cong., pp. 855-860.) The passing years serve to reinforce my conviction that an expanded publichousing program is essential to emergence of thousands of families now hopelessly entrapped in America's urban and rural slums. The tragic needs of these people alone would justify support of the proposed program. But, as I have traveled from city to city throughout the United States, I have seen the token program of public housing repeatedly demonstrate its value to the entire community as its tenants emerged to the full stature of responsible citizenship. In many communities where the prevalent pattern of substandard residency completely overshadowed the small but growing examples of Negroes' achievements in attaining good homes, I have seen public housing projects launch beachheads for a basic attack upon slum living. I have seen irrefutable proof that a large-scale demonstration of the people's responsiveness to decent living conditions stimulates and encourages the demand for private enterprise housing of good quality. Thousands of the public housing tenants graduate into the private enterprise market, and thousands more await only the opportunity to do so. Indeed, among Negro tenants alone, there are several thousand of former slum dwellers seeking the private homes their increased earnings can now support. Certainly, we heartily endorse the size of the public housing bill as introduced in the House of Representatives. In my statement of 1945 I said that proposal then under consideration was good, "but in terms of the magnitude and importance of the job it is too timid for the courageous and pioneering spirit of America." I urged then that "we turn loose a whole task force in our attack upon this stronghold of crime, ill health, delinquency, and racial tension." It would follow that we sincerely hope the maximum program of 1,050,000 public housing units, as proposed in H .R. 4009 is approved. I would particularly underline my deep interest in the provisions for rural housing in the proposed legislation. As I have said before, with our declining birth rates in urban centers, we are nurturing a large part of our Nation's future citizenry in rural areas. One phase of the proposed legislation, the slum-clearance title, has been subject to particularly close scrutiny by the council and its affiliated organizations. I should like to discuss this title in the context of the serious questions which have been raised with respect to nondiscrimination amendments to the pending bills. As you may know, the National Council of Negro Women strongly opposed amendments which would serve no purpose other than to obstruct an expanded public housing program. Our decision in this matter was carefully weighed, for the ultimate elimination of every vestige of racism from the American scene is one of the basic objectives of the council program. We believe, however, that mature judgment assays the merits of legislative approaches to this objective in specific rather than general terms. We are concerned neither with political expediencies nor with vapid philosophies. We shall never willingly endure malicious exploitation of the valiant struggle of our race against discrimination and its subversive auxiliary, segregation. We have studiously analyzed the conditions which are responsible for one of the most vicious manifestations of racism, the American ghetto. Our conclusions lead us to the conviction that the underlying structure is the traditional operation of private real estate and mortgage financing. We further believe it to be mandatory that the powers and resources of the Government not only refuse to buttress these operations but also be directed to their elimination. 89451-49-44 Contributing to this end, the United States Supreme Court has ruled and only this week, in effect, reaffirmed that ruling against judicial enforcement of racial restrictive covenants. It had already branded racial zoning by legislative measure as unconstitutional. The broad implications of its decisions place squarely upon the shoulders of governmental administrators the responsibilty of preventing use of the remaining arm of the State from any action which would obstruct the privileges specified in the United States Code. The United States Attorney General, in the Government's brief filed in the restrictive covenant cases, has declared it to be fundamental "that no agency of Government should participate in any action which will result in depriving any person of essential rights because of race or color or creed." Certainly, we are not so naive as to believe that either public policy or public law is self-executing. The National Council of Negro Women shall continue energetically to insist that agencies of the Federal Government discharge their full responsibility in safeguarding the rights of all citizens to acquire and use property to which the Government contributes in any way. But we see no achievement of our objectives with respect either to decent housing or racial democracy by a process of legislative default through which there would be no housing programs involving governmental responsibility. At the same time, we would urge serious consideration of protective devices in the housing legislation which would reinforce and expedite the sound administration of governmental programs as they affect racial factors in land use, finance, or occupancy, so long as these devices were not obstructive of the housing legislative program. Accordingly, we believe that high statesmanship should be used in appraisal of two amendments which have been proposed for title I, the program of slum clearance and urban redevelopment, in which, as stated in my testimony of 1945, we foresee grave dangers of racial discrimination by the private developers who may purchase land acquired through this activity. It does not appear to us that the controls in this legislation are sufficiently well defined to obviate the hazards we have come to fear from the traditional practices of private enterprise in this field. In this, rather than in the public-housing program, we are most concerned that legislative safeguards may be required. The amendments we heartily endorse are those proposed by the CIO Housing Committee, one to give preference in the selection of tenants for redevelopment projects to displaced site occupants; the other to prohibit insertion of provisions unenforceable by law from redevelopment project contracts or leases. We believe that the eminent fairness and soundness of these amendments would commend them to the full support of the vast majority of legislators from all sections of the country. One of the most compelling reasons for the council's position with respect to the "Housing Act of 1949" is based upon confidence in the integrity of the Declaration of National Housing Policy comprising its preface. As the United States now stands in the spotlight of the world, leader in affirmation of human rights, it has never been more fitting that Congress adopt this policy declaration. In every measured phrase, it is truly a document of American statesmanship. And its stated goal-"a decent home and a suitable living environment for every American family"-is one for the attainment of which only the United States has the resources, the capacity, and the resolute determination. In the absence of any personal appearance before the House Banking and Currency Committee, I would ask that you place this communication in the official records of the hearing on H. R. 4009. Sincerely yours, Hon. WRIGHT PATMAN, Member of Congress, Washington, D. C. MARY MCLEOD BETHUNE, THE FIRST NATIONAL BANK, DEAR MR. PATMAN: I am very much interested in seeing section 502 retained in the new housing bill, H. R. 4009: Being a country banker, it seems to me that everything should be done to develop and maintain the best method of distribution for any class of securities in which our Government has an interest. Country bankers are called on more often by their customers to buy and sell Government, or bonds that they feel the Government is behind, similar to the proposed housing bonds than any other, the banks in which I have an interest would always like to feel that complete marketability is always maintained in these bonds, which I believe can only be accomplished if banks throughout the country participate in bidding for housing bonds. To restrict the public bidding on these bonds to private investment houses, only would restrict the ready sale of billions of dollars of securities and result in an interest charge on all this financing which would only be added cost to our taxpayers. I think my feelings would be shared by many of my country-bank friends, were they acquainted with the facts in this proposed financing. May I respectfully suggest, in the interest of good business, proper distribution of the new securities and maintaining a broad and active market in the bonds, that section 502 of the housing bill be retained as part of this housing bill 4009. Yours very truly, H. H. RUSSELL, President. MEMORANDUM FROM RICHARD C. NONGARD Referring to our conversation of Friday, May 6, I am pleased to hand you herewith some of my thoughts relating especially to section 502 of the above bill and wish to stress the importance of retaining this section which will enable banks to participate in the purchase, sale, and distribution of securities under the housing legislation. There seems to be a move on foot by a group of dealers in the investment business to eliminate the banks from participating in the distribution of the housing bonds for purely selfish reasons. Examination of the facts in the case I believe will readily prove this point. The unfortunate "old 1929 gag" of Main Street versus Wall Street has been brought back to life to muddy further the waters and to instill misapprehension and doubt as to the sincerity of some members of the investment fraternity. In my opinion, and one which is shared by many other independent dealers with whom I have talked, it would be a grave mistake not to permit our banking institutions to participate in the underwriting, sale, distribution, etc., of Housing Authority bonds. As substantial proof that the New York banks, numbering five or six, are not the only banks equipped for organizing and handling underwriting projects, I submit a list of banks throughout the Nation that have bond departments with well-manned staffs. These are only a very small part of the underwriting strength of banking institutions, and this partial list is taken from the Security Dealers of North America, 1949 edition. The banks follow: First National Bank, Mobile, Ala. First National Bank, Montgomery, Ala. Louisiana National Bank, Baton Rouge, La. Whitney National Bank of New Orleans, New Orleans, La. Northwestern National Bank of Minneapolis, Minneapolis, Minn. First National Bank, St. Paul, Minn. City National Bank & Trust Co., Kansas City, Mo. Commerce Trust Co., Kansas City, Mo. First National Bank of Dallas, Dallas, Tex. Texas Bank & Trust Co., Dallas, Tex. The Fort Worth National Bank, Fort Worth, Tex. The foregoing list of banks only touches the surface of the distributing ability of banks dealing in municipal tax-exempt bonds and should prove conclusively that the banks in the back country and the correspondents which they represent more than offset the term "Wall Street." With the loss of section 502 from the housing bill, the Government would suffer not only the loss of distributing capacity, underwriting capacity, and marketing capacity, but it would be a costly factor in the last analysis as far as the taxpayers are concerned which should be of paramount interest when we are all looking for methods to save money. Not being able to have the full force of the banks' underwriting facilities, it is conceivable that the housing bonds might be offered in such substantial blocks that the underwriting capacity of strictly investment firms would be drawn on to the limit in financing the bonds, and the banks they seek to eliminate must either be their customers or have some of the public offerings be a flop which would shake the confidence generally with many who otherwise might be customers. Issuance of housing bonds is contemplated in amounts up to $8,000,000,000. A more sensible way of distributing the bonds than to try to eliminate the banks would be, say, to let all the dealers and banks whose names begin with the initials A through M handle one batch, with the next one to be handled by all dealers and banks from N through Z? By having banks participate in the underwriting—and the banks will invite other dealers to participate with them, thus removing any question of it being onesided or controlled-it seems obvious that because of the very nature of this situation that a lower interest rate will follow in the sale of these securities. With $8,000,000,000 involved, the saving over a 40-year period that the bonds would be authorized to run will produce amazing figures. I am attaching a schedule which shows the yearly payment to amortize a debt of $1,000 including annual interest. If, for the sake of discussion, you will take a 24-percent bond with interest and principal being amortized over 40 years, the annual requirement per million dollars of bonds is $38,177 (at 24 percent), and for a billion dollars of bonds it will be $38,177,000. Project this to $8,000,000,000 and you have a total annual cost of $305,416,000 and multiplying this by 40 for the 40-year period, you have a total cost of $12,216,640,000. Therefore, if you should have a saving of only 14 of 1 percent by bettering the marketability and salability of the bonds by having banks participate, let us see with the banks eliminated, which would be the case if section 502 is removed from the Housing Act, how application of the foregoing formula at a 21⁄2-percent rate would result. The annual requirement per million dollars of bonds at 21⁄2 percent is $39,836 over a 40-year period. For a billion dollars of bonds it will be $39,836,000. Project this to $8,000,000,000 and you have a total annual cost of $318,688,000 and multiplying this by forty for the 40-year period, you have a total cost of $12,747,520,000. Therefore, the difference of 14 of 1 percent in interest cost on 40-year financing between 21 and 22 percent amounts to approximately $530,880,000. This is all very simple arithmetic, but the difference in cost is astronomical. In summary, the participation by banks in the underwriting, sale, and distribution of the housing bonds seems absolutely necessary to obtain the widest and best distribution of the issues as they come along, or you automatically cut down your distributing capacity to one-half, as I believe it is an undisputed fact that the banks are among the largest distributors of bonds of this type. Banks by law now are underwriters of tax-exempt bonds throughout the country. The banks have the unquestionable financial responsibility which is going to be needed in any program involving the distribution of $8,000,000,000 of bonds of a security which in effect is like bonds issued by other Government agencies, and the banks have certainly proved their ability to handle other issues by their support and distribution of these securities. The staggering amount of money which may be saved by broadening the markets in retaining section 502 of the Housing Act of 1949 permitting banks to participate is in itself a primary reason to retain banks in this business. This undertaking is so vast and important in the all-around public interest there is the obvious need for a united effort between banks and dealers to handle the business. in the most successful and expeditious and least costly manner. Hon. BRENT SPENCE, HOUSE OF REPRESENTATIVES, Washington, D. C., April 9, 1949. Chairman, Banking and Currency Committee, MY DEAR COLLEAGUE: In view of the fact that the House Banking and Currency Committee is currently holding public hearings on the bill H. R. 4009, I thought you would be interested in the attached letter, including a housing survey as conducted by the Michigan Home Economics Association Housing Division of Wayne University. I shall appreciate your consideration of the enclosed information and possibly including the results of the survey in the transcript of the record. Sincerely yours, Hon. Louis C. RABAUT, House of Representatives. LOUIS C. RABAUT, M. C. WAYNE UNIVERSITY, Detroit 1, Mich., March 23, 1949. MY DEAR MR. RABAUT: Condensed here and submitted for your consideration are the views of 241 members of the Michigan Home Economics Association, to whom were put the enclosed questionnaire. The response was 18 percent from rural villages of 4,000 or under, 18 percent from small towns of 4,000 to 20,000, 11 percent from cities of 20,000 to 75,000, and 53 percent from large cities of 75,000 or over. Most of all, they would like to see written into the forthcoming housing bill a provision for establishing a program of research into ways to reduce building and rental costs while raising housing standards. Next in order of importance, they say, are the needs for public housing and slum clearance. These facts were established by tabulating replies to the questionnaire to determine viewpoints as to what features are most needed in the national housing legislation. You We enclose a copy of the questionnaire and a summary of the results. will observe that the features of the proposed housing program have been rated according to their relative importance as evaluated by those replying. The order of preference follows: First, research program; second, public housing; third, slum clearance; fourth, aid to private enterprise; fifth, farm housing. These women are in positions where they see the housing needs and problems of many families. In most cases the work of each whose view is here expressed is connected in one way or another with a number of Michigan families and their homes. They work in teaching, home service, home economics extension to rural and other families, home economics journalism and social work. Since they are in these very favorable positions to see family living problems and answers, we ask your careful consideration of their opinions. Sincerely yours, FRANCES G. SANDERSON, (Mrs. W. D.) Chairman, Housing Division, Michigan Home Economics Association. QUESTIONNAIRE What do you want AHEA to emphasize in housing legislation? Development of new building materials. Number the above points in the order of their importance from the standpoint of meeting the national housing needs. In writing or talking to your Congressman, which of the above listed factors do you believe is our strongest talking point and why? Basic research program will provide facts and figures upon which one may draw for further assistance. Will aid a greater number of families--most important at the present time. Other comments: Please return to Mrs. Frances G. Sanderson, chairman, housing division, Michigan Home Economics Association, Wayne University, Detroit 1, Mich. Please return as quickly as possible. |