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SMEARING THE AMERICAN CONSTRUCTION INDUSTRY

The second line of propaganda has been creation of the myth that the American construction industry is backward and incompetent. This charge seems strange when one reviews the industry's magnificent achievements-its Hoover Dams and Rockefeller Centers, the finest school and hospital and institutional buildings in the world, the best highway system of all history, the most efficient factories, and the world's most comfortable and convenient houses. The industry which builds the assembly plants and constructs the highways is just as up to date as the industry which makes the passenger cars and trucks. The industry which designs and builds the atomic-energy plant is just as up to date as the atomic bomb.

The rest of the world acknowledges American supremacy in construction know-how. During the war the British and Russian Governments sent to this country official commissions of architects, engineers, and builders to inspect our outstanding structures and to learn all they could about the way we do things. At the present moment, representatives of 11 American engineering and contracting firms are surveying Iran, having been engaged by the Government of that country to prepare a program for its industrial development. American designing offices and building companies are busy on projects in many countries throughout the world. American building materials and equipment are in demand everywhere. Many manufacturers own and operate foreign subsidiaries for production and sale of Americantype products.

. During the war and post war years the home-building division of the construction industry made outstanding strides in catching up with the technical progress of the rest of the industry.

In the evolution of modern construction methods it was natural that house building should lag somewhat behind the rest. Modern construction and modern design stem from the nineteenth century developments of steel and reinforced concrete and the safety elevator, innovations whose immediate application was to large-type structures. While there were in the past opportunities for large-scale housing developments, these did not assume major importance until we got the enormous movements of population to metropolitan cities and their suburbs. This change created what may be called mass markets for housing, still localized but frequently large enough to justify the use of construction methods formerly applied principally to other classes of projects.

Today's home builders are just as up to date in outlook and methods as are the designers and builders of other types of structures. Their national association is one of the largest in the entire industry and one of the most progressive. If there is no more price inflation and if home building is kept free from undue Government interference, private liome builders can be counted on for steady improvement of their products and reasonable reduction of costs.

In technical and managerial competence, construction is outstanding among American industries. There is no structure a rational mind can conceive for any purpose that the American construction industry cannot build well and speedily. It builds more structures, a wider variety of structures, and better structures than do the builders of any other country.

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The construction industry serves the American people and their economy by producing all their physical facilities for manufacturing, trade, transportation, communication, education, public health, religion, recreation, and daily living. Rendering adequate service, the industry must possess the utmost versatility, resourcefulness, flexibility. It must be organized in a great variety of ways, and not according to theoretically simplified patterns advocated by the economic planners. Even its seeming inconsistencies and complications are born of the complexities of the unregimented society it serves.

The construction industry's operations are so interwoven in the fabric of the American economy that one cannot regiment or constrict or destroy the private construction industry without ultimately destroying the free enterprise economy. One is strongly led to suspect that among the vociferous critics of the construction industry are some who know that successful attacks upon it can undermine the whole fabric of free enterprise.

GLORIFYING GOVERNMENT SPENDING

For 16 years, 19:31 through 1946, the Federal Government operated on a deficit basis. In that period it spent 453 billions of dollars, while it collected only 2081/2 billions in cash revenues. The remaining 2411/2 billions the Government spent consisted of I O U's.

That kind of spending made everybody feel rich, led candidates to promise vast social benefits out of the public treasury, made the people think that the Government's financial resources are unlimited and that Government can do for them many things they cannot do for themselves. Deficit spending created the illusion that benefits lavishly bestowed by Uncle Sam do not cost anything.

This housing bill would authorize:

1. An increase of $1,950,000 in the already staggering Federal debt for creation of loan funds.

2. Commitments for slum-clearance grants of $100,000,000 a year for 5 years.

33. Commitments for annual contributions to public housing projects of $100,000,000 annually for 40 years.

4. Contributions and grants to farm families aggregating $17,500,000 a year for 10 years.

If Congress authorizes these and other proposed social program expenditures, adding vast future commitments to the Nation's already huge budgets for defense, foreign aid, interest on the public debt, and increased expenses of ordinary Government services, we will again have deficit spending, inflation, public clamor for controls, and, ultimately, national insolvency.

WHO IS BEING SOAKED?

Vast numbers of people have been led to think such programs are paid for by soaking the rich. Under the current realities of the Federal budget that cannot be done.

In 1948 the people with incomes of $100 a week or more earned an aggregate total of 29 billion dollars. The Federal Government alone collected 12 billion in taxes, not to speak of the additional 13 billion

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dollars collected by State and local governments. The Federal Government soaked everybody. The comparatively few who did not pay income or pay-roll taxes, paid a whole set of pyramided taxes that were concealed in the prices of all the goods they bought.

This being the case, many self-supporting families in relatively low income brackets would, of necessity, be taxed to support the subsidy benefits provided in H. R. 4000. Title II of the proposed act provides annual contributions to local public housing authorities at a permitted average rate of $380.95 per year per dwelling unit. This figure, which would constitute only a part of the true rental value of the dwelling units to be built, is greater than the median of all rents paid by tenant families in the United States in the year 1947, which was $352 on an annual basis.

With its current mammoth budgets the Government is obliged to soak everybody. When its budget again becomes unbalanced and its debt again begins to increase, it will start soaking everybody's children and everybody's grandchildren. Even if there should be future Federal budget deficits, 40-year subsidy commitments pass society's current liabilities on to posterity. These are the ways governmentprovided utopias are paid for.

CAN GOVERNMENT REDUCE THE COST OF HOUSING

Experience shows that the one effective means of steadily reducing production costs is the operation of free competitive enterprise. Only cost factor in housing with which the Government can deal with directly and effectively is financing cost. This it has done by creating and operating the financing services of the Federal Home Loan Bank System and the Federal Housing Administration. Government can also render appropriate research and information services of signal assistance to private enterprise in cost reduction.

When it comes to direct intervention in housing production, government can inflate costs, can conceal costs, can pass excessive costs on to the taxpayers; it cannot reduce costs.

According to a recent report of the United States Bureau of Labor Statistics, the average construction cost of new privately financed nonfarm dwelling units started in the United States in the first 9 months of 1948 was $7,640, whereas the average publicly financed unit cost was $9,350. The difference may reflect generally higher standards in the publicity financed units.

Cost limits imposed in this bill for subsidized public housing units could permit expenditures as high as $9,500 for a 312 room unit, including land costs. Currently, the Housing and Home Finance Agency is spearheading a drive for production by private homebuilders of economy houses, to be sold with lots at $6,000 to $8.000.

Published figures on costs of public housing projects never include the overhead administrative costs of the Public Housing Administration in Washington, of its many regional and field offices, or of the local public housing authorities. Such administrative costs are very high. Senator Harry F. Byrd, of Virginia, has estimated that the average overhead cost of administering Federal grants-in-aid is 15 percent. Many programs cost more.

ANALYSIS OF THE BILL

Declaration of national housing policy: This declaration commits the Federal Government far beyond assistance to low-income families. It makes the Federal Government responsible for securing adequate housing for all the people. In line with other proposals, including the original draft of what was revised and enacted as the "Employment Act of 1946,” this declaration, if adopted, would be an additional step in the direction of transforming the American free society as we have known it into some form of socialism or statism.

The Federal Government, through creation of the home loan bank system and the mortgage insuring system of Federal Housing Administration, has created a modern home-financing system available to those potential home owners who desire to use the facilities offered. This is essentially banking legislation, sound in principle but in no sense implying an obligation to provide housing. It has made it easier for people to secure adequate housing for themselves.

No government, except a totalitarian state, can provide housing for all the people. It can provide housing for some people by taxing for this purpose those who have acquired their own dwellings without any government subsidy. The American people have been provided with housing, probably more adequately than any other people, largely by their own efforts. The efforts of individuals and families to acquire adequate and progressively better living accommodations. have provided one of the very strongest incentives to working and saving, incentives that would be greatly diluted by such a declaration of governmental responsibility as is contained in this preamble.

The declaration includes a section describing the proposed powers to be conferred on the Housing and Home Finance Agency which, taken with the context of the bill, point very strongly in the direction of dictatorial control.

Title I.—Slum clearance and community development and redevelopment: The bill quite correctly distinguishes between slum clearance and subsidized low-rent housing. Slum clearance, designated as urban redevelopment in most of the State laws enacted, is essentially reclamation of blighted real estate. A reclaimed area may be more appropriately redeveloped for automobile parking, recreational, industrial, commercial, high-cost residential or mixed use than for lowrent residential use, either subsidized or unsubsidized.

This economic activity by the Federal Government was introduced into schemes of postwar planners as a convenient vehicle for largescale Federal spending at the time when the prevailing theory about the postwar economy was that the Government would have to spend lavishly to maintain employment.

Thirty-three states and the District of Columbia have urban redevelopment laws, all of comparatively recent enactment. Redevelopment programs of substantial scope have made considerable headway in Baltimore and Indianapolis. A large program is ready to start in Chicago. One of the New York laws (the Redevelopment Companies Act) stimulated three important projects by the Metropolitan Life Insurance Co. None of these programs receive slum-clearance assistance from the Federal Government.

Many governors and some State legislatures have gone on record as opposing extension of Federal aid programs into areas that are the appropriate responsibilities of State and local governments. In November 1947, a policy declaration along these lines was unanimously adopted by a conference in Chicago attended by six senators, six congressmen and fifteen State governors, these fifteen governors comprising the special committee on Federal-State tax relations of the Governors Conference.

Federal subsidies for slum clearance should be vigorously opposed on several grounds. They invade the proper sphere of State and local responsibility, they encourage extravagance and waste, as well as subservience of local governments to the party currently in power nationally. They are likely to cost the taxpayers of a given locality many more dollars in Federal taxes than the dollars of benefits allocated to their community.

This bill provides subsidies (capital grants) amounting to $100,000,000 a year for 5 years. Other current proposals involve larger amounts. This bill also establishes a revolving loan fund, permitting the Housing and Home Finance Administrator to create a debt of $1,000,000,000 for the purpose.

An impartial expert study of the credit requirements of State and local governments might reveal that there is need for establishing a banking facility for State and local governments, perhaps some RFC or Export-Import Bank type of institution, if needed facilities cannot be provided by private finance. Experience in financing State and local public works during the great depression suggests that there may be such a need.

Proper study should indicate whether there is such a need, not necessarily for a slum-clearance revolving fund, but for any foreseeable legitimate credit needs, and what kind of institution would best take care of it. The kind of debt creating and lending authority which would be granted to the Housing and Home Finance Administrator under title I would be an unsound way to meet this need, if indeed the need actually exists.

Title II–Low-rent public housing: This title, an amendment to the United States Housing Act of 1937, provides for an extension and enlargement of the program started under that act.

The public housing record to date is one of extravagance, grave abuses and failure to meet the requirements of the law as Congress wrote it. In June, 1947, the subcommittee on Government Corporations Appropriations of the House Appropriations Committee reported that the Federal Public Housing Authority was overstaffed with high-salaried personnel, that the law's provision for elimination of one slum dwelling unit for every new public-housing unit built had been almost completely ignored, and that a very high proportion of public housing occupancy was by families with incomes higher than the maximum prescribed by law. A later Congressional committee report revealed that FPHA's financial records were in such bad shape that neither the General Accounting Office nor private accountants employed for the purpose could make a satisfactory audit of the books. Propaganda activities of FPHA were severely criticized.

In June 1948, the House Committee on Expenditures in the Executive Departments reported :

Your committee reports that, on the basis of the extensive investigations and public hearings, the evidence indicates that oflicials of the Public Housing Authority in the San Diego, Calif., area have been guilty of intense illegal propa

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