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ing to see the benefits of tax-exemption and the power of eminent domain go to these private corporations, which, incidentally, with the exception of the cash subsidy, almost parallel in many respects the basic provisions of the public housing law.
And one further incidental statement on that: the man who was the head of the committee that advocated that bill was none other than Mr. Thomas Holden, who, I believe, is the author of the article now being distributed so widely. And while I am on the very same subject of granting tax-exemption, and whether or not it does make a difference who receives the benefits, may I call your attention to the fact that within a year or two after the passage of that original law, we had a redevelopment companies law passed in the State of New York, under which the Metropolitan Life Insurance Co. built its very substantial project known as Stuyvesant Town, and that law too had the provision for tax-exemption on the improvement value. And if my figures are correct, and I have not checked them-I am speaking to you extemporaneously on this subject--assuming that the original cost of the area which the Metropolitan acquired was $20,000,000, and its total development cost $90,000,000, they get the benefit of tax-exemption for 25 years on the difference between $20,000,000 and $90,000,000, or a tax-exemption on $70,000,000. With a tax rate of approximately 3 percent, that means about $2,000,000 a year for 25 years.
Now, I do not say that the redevelopment laws and the urban redevelopment laws are not sound, but I am pointing out to you, and I think that you ought to consider when you hear these arguments of socialism, and the grant of the power of Government, that you bear in mind that the very people using that argument have not hesitated to take the benefits time and time again. And I think it is an important factor to consider.
Mr. KILBURN. On that point does the Metropolitan limit its net return?
Mr. WEINFELD. I believe it is 4 percent net.
Mr. KILBURN. So that any saving they get from tax exemption does not do them any good as far as getting an increased return goes!
Mr. WEINFELD. Well, in the first place, a 4-percent return at the time they went into that project, with Governments selling at two, was a very good return and, secondly, the Metropolitan under that bill after a given period of time, can pay up the back taxes, or the taxes as to which it received tax-exemption, and become a project completely free of controls and charge any rentals they want to charge, which means that they have exercised the power of Government in acquiring other people's property for the clearance purposes and then, having paid up the tax benefits which they derived the benefit of in previous years, be completely free of controls as far as rentals are concerned.
Mr. KILBURN. Do you not approve of the Metropolitan development?
Mr. WEINFELD. I approve of the general idea of the redevelopment laws. As a matter of fact, I urged the Governor to sign the one that I referred to previously, which was sponsored by the Merchants Association, and it was signed after certain changes were made in it. There are certain provisions contained in the redevelopment laws under which the Metropolitan built Stuyvesant Town and certain operating procedures, which the Metropolitan has engaged in which I do not approve of. I think that there is something to be desired as far as the planning of it is concerned. I think the question of its announced policy of race discrimination in the city of New York leaves much to be desired and should be eliminated.
Mr. COLE. Do you mean to say that your New York housing has no racial discrimination?
Mr. WEINFELD. I certainly do mean to say that, sir; in the State of New York. We have mixed projects.
Mr. KILBURN. Did not the Metropolitan build one for colored people in Harlem?
Mr. WEINFELD. That is right; there is a separate project up there for colored people.
Mr. COLE. Well, generally, this law will not have any prohibition against discrimination, I assure you of that. This law, if we pass it, will not have any prohibition against civil rights.
Mr. WEINFELD. I do not believe it will. I think that raises another question entirely.
Mr. COLE. But you were complaining about the Metropolitan not recognizing civil rights.
Mr. WEINFELD. That did not come into it at all. That was purely incidental in answer to Mr. Kilburn's question. But, answering his question as to whether or not I favor redevelopment laws, the answer is emphatically “Yes.”
The CHAIRMAN. That is not an issue here, Mr. Cole.
Mr. Kilburn. Well, not on the discrimination, but on this private Metropolitan development, my impression is--and I have no interest in it—that that is a pretty good thing if you can get them to develop a project like that and stick to a net return of 4 percent. I do not agree with you that in comparison with Government bonds that that is a great rate, because the hazard of building and the trouble and bother of doing it is worth some money.
Mr. WEINFELD. Mr. Kilburn, I am not quarreling with that.
Mr. WEINFELD. I mentioned a factor which undoubtedly the Metropolitan took into account, and, as I said to you in answer to your question, I certainly favor redevelopment laws, and that, of course, always assumes that there are adequate controls in the public interest.
The CHAIRMAN. Have you finished your statement?
Mr. PATMAN. On that question, I do not want to question the sincerity of any Member of Congress; each Member votes as he wants to; that is the way it should be; but my own personal opinion is that th enemies of this legislation will bring in the racial issue for the purpose of trying to kill it. They know that if they get that issue in, they can successfully kill the bill.
Mr. COLE. I am not going to introduce any amendment for racial discrimination, Mr. Patman. The gentleman raised the objection to the Metropolitan Housing Authority because it did not provide for civil rights, and I am saying that if that is true, then, this raises the same objection.
Mr. PATMAN. My only concern is that I know that the enemies of this legislation will bring that issue in, not for the purposes of helping the bill, but for the purpose of preventing the legislation being passed, and I hope that those of us who are favorable to the legislation will not get into that trap, because it certainly would be a trap, and would be devastating to the cause.
Mr. WEINFELD. I will answer that question, if you are directing a question to me on that, Mr. Patman, and it is in no respect inconsistent with the position which I have stated insofar as the Metropolitan's present position is concerned. I do not think the civil-rights issue, at this juncture, in the fight for the housing program, should be brought into the housing picture. Now, if, for example, that issue could be tested solely and only within the framework of the housing issue, I would take a different position, but I am sure that every member of this committee knows there are plenty of other items, plenty of other bills-and, in fact, a positive program—within which that issue can and should be fought out. I am being very realistic. I am being very practical here. I do not hesitate to say with the greatest of respect to the members of this committee that when the sponsors of that provision to which you referred introduced it, knowing the opposition which had previously characterized their position, it was not for the purpose of advancing this bill, but for the purpose of killing it.
Mr. PATMAN. That is the position I have taken.
Mr. COLE. I do not think there is any amendment of any such sort pending here. No one raised it but you.
Mr. WEINFELD. I did not raise it, sir.
Mr. KILBURN. I do not think you ought to criticize the Metropolitan for that.
Mr. WEINFELD. I think we have a different issue in New York on that, sir.
The CHAIRMAN. You may proceed, Mr. Weinfeld. Mr. WEINFELD. If you want to go back to that, I will go back to it, Mr. Kilburn.
Mr. MULTER. A question was raised a few moments ago about a 4 percent return and the tax-exemption being something that the builder, the Metropolitan or any of these private institutions, gave up in exchange for tax-exemption. As a matter of fact, as you indicated, the 4 percent return was a very fair return. What they did, by taking the tax-exemption, was that they were able to pass on a saving to the tenants. The tenants got a lower rent and they still got a fair return.
Mr. KILBURN. That is right.
Mr. WEINFELD. Well, they could not achieve the rents that were originally set under the contract with the city, which was $14 a rental room, unless they had the benefit of tax exemption. That was taken into account. And, as a matter of fact, the increase in the cost of construction following the signing of the contract with the city was such that the Metropolitan applied to the city for permission to increase its rents, and it was granted, so that the rents presently charged are on the average of $17 a room instead of the original $14. That is true. That is a fact that is taken into account. It has to be taken into account.
Mr. MONRONEY. Does the city have anything to say about selection of tenants?
Mr. WEINFELD. No; that is entirely up to the Metropolitan.
Mr. WEINFELD. Well, they are giving first preference to veterans according to public statements. But there is no provision that I can recall in the act that requires such a preference to be given.
Mr. KILBURN. I think actually it is being given.
Mr. WEINFELD. I think, as a matter of policy that is the position that they are taking.
Mr. MULTER. I think you ought to make clear that in addition to these privately owned low-rent projects of the insurance companies in New York City, there is the New York State Housing Authority and the New York City Housing Authority under whose jurisdiction low-rent housing is also constructed.
Mr. WEINFELD. That is right. That is also a part. We also have a limited dividend housing program.
The CHAIRMAN. You may proceed.
Mr. WEINFELD. Second, that the program will cost 16 billion, 18 billion, 20 billion dollars. Whatever figure is used is arrived at by multiplying 1 year's contributions (and sometimes the loan figures are thrown in, too) by 40. The difficulty with such figuring is that it is logically unsound. An aggregate 40-year cost can only be related to 40 years of benefits. Personally, I shall ascribe more merit to the argument when real-estate salesmen point out to purchasers of $10,000 houses that they are really paying $20,000, since over the period of the mortgage the interest paid will equal the principal of the loan. The transparency of an argument which is intended to frighten by inferring a 40-year cost as today's cost is obvious as well as revealing: revealing for it displays an unwillingness to appraise the cost for 1 year against the benefits for 1 year. If that cost is too high, then, there is a challenge to find a cheaper way to do as effective a job to meet the admitted need. Such a challenge has not been met.
Incidentally, on that same subject, another parallel that can be drawn is, for example, in the case of any corporation—and let us take the case of a large corporation that issues bonds and sells its bonds to the public—20-year bonds. They do not carry on their balance sheets the liability reflecting over the life of that bond issue the interest. They merely reflect whatever the loan liability is and the interest is an annual item paid out of each year's current operating income.
Third, that the public housing program is socialistic. Whatever the socialist philosophy may be, in my opinion when this argument is advanced, it is obviously intended to convey the conclusion that a public housing program is un-American.
Administrator Foley gave one answer when, in testifying here last week, he said:
In my judgment, the truth of the matter is that this legislation would provide a most effective bulwark against the inroads of socialism or communism. To me, the basic strength of our system of government lies in its ability to serve, more effectively than any other system, the basic needs of the great majority of the people. If it does not serve those needs, there are created the very conditions under which socialistic or communistic systems of government may falsely appear to be acceptable.
If there is an admitted need, if current operations of an industry cannot meet that need, if the Government, in recognition of its obligations to its citizens, steps in to make financial assistance available-if this is un-American, then, so are the public roads programs, public education, and public hospitals. And if it is the mere size of financial assistance which makes it socialistic, then, accordng to the arguments of the real-estate interests, the merchant ships and commercial air lines, for example, also must represent advanced socialism.
Let us consider the myriad ways in which the Federal Government helps its citizens-from farm loans to veterans' pensions, from loans to businessmen to insuring loans to home builders—and determine whether all these programs should be scrapped because they are unAmerican, according to that theory.
In speaking of this specious socialist argument, I need not advert with too much detail, for it all is in the record, to the unsocialistic character of individuals (in and out of Congress) who have supported a public housing program, and to the unsocialistic character of the many veterans, labor, religious, women's, educational, farm and civic organizations and industrial leaders who have endorsed such a program. And I think it would be in order to mention the fact that 41 States in this country have sponsored such programs, and thereby that charge would necessarily have to be leveled against 41 States in the country, not to take into account some four-hundredodd municipalities who also believe in the program.
Fourth, that the labor and material supply of the country will not support a public housing program. I think this argument, if seriously advanced, should be dismissed quickly. The argument is a curious mixture of lack of confidence, lack of fact, and lack of statesmanship: lack of confidence, for it assumes a nation able to mobilize human and material resources for war is unable to do the same in peace; lack of fact, because it is contrary, so far as labor is concerned, to the statements of organized labor, and so far as materials are concerned, to the increasing productivity of that industry; and lack of what I have termed "statesmanship,” because it assumes as did a witness in opposition to public housing who appeared before the Senate Committee on Banking and Currency and was charged by Senator Sparkman with presenting the view that labor and materials "ought to go for the benefit of only that part of the people that can afford to buy or rent your houses, and that the person who is in that low-income bracket is not entitled to consideration.”
Mr. Chairman, I could go on indefinitely with exposing the specious arguments that have been advanced. The charge of competition, for example, or of excessive costs, or of fears that the program should not begin because it will do the job so well that it will be continued. Stripped of all the pious double talk, however, the arguments for whatever reason advanced, boil down to an inescapable confession (a) that there is a segment of our population for which private enterprise, legitimately functioning in a profit economy, has not built and cannot afford to build, and (b) regardless of the cost to society dollarwise and the drain caused by unfit homes on the Nation's greatest asset—its citizens—it is better to leave that segment unhoused or illhoused.
The National Public Housing Conference believes that this Congress has an opportunity to show the world that the democratic proc