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Mr. MULTER. Surely they know whether the slums exist in their areas.

Mr. WEST. They do.

Mr. MULTER. And they also know whether or not they have any finances with which to remove the slums.

Mr. West. I do not know about your town, I know about two or three around where I live. I do not know that the mayors know too much about where the slums are. I have testified before this committee once before and got in trouble back home in politics.

My statement is this, and we point with some degree to Indianapolis, because I think they are on the way to do a job. As I understand it, the Indianapolis Redevelopment Commission, headed by a realtor there, has accumulated now for some 5 years a special tax fund of onetenth of 1 percent, I believe it is—at any rate, several million dollars a year—and they intend to redevelop what are slum areas, and then resell all these areas and get out of business and go from place to place, with the general city planning on these areas. Somewhat like your off-street parking authority operates here in the District. That is the city of Indianapolis. They do not call on the State of Indiana.

By the way, 3 years ago, that authority did not even exist. They never even thought about it.

In my own town we have had on the statute books for 30 years health and sanitation laws which have never been enforced until recently. I do not say they are being enforced any too rigidly now, but at least they are making a try at it. Obviously, if you take out of circulation 7 a unit now, which is a slum unit, you have to relocate those people somewhere.

Then we have this other broad problem. Any number of our cities are planning these free ways through them. We give those people 4 or 5 days' notice and kick them out.

Mr. MULTER. Where do you put them?
Mr. West. They put themselves.
Mr. MULTER. Where do they go!

Mr. WEST. The same place people always went when they were dispossessed and had to find some place to go. I do not know where they go. I will say that the mayors and councils who put them out do not provide a place to put them.

Mr. MULTER. You say in 1940 there was no housing shortage. I can see where they would go then. Where do they go today?

Mr. WEST. The same place I want to go when I buy a suit of clothes from somebody who wants to sell it. I was riding in Washington sometime ago with a taxi driver, and he was fussing about housing. I said, “Why don't you buy some sheeting and 2 by 4's and some nails and roofing and build you a house?” He never thought of it. By the way, you provided a plan for him. He was a GI, to get a 100-percent loan, without putting up any money.

Mr. MÚLTER. I think if you did not have the finances to provide that suit of clothes you would go without it. That is what the people who need housing are doing. They do not have the money and they are doing without.

Mr. WEST. That is getting back to the discussion of the degree of poverty in this country, Mr. Chairman. That is a long discussion.

The CHAIRMAN. Thank you, Mr. West. The bells summon us to the floor.

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That concludes the testimony.

Before we leave, Mr. Clerk, there has been some criticism made of the administrator of public housing in Louisville. I have here a telegram which I wish you to read for the record.

The CLERK (reading): Have just read newspaper account of testimony of James P. Bourne, president of the Louisville and Jefferson County Home Builders Association and also previous testimony of Louis Quin. Its executive secretary, Mr. Bourne suggested that "before you consider expanding this program you might thoroughly investigate operation of existing projects and possibly Louisville would be a good place to begin.” As chairman of the Louisville Municipal Housing Commission I most heartily invite you to make the fullest possible investigation of all Louisville public housing projects; such investigation will, we are confident, not only' reveal fully the distortions in the testimony of Messrs. Bourne and Quin but will con. clusively show that Louisville public housing is filling an urgent need for additional public housing in Louisville.

HARRY W. SCHACTER, Chairman, City of Louisville Municipal Housing Commission. Mr. BUCHANAN (presiding). The committee will stand in recess until 10 a. m. tomorrow morning, at which time we will hear Mr. Morton Bodfish.

(The following statements were submitted for inclusion in the record :) NATIONAL ASSOCIATION OF MUTUAL SAVINGS BANKS,

New York, N. Y., April 26, 1949. Hon. BRENT SPENCE, Chairman, Committee on Banking and Currency,

United States House of Representatives, Washington, D. C.

(Re H. R. 4009.) DEAR CONGRESSMAN SPENCE: There is enclosed herewith a statement with respect to H. R. 4009, submitted on behalf on the National Association of Mutual Savings Banks.

For the convenience of the committee, 30 additional copies of the statement are also enclosed.

It is respectfully requested that the enclosed statement be submitted to the Committee on Banking and Currency and that it be made a part of the record in the hearings on H. R. 4009. Very truly yours,

OLIVER & DONNALLY,

General Counsel. By HARRY E. PROCTOR.

STATEMENT ON BEHALF OF THE NATIONAL ASSOCIATION OF MUTUAL SAVINGS BANKS

WITH RESPECT TO H. R. 4009 This statement is submitted on behalf of the National Association of Mutual Savings Banks. Our organization represents the savings banks of the country, which are mutual institutions, operating solely for the benefit of their depositors and all their assets belong to their depositors. They are 531 in number, operating in 17 States, primarily located in the New England States, New York, New Jersey, and Pennsylvania. They have a total deposit liability of more than 18 billion dollars and have assets of 2012 billion dollars. They are traditionally known as depositories for small savers. These mutual savings banks are actively engaged in the making of home mortgages in their respective territories. This mortgage investment activity has increased tremendously since the end of the war and especially since the initiation of the veterans' home-loan guarants program and the various liberalized programs under the Federal Housing Administration.

TITLE I-SLUM CLEARANCE This statement is directed to the provisions of H. R. 4009. We in the savings institutions are wholeheartedly in favor of title I of this bill which is known as the slum-clearance title and we urge its enactment with only slight amend. ment.

Private enterprise cannot do this job, because it usually requires the exercise of the power of eminent domain and only Government can furnish the financing necessary to bridge the gap between the cost of acquiring and clearing the land and its value after clearance. It is our understanding that this is the primary purpose of title I.

Several of the earlier slum-clearance measures proposed a system of annual contributions for the purpose of absorbing the write-off necessary for this kind of project. This bill, as was the case in S. 866, as passed by the Senate last session, has made a major improvement in the system of paying for the loss represented by the excess of the cost of the project over its reuse value. The present bill provides that the Federal Government will finance its share of slum clearance and urban redevelopments through capital grants rather than through the expensive annual contributions method.

Our only suggestion for improvement of this title is made for the purpose of guaranteeing a substantial local interest in the project. Our suggestion is that local government be asked to bear one-half of the cost of slum clearance, instead of one-third as proposed in this bill. It is our opinion that a one-third contribution may not be suflicient to deter local governments from proposing projects which are not socially justifiable.

TITLE II-LOW-RENT PUBLIC HOUSING We recognize the need for adequate housing for the underprivileged and are not opposed to public housing, provided its use is restricted to the underprivileged.

The new safeguard in section 201 which makes it mandatory that over income families be evicted would be a decided improvement in the law and should serve to remove much of the bad reputation acquired by public housing in recent years. The administrators should appreciate being taken off the spot in which they are placed whenever any substantial degree of discretion is left with them in connection with determining whether or when individual tenants are to be evicted. One of the most potent and valid criticisms of the public housing program has been that the program was not effectively limited to those who really need public housing. You, of course, are aware that there have been many comparatively high income families, including those who make as much as $5,000 or $6,000 a year who have occupied public housing built for the underprivileged. In times of housing scarcity, this presents a particularly acute problem inasmuch as it is very difficult to evict anyone who earnestly claims he has no other place to go. But unless these high income families are expeditiously evicted, the validity of the whole public housing program and the sincerity of those who administer it are brought into question in the public mind. If enacted and enforced, we believe that the provisions of title II should go far in removing if not completely preventing, these abuses.

Our first major suggestion for improvement of title II is that the public housing program be initially set up on but a 2- or 3-year basis pending the completion of the 1950 housing census. This bill would authorize the construction of 150,000 units of public housing for a period of 7 years making a total of 1,050,000 public housing units in all. There were started in this country last year about 930,000 units of private nonfarm dwellings. A recent forecast by the Bureau of Labor Statisties indicates that the private production of home nonfarm units for the year 1949 will be somewhat less than the production in 1948. To forecast our public housing needs into the future for a period of 7 years is to place the whole program in a strait-jacket. It may be that we shall need more of this public housing and it may be that we shall need less. We urge that this provision of title II be amended to authorize in the years 1949 and 1950 the construction of public housing units to the extent of 10 percent in each year of the total starts by private means of nonfarm housing units produced during the year 1948.

On the basis of the housing census provided for in section 507 of this bill and under the authority contained in section 301 of the bill, the Housing and Home Finance Administrator would report to Congress the findings of the housing census and his estimate of all of our housing needs including those of public housing. We believe that this practice would give the elasticity necessary for the proper gaging of our public housing needs.

Our second major recommendation for amendment to the public housing provisions of the bill bears on the local participation in the rent subsidies. It is only fair, we believe, that the communities which derive the principal benefits from the housing should carry a substantial portion of the cost of providing it. In any case, it will not be possible for the Federal Government to provide public housing in all urban centers. As written, we believe these provisions contain inadequate requirements for substantial participation in the subsidies by the local governments. We suggest that the local governments be required to bear one-half of the subsidies. If the localities are required to back their requests with their cash, there will be automatic assurance that fewer badly conceived proposals will be submitted. We believe that those communities which do not obtain the benefits of Federal grants will be better satisfied if they know that the communities which have benefited have borne a substantial portion of the cost.

Our third comment on the public housing provisions of the bill relates to the use of the expensive annual contribution method of subsidy. In line with the method used in title I, relating to slum clearance, we suggest that all Federal subsidies be on a capital grant basis. The real objection to the annual contribution plan is that the fact that $85,000,000 the first year, the $80,000,000 a year for the next 3 years and the $73,000,000 for the fifth year eventually over a 40-year period, involves a total cost of $16,000,000,000. Attention should properly be focused upon the $16,000,000,000 total and not upon the annual figures of 87. SO and 75 million dollars. Furthermore, the longer the period the larger in essence is the interest factor which is involved. In other words, the less the actual housing per dollar of expenditures. The capital grant method involves a cost about half as great as the annual subsidy precedure. That is to say, over the period almost twice as much housing can be constructed with a given dollar of expenditure. The capital grant method has the further advantage that it faces the problem squarely instead of seeking to defer part of it to the fuiure. In so doing it adopts the pay-as-you-go policy which enables the Nation to know at any one time just where it stands financially.

Our fourth and last suggestion for modification of title II of H. R. 4009 is ad. dressed to the provisions governing the per room construction cost limitations in section 203. This section first calls for a $1,750 per-room ceiling, but then permits the Administrator to increase this cost by $750 per room, making the real maximum $2,500 per room. This is an excessive figure for public housing. In one of the highest construction cost areas in this country—that is New York City--we find that in 14 public housing projects presently under construction, or pending construction, the average per-room cost of construction is $2,013.

Under FHA 608, private enterprise has demonstrated that housing can be, and is, being produced complete, including land and all costs, at $9,000 on an average 41/2-room unit or $2,000 per room, whereas under this bill, with $2,500 per rooni, the public housing authorities would be provided with $11,250 to produce the same average 442-room unit, excluding land, demolition, and nondwelling facilities. There would appear to be no reasonable or justifiable basis for providing for higher unit costs for public housing than for FHA insured private housing. We believe that the determination of realistic cost limits is of utmost importance in connection with this bill. We believe the committee should secure from the Federal Housing Administration the cost figures of all commitments issued by them since January 1, 1948, as a guide in setting a realistic cost limit figure in this bill. We further believe that in setting such cost limit it should not exceed the effective cost limit which would give the private builder a full 90 percent loan under the 608 provisions of the National Housing Act. The foregoing views are respectfully submitted for your consideration.

NATIONAL ASSOCIATION OF MUTUAL SAVIxGS BANKS,
By ROBERT M. Morgan,

Chairman of Committee on Mortgage Investment.

THE AMERICAN BANKERS ASSOCIATION,

Washington 5, D. C., Jay 3, 1949. Hon. BRENT SPENCE, Chairman, Committee on Banking and Currency,

House of Representatives, Washington 25, D. C. DEAR MR. SPENCE: There is transmitted herewith a statement of the American Bankers Association on H. R. 1009.

It would be appreciated if you would include this statement as a part of the record of the hearings of your committee on this bill. Very truly yours,

D. J. NEEDHAN.

STATEMENT OF THE AMERICAN BANKERS ASSOCIATION ON H. R. 4009 The American Bankers Association in considering the bills before Congress during the past 4 years, which would obligate the Federal Government to provide financial assistance for public housing, slum clearance, and farm housing, has consistently approached these legislative proposals from the standpoint of their effect, if enacted, on the immediate and future fiscal positions of the Government and on the economy of the country as a whole.

On February 25, 1945, the association submitted a memorandum to the Subcommittee on Housing and Urban Redevelopment of the Senate Special Committee on Post-War Economic Policy and Planning, in which the following principles were enunciated :

“(1) The major task of providing homes in the postwar period, and especially the encouraging of widespread home ownership, is a reponsibility that must be discharged through the usual channels of private enterprise. A public housing program should supplement rather than compete with this responsibility of private enterprise.

“(2) The primary responsibility for the elimination of slums and the improvement of housing conditions for the lowest-income groups must progressively be assumed by local and State governments. The responsibility of the Federal Government should consist primarily in assisting and supplementing the efforts of local and State governmental bodies.

“(3) In view of the unprecedented size of the Federal Government debt and the probable demands which will be made upon the building industry in the immediate postwar years, the volume of funds made available by the Federal Government for public housing purposes should be given most careful consideration. If a program of building public housing of any considerable magnitude should be undertaken primarily through the use of Federal funds, a double pressure would be exerted in an inflationary direction. Additional Government debt would further expand credit, and additional demands would be created for both labor and materials for building purposes at a time when the resources of the building industry will probably be taxed to capacity."

Subsequently, in its testimony before the Senate Committee on Banking and Currency on the Wagner-Ellendler-Taft bill, S. 1592, and on the Taft-EllenderWagner bill, S. 866, in the Seventy-ninth and Eightieth Congresses, respectively, the association pointed out that the Federal debt is tremendous, whereas State and local debt is relatively small; that the proposed loans and grants for public housing, slum clearance, and farm housing would increase the size of the Federal debt, ultimately adding billions to such debt and that the burden of this debt will have to be borne by the taxpayers.

In a statement on S. 866, submitted to the House Committee on Banking and Currency on June 3, 1948, the association contended that, “The proposals contained in this bill, particularly those for direct assistance in the form of loans and grants for slum clearance, public housing, and farm housing, should be considered in relation to the over-all fiscal policies of the Government. At a time when this country is embarked on an expanded defense program to cost many billions of dollars, and at the same time is committed to the expenditure of more billions for foreign economic aid, most careful consideration should be given by Congress to any proposals which would increase the burden of the public debt."

Our position on the former bills as set forth above, we believe, applies with equal force to the proposals contained in H. R. 4009. With respect to public housing alone section 205 of H. R 4009 authorizes the United States Housing Authority (Public Housing Administration) to obligate the Federal Government to an expenditure in the aggregate of $16,000,000,000 in annual contributions to local public housing agencies over a 44-year period commencing July 1, 1949.

Also under the slum-clearance provisions of H. R. 4009, grants aggregating $500,000,000 over a 5-year period would be authorized. Under the farm housing provisions of the bill the Secretary of Agriculture would be authorized to make commitments for contributions aggregating $50,000,000 over a 10-year period and to make grants aggregrating $12,500,000 over a 4-year period.

The annual contributions under the public housing program, the grants under the slums clearance program and the contributions and grants under the farm housing program, totaling $16,562,500,000, would have to be provided by annual appropriations.

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