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permit the same tenants to remain in a building brought up to a decent minimum standard of safety and cleanliness.
I know you have heard testimony citing today's construction costs as prohibitive for the average income person and you have had contrary evidence bearing out the contention of business groups that home costs are proportionately below that of food and clothing. The Bureau of Labor Statistics and the Department of Commerce substantiate this statement. Two out of every five homes sold in 1947 were bought by families with incomes of less than $3,000; four out of every five were bought by families with incomes under $5,000 according to the Federal Reserve Board. Isn't it significant that 55 percent of all American families today own their own homes? Can any other nation in the world match this record!
The average cost of the more than a million homes built last year was less than $8,500. The average veteran who bought last year, according to the Veterans Administration, paid round $7,000 for a home with two bedrooms, a modern bath, an electric kitchen, and many other truly American innovations. Latest figures on savings deposits show the American public has over $160,000,000,000, an all-time high for per capita savings.
Do these figures suggest that home costs are too high? Do they indicate that a substantial number of people cannot afford other than public housing? I believe that you will agree with me that the besthoused people in the world do not need subsidized housing.
For a minute let us consider the cost of these 1,200,000 homes that were built last year. What other purchase by the American people approximated the full cost of this housing? Did you know that if the money spent in retail liquor stores last year could have been siphoned off to pay for housing, these new homes of 1948 would have been fully paid for within the 12-month period ? Department of Commerce records bear out this statement. I have used this comparison of figures merely to point up the situation. Not for a moment would I suggest that an American citizen be denied the right to spend his money as he wishes. But the fact remains that the money is available to provide adequate housing for everybody. Investment capital in rental housing is actually scared away by the threat of a Federal rental monopoly in socialized public housing.
Until the threats of large-scale subsidized housing and rent control are removed the investor and the builder remain uncertain of the future housing market. Certain it is that the builder will face a diminishing demand for homes built for private ownership with the assurance of higher prices for labor and material, new Federal taxes, and increased local property taxes to pay for public housing with its subsidized rentals and tax-exempt status. It is inevitable that the lower and middle-income groups, representing the great mass of Ameriacn home owners would be unable to afford the advantages of a home of their own. It is equally certain that the private investor will not build rental housing units when his competition is a federally owned and operated public housing project.
All of the evidence which has been submitted before this Congress by experienced men in this field, we believe, substantiates our position that Federal public housing will not built one more home for the American people. Already full available manpower in the building trades, and all production of the thousands of items that go into the
construction of a home are utilized in the present program by private enterprise. Federal competition will but curtail the supplies for builders, and create huge stock piles of unused materials because of the necessarily slow operations by Government. The competitive situation, affected as it is by the law of supply and demand, will bid up the cost toward further inflationary levels and must inevitably be passed on to the consumer, the buyer of a new home or the renter of a new apartment.
The experience of FHA has provided facts to show that multiple unit dwelling construction in today's market must necessarily bring a rental of about $70. The 20-percent gap provision of H. R. 4009 permits lowering this rental to approximately $56. How can you justify the construction of public housing which will cost well beyond the $9,000 per unit construction cost, including land, which is financed for rental through FHA insurance? Please bear in mind that the burden of taxes to carry the multibillion investment in public housing under H. R. 4009 must be borne by the owners of this private rental housing along with the small home owners who are building within the $6,300 to $7,000 figure outlined by FHA for a 90- to 95-percent insured loan.
We believe strongly in the principle of home ownership, gentlemen. I think you are in accord with this. We are in full agreement with you in our desire to see better housing provided for the American people. If public housing could possibly lead to the attainment of this idea, I am sure that the industry I represent would be wholeheartedly for it.
The record of American business initiative has established positive proof that it can do a better job of housing our people, in less time, for less money, without running the extreme risk to personal freedom and a healthy economy.
To summarize our viewpoint: We are opposed to H. R. 4009 because :
1. H. R. 4009 is like signing a blank check. This bill could easily become a 10-year long political weapon costing taxpayers $19,000,000,000. Once signed there is no provision for annual congressional review of the public housing subsidies by appropriations committees. Not included are the imcertainties of a huge bill for administrative costs. All appropriations committees would be without power to limit spending for 40 years for the full faith and credit of the United States would be pledged in the 40-year contracts.
2. The needy don't get public housing. It does not provide specifically that public housing will be for the needy and the low-income groups. All experiments thus far indicate that "preferred” tenants, with incomes above average, get the public housing The Government cannot affordd, even with subsidies, to turn new housing units over to the needy, the indigent and the residents of slums. The cost of land and demolition of present structures makes it inadvisable.
3. Socialized public housing will not build one more housing unit. American builders in a private-enterprise system are using full available manpower and materials now. The industry has made an alltime record in constructing more than 3,000,000 homes in 3-post war years. There are more rooms per person today than were available before Pearl Harbor.
4. Slum clearance is strictly a local affair and proper local en forcement of building, sanitation, and fire prevention laws will remedy the evil. Baltimore is proving this. Other urban centers can do likewise without 1 penny of Federal money.
5. Is it common sense for Government to build at $2,500 per room exclusive of land, when FHA rental housing is based on $9,000 per unit, with land? By reason of the existing provision each public housing unit could cost as much as $6,000 more than that permitted under insurance of rental housing.
6. American builders are now building homes for the lower-income brackets. They are attractive, well built, and feature modern comforts for every-day living. I am sure that that exhibit was well presented to this committee, Mr. Chairman, and I will not dwell on it.
With sensible long-term financing, plus a low down payment, it is not necessary for any steadily employed persons to live in subsidized hones and apartments.
7. The 20-percent-gap provision is a clear misrepresentation. Everyone knows that new rental housing under FHA 608 at presentday construction costs must necessarily bring $70 a month and up in rentals. A 20-percent-gap provision in the bill between the lowest limits of available new and existing private enterprise rental housing and the upper limits is a complete misrepresentation. The 20-percent differential would amount to $14 per month less, which means public housing could be rented for $56 a month and up. The difference must be paid by taxpayers. Present rent in private housing showed a median rent per family of $29.33 in 1948, according to the Census Bureau.
8. As many as 250,000 units per year could be built under this public housing bill. Private enterprise constructed more than 1,000,000 units of all types last year. Government witnesses have testified that the number of rental units in relation to the total number of units constructed represented 17 percent of the 1948 total. This means that about 170,000 rental units were constructed in 1948. Success of the housing bill means that there can be no private competition with the Government. It authorizes a volume of Government building equal to the entire national output of new rental housing production, and it gives public housing the tremendous advantage of being able to spend more per unit constructed and to rent at less than cost.
9. How local is Federal public housing? The Senate Committee on Banking and Currency report on S. 1070 says:
It [the bill] recognizes that the need for any kind of housing should be determined locally
leaves primary responsibility with the local communities But-how local is Federal public housing?
On March 21, 1947, John Sirois, secretary of the Massachusetts Association of Housing Authorities, wrote Senator Tobey the following, in part: (a)
we are conscious of the effect a national housing bill can have upon the family life of the Nation as well as that of our Commonwealth. It is something that should be carefully guarded in the draft of legislation which reaches the homes and family life of the Nation. (b) Heretofore the housing authorities
have had sad experience with the administrative policies of those who are in charge of housing and who possess ideologies foreign sometimes to our American way of life. (c) [S. 866)
fails to recognize local conditions and fails to recognize the rights and privileges of local bodies
freedom from the unwarranted administrative control of the Federal Public Housing Authority which has developed to such an extent that local action on practically every administrative detail of the management and construction of public housing is subject to review by the national agency.
(e) We do not feel that the Congress meant that the Federal Public Housing Authority should dictate every phase of the construction of our developments, how many rooms an apartment should contain, the size of the rooms, how many people should live in them, what type of hinges should be on the doors, nor the number, type, and conditions of the personnel to be employed by a local body.
There, in the words of a representative of the housing authorities themselves, you have some of the reasons why we believe that socialized public housing is un-American, is contrary to the Constitution of the United States, offers the threat of a socialized state, and is a menace to the American free-enterprise system.
Our system of individual planning delivers greater social and material gains to more of the people here than are enjoyed in any of the countries employing the imported systems put before the Congress by the administration.
Mr. Chairman and members of this committee, I want to thank you for this opportunity to present our side of the story to you for your serious consideration. I trust you will decide to protect the opportunity for home ownership in America by refusing to adopt this proposal to make the people tenants of the Federal Government.
Mr. Brown. Thank you, Mr. Gerholz,
Mr. WOLCOTT. I think there is one thing that should be in the record, if it is not already in, and that is the square feet of housing per capita which is available now as compared to that which was available in 1939-40. Does your association have that material?
Mr. GERHOLZ. Yes, we do have that information. There was a substantial increase.
Mr. WOLCOTT. I think there was some testimony in the rental hearings along that line.
Mr. SNYDER. That is correct. I do not have that figure immediately available.
Mr. Brown. You may supply it for the record.
Mr. SNYDER. I will be very pleased to supply it for the record. The present square footage record.
(The information referred to above has not been submitted.)
Mr. GERHOLZ. The increase of shelter, as a total net increase, figuring all the married couples, was 640,000. The total increase in habitable homes during that period, was 6,700,000 units. This also makes allowance for demolitions and fire losses. And remember, during most of that period, the industry was operating on a very restrictive basis because of the war.
Mr. Brown. Thank you, Mr. Gerholz. Are you through?
Mr. GERHOLZ. Mr. Chairman, I made some statements, and I have one letter here that I would like to include in the record. It is a letter from Cleveland.
Mr. Brown. Do you want to read the letter?
Mr. Geruolz. This is a letter addressed to Mr. Snyder. The situation we want to point out here is that with this kind of bill, frequently. a local public housing authority will move into an area and buy the exercise of its right of eminent domain, will declare an area of slums. where a majority of the occupants are opposed, of course, to that area. and I think this letter from Cleveland will point it out. [Reading :)
I have on previous occasion mentioned to you my experience and observation with respect to the site acquisition of Valley View Homes, one of the several public housing projects in Cleveland.
In 1938 I was employed by the Cleveland Metropolitan Housing Authority to acquire this site which had been approved and authorized by the then publie housing authorities in Washington. The land aspect of the project was under the direct supervision of Mr. John Vichols, senior land appraiser of the United States Housing Authority.
The site consisted of 132 separate property ownerships, of which approrimately 77 percent were occupied in whole or in part by the record owners. A distinguishing aspect of this site was that bank ownership, which usually signifies previous foreclosure, was negligible. Delinquent taxes were low or noneIistent. Mortgage debt was relatively inconsequential-many properties being owned debt-free.
The neighborhood was made up of Austrian, Ukrinian, Russian, and other national of the ivic countries. Most of the people were communicants of the Greek Orthodox Catholic Church, who had established a cathedral in the heart of the Tremont area, of which the site was a part. Generally speaking ownership was in individuals born abroad who had migrated to Amerira because of the freedoms and opportunities here offered. Home ownership was no minor aspect of that for which they came. Their children attended local public and parochial schools. As one pair of two-fisted brothers said to me in behalf of their steel mill worker father, who had difficulty with his English, "Why, we read in the history books about what a great thing it is to own your own home-that's what the books said you could do in Amerira-that's why the old man came over here. We kids helped him build a shower bath in the basement so he could wash up when he came from the mill. We wild newspapers and helped him pay for that house, and he don't owe nothin' on it now. Now you come along and tell us the Government is going to take our house. Well, the old man and ma don't want to sell and we are going to fight you. Of course, we will get licked against the Government, but mathe we'll get our name in the history books."
We negotiated outside of court the purchase for a public housing venture about 88 percent of those ownerships. One attorney secured representation on a contingent basis of most of those who held out.
During the 14 to 16 weeks that I spent on that acquisition I almost lived with those people. I had received the endorsement of their priest. I was invited to two or three weddings of their young people. I sent flowers to a funeral or two. I broke humble bread with them in their clean little kitchens,
About a year and a half after it was all over, I had occasion to visit in the neighborhood. I was told that 11 of the old people whose homes I had purchased had since died. Ir informant then went on to say, "Mr. Morris, they just couldn't take being put out of their homes and having to move from a neighborhood they loved, where they maintained their so-alled national hones, where they continued to preserve the colorful dances and folk songs, and wear the festive garments they had brought from the old country. The just couldn't take it."
When it was half done I began to be convinced that the whole thing was wrong. Sure it was a tough neighborhood-it eren had one or two representatives down in the State penitentiary for manslaughter. True, sometimes these kids gare the police a headache, but how could a neighborhood where 77 perrent of the