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We firmly believe that little can be achieved by setting up such a program unless it is large enough to make an important contribution to meeting the needs of moderate-income families. For this reason, we feel that this program should begin with a 6-year program permitting the construction of at least 120,000 units each year. This would require that $1,000,000,000 per year be authorized for loans under this program each year.
In conclusion, as one who has had many years of experience in the building industry, I want to take this opportunity to answer one type of attack which has been made upon this type of housing legislation. I am referring to the cry that is often raised that passage of this bill will not mean the construction of any more houses this year when the shortage is greatest.
Of course, that is true. It cannot be denied that enactment of H. R. 4009 within the next month will not make much difference in the number of homes constructed during the 1949 building season. But the reason why we are not getting the additional homes in 1949 is because the Eightieth Congress failed to enact the Taft-EllenderWagner bill. We will never get the homes America needs by saying each time a housing bill is under consideration that there is no use passing it because it can't produce any homes immediately. If we pass this bill now many more homes may not be built in 1919, but they will be built in 1950, 1951, and the ensuing years.
The 8,000,000 members of the American Federation of Labor, and particularly the 2,000,000 members of the building and construction trades department, are ready to do everything within their power to build the million homes America needs. We only ask Congress to enact the legislation which will enable us to begin our job.
The CHAIRMAN. Thank you, Mr. Gray. The great organization which you represent has been a very consistent advocate of housing legislation, and we are very glad to have your views. Are there any questions?
Mr. BUCHANAN. Mr. Chairman.
Mr. BUCHANAN. I notice you urge that no definite cost limitation be written into the bill. Why?
Mr. Gray. I think that would act as a retarding factor in accomplishing the very purpose of the bill. There is such a wide variation in costs. At the present time most of the labor organizations are advocating a leveling off in wage rates, and are trying to achieve that through agreements with the employers. But we in turn are hamstrung because we have no guaranty as to where living costs are going, and if there is any unexpected development that comes up that would increase living costs, material costs, and so forth, it may possibly prohibit the carrying out of the program provided for in this bili
. I am in favor of every economic provision that we can exert to keep costs down and to keep rents within the possibility of payment by those in those income groups, but I am very fearful of the danger to which this provision in the bill exposes us.
Mr. BUCHANAN. Just what are the building-trades unions doing to increase productivity?
Mr. GRAY. There have been a number of campaigns going on throughout the country. For instance, in New York City, many pub
lications throughout the country were accusing unions of retarding production, they sent out investigating committees, and they found that these statements by radio commentators and newspapers were not based on fact; that they were distorted. In other words, it was comparable to the pickpocket who yells, “Stop, thief,” to distract attention from himself while he gets his hands in somebody else's pocket.
You have heard perhaps the accusation made time and time again that unions restrict the number of brick that can be laid in a day. Nothing can be further from the truth. We had, for instance, starting in 1930, during the depression years, a situation where it was necessary for the Government to enact emergency plans to furnish employment. There was a lot of made work. And in the process of that made work, the incentive was not there to keep up to the peak of production level. Then we went on to the war effort, in which there was no competitive bidding due to another emergency, where the cost-plus fee was in effect. There was a great waste of manpower.
The boy who was 15 years of age in 1930, by 1945 was about 35 years of age and should have been at his peak of productivity, and that boy, during that portion of his life, which was most important in that respect, had seen nothing but low productivity. In other words, he had had nothing but an education in low productivity. And we admit that productivity in the reconversion period after the war was low, but not due to the responsibility of labor unions, or through the imposition of any restrictive practices on their part.
Take, for instance, the charge that a bricklayer only lays 400 brieks a day. In the last 20 years there has been a large change in the type of building construction. Where you used to lay up a solid 12-inch wall in the average dwelling house, now it is 4 inches backed up by an 8-inch concrete block. That block is generally 8 by 12 inches and 8 inches high, and it is impossible to slush down that whole 8 inches and make a tight wall between the block and your outside 4 inches. So when the outside 4 inches of brick are laid up, it is necessary to take the trowel and parget up the back of that wall in order to make it watertight and then lay your block. But I have contended, and I defy anybody to refute me, that the bricklayer today who lays 400 bricks, pargets up the back of the wall, lays the concrete block behind it, is completing more wall area than the fellow who laid 12 or 15 hundred bricks 20 years ago. But the newspapers fail to bring that explanation out clearly to the public.
Mr. BUCHANAN. Is it true that the American Federation of Labor opposes the economy-type house?
Mr. GRAY. Yes.
Mr. Gray. To begin with, most of your provisions proposed in this so-called economy-type house mean the elimination of certain items in the house that today have become a necessity. For instance, what economy is obtained by building a house today and neglecting to put a refrigerator in it? It is very difficult to get the old lump house any more.
So electric refrigeration today is a necessity, and not a luxury. So the home owner who purchases that house is going to go to the expense of buying that refrigerator. The same for the gas range, and so on. Many of these economy houses have no facility for the old-fashioned coal or wood stove anymore. To begin with, they have restricted space so much that there would be no room for the
old coal stove in the kitchen. So I do contend that 700 feet of floor area in a house is not space enough in which to properly raise a family of two children and a man and wife.
And there is another thing about your economy house. It is all right for the Federal Housing Administration, in the granting of loans, to set up certain standards of quality, durability, and livability, but then what good does it do to do that if they do not have the facilities for policing and enforcing those standards—which we all know they have not now and never have had. For instance, I think your joint committee last year developed the fact that in the State of California, the Federal Housing Administration had one inspector covering seven States. Right in the bay area, from 1940 to 1945, the population of Richmond, Calif., increased from somewhere in the neighborhood of 40,000 to over 100,000. The housing needs in that community alone would have taken all his time and one man could not have policed that community alone. So what good does it do to set up these requirements if the speculative builder, who has only come into the real-estate market to skim over the cream while this emergency exists, gets away with murder, and the poor public that buys the houses, finds out, due to that cheating, answer to quality and durability, that his maintenance and upkeep are almost equal to his capital investment over a period of 10 years in maintaining a house constructed under those conditions. There is nothing economical about that, is there?
Mr. BUCHANAN. Thank you, Mr. Gray.
Mr. McKinnon. Mr. Gray, would you favor a contractor's warranty that a house is built according to standards and specifications?
Mr. GRAY. I certainly would. I participated in a round-table discussion as a guest of Life magazine last January. I always contended that there was more than labor concerned in this housing program. There is the material manufacturer, there are your financing people, and the local distributor of the material, and it was the first time I have ever known where a group of all the people concerned with housing sat down around the table. Unfortunately, Life magazine, as they contended, due to journalistic problems, could not print the whole article. But it is about the first article that came out that did not lambaste labor. Mr. Cain and myself, who participated in that, accomplished one thing we kept them from yelling, "Stop, thief.”
The first question at that table was, “Are those participating in favor of keeping the Government out of private business and letting private enterprise carry on?" We were all agreed on that. We did not want the Government in any more than necessity required them to come in.
The next question was as to extending the term of the amortization for these mortgages and increasing the interest rate on the mortgage that the Government was guaranteeing. So here you had an instance where business in one breath wanted to keep the Government out, but in the next breath wanted to bring them in for the purpose of guaranteeing their profit and relieving them of all risk. So it gets down again to the problem of whose ox is being gored.
Mr. McKINNON. Would you not say a lot of money would be saved if we could modernize our merchandising techniques in the handling of materials ?
Mr. Gray. I am sure that is true. But added to that, there is another factor, and that is your so-called prefabricated house. The Wall Street Journal boasted that, but in February of this year they came out and admitted that the prefabricated house is a bust, and I am inclined to agree. In fact, I do agree with their latest position. If you are going to have any kind of mass development of housing, and if the raw materials can be directed to the job site direct from the place where the raw materials are produced, it is an easy matter, with modern innovations and machinery, such as the electric hand saw, and your piping equipment, to set up temporary mills right on the site and you can do your prefabrication right on the site, or a large portion of it, and reduce costs tremendously, as compared with shipping the raw material into a factory, and then trying, by truck or otherwise, to transport it out of that factory again to a remote job site in these prefabricated sections.
I am not against_the prefabricated house. It has its purposes in some instances. But I claim that in this problem our experience, up to this time, proves conclusively that the prefabricated house is not the answer to the problem. Now, if you are going to have multiple-unit dwellings, it is impossible to prefabricate them. You may have certain individual unit heaters that would go in a single house, prefabricated, compact, and packaged, and brought for installation on the job site. The man-hours of installation are cut down. Those things have been, and are, going on. The industry is not at a standstill.
Mr. McKINNON. Is it not true that in most communities throughout our country the contractor who builds a dozen homes pays as much for his materials as the man who builds only one home?
Mr. GRAY. I think that is true, under the system of material distribution, the local dealer has to get his commission. On the other hand, there is something to say for that local dealer. Take the average maintenance needs of homes that are already up, where people need to do repair, in the natural course of living. They have to have some immediate local supply yard where they can go to buy new sash and other different supplies to maintain their house. And if you take this other feature away from that dealer of handling those materials, from which many times he gets a profit without them going into his supply house at all, I wonder if that man could stay in business. I am not boosting the private material dealer, but I do like to look at this question from all angles and not from my own particular selfish angle.
Mr. McKinnon. But that does create a higher purchase price?
Mr. Gray. It certainly does, and I am wondering if that is not a service that we cannot dispense with in view of what I have just related.
Mr. DoLLINGER. Mr. Gray, what is the employment situation in the building trades industry? Are all employables working now!
Mr. Gray. No; they are not. There are a large number of men idle in New York City. I think there are about 10,000 building trades craftsmen idle in New York City at the present time.
Mr. DOLLINGER. Is that because private industry is not building as many houses as they could or should ?
Mr. GRAY. I contend this, that when your last housing bill shut down, there was a drive, first to increase the amortization period,
second to increase the interest rate, and I am inclined to believe that lending agencies just locked the door and made it more difficult to
Mr. DOLLINGER. Is it not also possible that the reason for that is that enough houses are not being sold because the prices are too high?
Mr. Gray. Yes; they have priced themselves out of the market.
Mr. DOLLINGER. What could be done to reduce the price so that Mr. and Mrs. Public can afford to buy those houses or rent the apartments which are renting at excessive prices today?
Mr. Gray. As long as living costs stay up, I am very fearful it cannot be done by reducing wages. Let us review the situation. Let us go back to early in 1939. Ordinary sheeting lumber, just ordinary rough sheeting lumber, you could buy that in the early part of 1939 from $25 to $27 a thousand feet. Immediately when your defense program started, that jumped to $54 a thousand feet. It went tremendously out of sight and it has never come back near its normal market. Now I claim there are many of those material prices that can be reduced, and that there are economies in improved methods of construction.
Take the average two-story walk-up house today which has a wooden frame and a brick veneer. Some
back you would see 50 to 60 hod carriers in the large developments going up. What do you see today? An uplift truck, which comes in, and there is one laborer on the scaffold shoveling it out onto the boards. The people who say that the building industry has stayed back in the horse and buggy days do not know what they are talking about.
If we have reduced these man hours of employment, I would like to ask a question: Where has the cost increased?
Mr. DOLLINGER. Is it not because private industry is trying to exact an exorbitant profit on the construction!
Mr. Gray. That is right. It is like the prohibition days. The old legitimate saloon keeper went out of business, but a lot of people came into the bootlegging end. And that is what you have in the building industry.
Mr. POLLINGER. Would you not advocate today that because of the emergency, and we all realize we must build houses quickly if we are going to reduce this situation to normal conditions, that the Government should step in and do away with these excessive profits and start building on its own, if we cannot get private industry to do a job at a fair and reasonable price?
Mr. Gray. I think, as contained in this bill, that this goes a great step in that direction. We still protect private industry, the contracts are let to them, with proper competitive bidding and proper management and supervision by the Government, with Government aids, and we will correct that situation.
Mr. DOLLINGER. Do you not also think that if the Government agreed to step in and take over that private industry would come down in its prices and build a house at a fair and reasonable price?
Mr. Gray. I am a little fearful of that if we have to go that far in the building industry, there are so many other segments of our economic life that we would expect the Government to take over completely. What this bill asks, as I see it, is to take care of a segment of our society in relation to housing, that private industry over a