Housing--a National Achievement

I

THE new decentralized public housing programme carried on by localities throughout the country with the financial assistance of the United States Housing Authority constitutes the first permanent attack launched in this country against one of the worst national disgraces confronting us — the slums of America. When an effort is made to raise doubts about this programme by attempting to confuse it with labor racketeering, as was done in the articles entitled ‘Housing — A National Disgrace,’ by Charles Stevenson, appearing in the December and January issues of the Atlantic Monthly, I welcome an opportunity to set forth the facts.

If Mr. Stevenson implies that subsidies for the rehousing of slum dwellers are made necessary because of real or alleged labor racketeering, then he neglects the experience of England, which has found it necessary to maintain and expand a subsidized housing programme very similar to the USHA programme despite the universally acknowledged freedom of England from the practice of racketeering.

If Mr. Stevenson implies that public housing in America has in any way facilitated real or fancied labor racketeering (racketeering, as he discusses it, seems to be synonymous with strikes of all kinds), then he fails to explain why the examples of this evil which he cites are drawn largely from the private construction industry, while most of his citations of the effective attacks upon this evil are drawn from the history of public housing by the Public Works Administration and the USHA.

If Mr. Stevenson implies that the rehousing of slum dwellers should be stopped until the last vestige of racketeering has disappeared, then his argument might as well be extended to include the construction of hospitals, schools, bridges, and every other form of public works.

But if the articles merely imply that the United States Housing Authority and the hundreds of local authorities cooperating with it should do their utmost, within the field of their operation, to combat real or alleged racketeering, then I heartily agree with the author. This is a responsibility which, as honest citizens and as public servants, the entire personnel of the USHA and all local housing authorities must assume. But the articles do not indicate precisely where any of us under the USHA programme have been derelict in this responsibility.

The USHA and the localities working with it want to perfect the record of sound and constructive labor practices. So does Labor. While this is being done, and before the millennium arrives, it is the essential function of the local authorities, aided by the USHA, to finance homes for those in the lowest income group with the social and technological machinery now at our disposal. That is the machinery which the private construction industry uses to supply homes for those in the middle and upper income groups.

Mr. Stevenson charges the USHA with ‘evasion.’ Before answering that charge let me say that the effort to tie the low-rent public housing programme and racketeering into one neat little package for destruction is one of the clearest examples of evasion and misrepresentation on record. One might just as well have linked the discussion of racketeering with the Federal Housing Administration, the Federal Home Loan Bank Board, any city or state doing construction work, or, for that matter, anyone building anything.

II

Now let us consider the specific criticism expressed in the articles.

First, the United States Housing Authority is accused of ‘concealment’ in writing off some of the construction costs of the PWA Housing Division projects in order to achieve low rentals ‘without informing the public.’

The establishment of rents on the federally constructed housing projects built by the PWA Housing Division and now administered by the USHA or leased to the localities has been based upon four successive statutes. To begin with, projects were built with funds made available for the purposes of the National Industrial Recovery Act and the Emergency Relief Appropriation Act of 1935. When it was found impossible to fix rents for these projects low enough to rehouse slum dwellers, the George-Healey Act was passed by Congress in 1936, and rents were fixed in accordance with its terms. Finally, in 1937, the United States Housing Act was passed, allowing further adjustments in rents based on additional experience in the problem of rehousing slum dwellers.

To-day the rents charged on the former PWA Housing Division projects result in a federal subsidy about equivalent in effect to the federal subsidy to be paid on the local projects under the new decentralized USHA programme. These subsidies, in magnitude and in method of application, are very similar (making allowances for differences in price levels) to the subsidies paid under the English programme for the type of slum clearance and rehousing that we are doing now. Their effect is to make decent housing — which otherwise could not be produced in New York City, for example, for less than $10.00 per room per month (excluding utilities) — available at about $5.00 per room per month (excluding utilities), and thus bring such housing within the reach of families otherwise doomed to the slums.

These successive adjustments, which have enabled the United States in five years to achieve an effective plan for the rehousing of slum dwellers which it took England twenty years to achieve, are the product of public acts of Congress, openly arrived at after public hearings. The whole procedure has been about as hidden from view as the Washington Monument.

Secondly, it is charged that the USHA is guilty of concealment because it has not announced that taxpayers will have ‘to contribute more than $2500 in rental subsidies for every $1000 worth of buildings.’ This figure is arrived at by taking the $28,000,000 which is the maximum amount that the USHA can contract to pay in annual subsidies to local housing projects under the present law, multiplying it by the 60-year period over which such subsidies are to be paid, and adding all local subsidies for the same period of time. In order to confound the unsuspecting reader with a really astronomical figure, Mr. Stevenson then applies the same method of computation to reach the conclusion that if the local programme, aided by the USHA, were expanded to rehouse immediately 65 per cent of the total population of the United States, the cost to federal and local taxpayers over the next 60 years would be $359,434,304,000!

In making this designedly terrifying computation, the critic errs on the side of false bookkeeping and disingenuous opposition to the cause of public housing. It is false bookkeeping to state in terms of a present cost the aggregate future cost of social benefits which will be paid for and enjoyed over a 60-year period in future. It is false bookkeeping to total up periodic future expenditures and reduce them to a present figure without making a commutation to allow for the interest value of money, as any accountant or actuary or purchaser of an annuity or investor in a trust fund knows.

And above all it is disingenuous opposition to the cause of housing to link the beginnings of a small housing programme with the cost that would be involved in doing presently a job more than 250 times as big as the job now undertaken. Let us suppose that in 1850, when public education was being subjected to the same kind of attacks that public housing now is, the whole estimated cost of public education for all the people during the 60-year period between 1850 and 1910 had been cited to scare people away from the novel idea of public education. Suppose that to-day a similar mathematical legerdemain were applied to estimate the cost of doing the full job over the next 60 years in the field of armaments, boll-weevil extermination, flood control, prevention of bovine tuberculosis, or any other of the items which appear in the Federal Budget. We should soon arrive at figures that would look like the distance from the earth to the farthest star.

Let us get away from stargazing and return to earth when we discuss the cost of the USHA programme. Under the present law, the maximum possible cost to the federal taxpayer is the $28,000,000 a year represented by the annual subsidies to the local projects. In the average community benefiting by our present programme, the maximum local cost in the form of tax exemption would deprive the city of only .002 of its annual tax revenue. Even this small theoretical loss is more than offset by the saving in municipal services due to the elimination of slum areas, and by the economic gains conferred upon business and the whole community by an enduring public improvement. It is my contention that the amounts above indicated represent a comparatively tiny sum for our nation to spend to house more than one half million slum dwellers and thus to set in motion a campaign to achieve a new standard for American housing.

As to what the public housing programme will cost in the distant future, no one participating in the programme assisted by the USHA ever dreamed of rehousing 65 per cent of the total population of our country. Our nation-wide housing programme is designed to help the lowest income third to achieve decent living standards. Experience in England and Sweden indicates that the eventual rehousing of 20 per cent of the population in decent homes with public assistance will so stimulate the development of private housing that the remainder, constituting the upper levels of the lowest income third, will be cared for.

Such a programme, when functioning in the distant future, would cost both federal and local taxpayers far less annually than the annual state and federal subsidies for roads and highway maintenance between 1929 and 1936. Such a programme would involve a theoretical rise in present local tax rates from the existing average of about 2 per cent to a new average of only about 2.1 per cent, without allowing for the dollars and cents savings in municipal services and the tremendous positive benefits of rebuilding our cities.¹

Thirdly, Mr. Stevenson charges the United States Housing Authority with evasion about building costs, alleging that our press releases state the ‘construction cost’ of the projects we assist but fail to disclose the ‘total’ costs.

One of the most important functions of the USHA is to make an analytical and businesslike breakdown of all the factors in costs. Without this there can be no rational comparison between the cost of public housing and that of private housing, because the ‘total’ cost of a public housing project includes many items of benefit to a city’s government, and to its social and economic welfare, which are practically never encompassed by a private housing development.

Table I, illustrative of the foregoing point, shows the estimated costs on the most recent group of local projects approved by the President, covering twelve developments to be built in seven cities.

The reader will note in the table a column devoted to the cost of slum buildings to be purchased and torn down. This represents an expenditure, not to create new housing for slum dwellers, but rather to rid a city of rotten buildings which are a blight upon its surface and a drain upon its resources. This admittedly desirable undertaking, while it enters into the ‘total’ cost of a public housing project, does not enter into the ‘ total’ cost of a private housing venture, simply because the speculative builder practically never performs the function of slum clearance — and that is why we have so many slums.

The reader will note also in the table a column devoted to the costs of nondwelling facilities. These include the costs of site improvements, preoccupancy charges, and certain administrative expenses. They also include the costs of adequate play spaces, community facilities, and other health-giving improvements. These last items are very necessary adjuncts to decent housing in slum areas, but, since they are not supplied by the speculative builder, they enter into the ‘total’ costs only of public housing projects.

TABLE I

III

A public housing development goes beyond the narrower objectives of a realestate venture and seeks to create a new community of contented citizens, integrated with the life of the city as a whole. In a public housing project the walls, the floor, and the ceiling do not constitute the whole job. Playgrounds, air and sunshine, neighborhood improvement, and the removal of slums and blight, are all included in the public benefits conferred upon the city and the state.

When subjected to this analysis, it is seen that the ‘ total ’ costs of local projects aided by the USHA will be economical and reasonable. Moreover, the table provides a basis for fair comparison as well as a basis for fair distinction between public and private housing costs. The estimated net construction costs per family dwelling unit for USHA-assisted projects, as shown in the table, are computed upon a basis of items identical with the items entering into the net construction costs for private construction.² The Bureau of Labor Statistics figures for the first ten months of 1938 show that in the cities listed in the table the average net construction costs on private dwellings ran considerably higher than the estimated costs on USHAassisted projects. The figures for private construction run as follows: Atlanta, $2879; Burlington, $3690; Houston, $3639; Los Angeles, $3344; Orlando, $4091. No such figure is yet available for Zanesville, and in Asbury Park only one building permit was reported.

These lower construction costs have been achieved not alone on the very latest projects. The USHA recently estimated the net construction costs for the first 51 local projects approved in 28 cities under our new programme, and compared these costs with the costs of private construction in the same cities.³ It was found that the costs for private construction average 24 per cent higher. And it must be borne in mind, in this connection, that the figures for local projects helped by the USHA reflect the payment of prevailing wages, the observance of fair labor standards, and insistence upon durable and safe 60-year construction — considerations which, to say the least, are not uniformly reflected in the figures cited for the cost of housing undertaken by private enterprise.

The objection may be raised that the above figures covering the cost of projects aided by the USHA are merely preliminary estimates made by the USHA. The answer is that, in the first eight developments on which the main construction contracts have been let, the costs in every case are lower than our preliminary published estimates referred to above. And it is generally conceded that, when government construction contracts have been awarded, costs can be determined within 5 per cent of absolute accuracy. As indicated by these construction contracts, the net construction costs per family dwelling unit are: New York City, $3345 and $2880 (two developments); Buffalo, $3537; Austin, $2283 and $2313 (two developments); Jacksonville, $2825; Louisville, $3013; Youngstown, $3095.

From the foregoing it is clear not only that the ‘total’ cost of local projects assisted by the USHA, taken item by item, will be reasonable and economical in terms of the comprehensive benefits which the projects will confer, but also that a comparison reveals that these public housing projects are being constructed with even greater economy than obtains in the private construction industry.

Fourthly, Mr. Stevenson’s discussion of land costs points out that Public Works Administration sites ‘cost as much as $4.30 a square foot in New York and have been correspondingly expensive elsewhere.’ Since the articles deal primarily with the present decentralized housing programme carried on by the localities with the help of the USHA, rather than with the past PWA Housing Division programme of federal construction and ownership, this statement, if unexplained, creates in the reader’s mind the impression that land costs under the new programme for which the USHA is responsible are correspondingly high. Nowhere does the critic feel under the necessity of pointing out that the USHA has set a maximum cost for local land purchase with USHA funds of $1.50 per square foot, from which it has deviated only in case of very substantial special capital donations by the localities. The average land cost per square foot for all of the 141 projects aided by the USHA and now under loan contract is less than 75 cents per square foot, and this includes a preponderance of relatively expensive slum sites.

Fifthly, the articles charge that the rents on the local projects assisted by the USHA when completed will be too high, that they ‘call for an average family budget of from $1293 to $1552, and which may go as high as $2358’ (italics mine).

The entirely hypothetical family budget figure of $2358 is obtained by calculating the highest possible income of any family that could conceivably be admitted into any local project helped by the USHA without violating the top limit set by Congress. The author then calls this the legal formulas’ ideal budget.’ It should be obvious that, when a general statute of Congress defines the uppermost limit of eligibility, it must cover every conceivable family, including one with fourteen children to support, and therefore is not indicative of the averages or even the maxima actually to be put into operation.

A truer view of the actual rents to be charged in local projects under the new programme is afforded by Table II, covering 51 projects in the first 28 cities with which the USHA signed loan contracts.

TABLE II

As the table indicates, four Southern cities expect to achieve average monthly rents well under $14 per family dwelling unit, serving families with annual incomes from $450 to $750. In these cities the median monthly rent paid in 1930, according to the census, averaged $19. Eleven Northern and 10 Southern cities are planning average monthly rents between $14 and $18, for income levels from $750 to $950. In these cities median rents, according to the census, averaged $22 in the South and $36 in the North. The remaining three cities, all in the North, will have average monthly rents of $18 to $22, serving a maximum average income level of about $1100. The census indicates that half the families in these cities have been paying less than $41.

It is important to compare these proposed rents with a Cost of Living Survey recently made by the WPA, which included 15 of the very cities already referred to. In each city, by field survey, questionnaire, and careful analysis, a ‘maintenance level budget’ was worked out. These budgets embraced the minimum requirements of an unskilled wage earner’s family in terms of the actual cost of standard food, clothing, shelter, and so forth, in his community. The budget was first developed for 1935, and later adjusted for 1937 prices. On the 1937 basis, the budget allowances for rents at the minimum ‘maintenance level’ were, with only one exception, higher than the proposed rents for the housing projects in the same cities. All in all, the proposed rents for the new projects average 16 per cent lower than the minimum budget allowance.

In summary, dwellings built by the localities with the assistance of the USHA will serve a proved and urgent need of those who live in the slums at rents they can afford to pay. They will serve many families on relief, because the rents will be lower than the rent allowances in many relief budgets, and because the income level of tenants will drop lower than the income levels of many on relief.

Viewed as a whole, Mr. Stevenson’s articles, while heavily documented with supposed facts and ponderous footnotes, are a manipulation of figures in an effort to sustain prejudices and preconceptions. It is not housing, but rather misinformation about housing, that is a disgrace, though happily not a national one.

IV

In conclusion, let me state in affirmative terms some of the accomplishments of the USHA and the localities during the first year of the new law.

The number of local housing authorities has grown from 46 housing authorities in 13 states to 220 housing authorities in 31 states, having jurisdiction over 60 per cent of the total urban population of the country. Thus substantial machinery has been established for administering a long-range, well-planned public works programme, on a decentralized basis, embracing an unprecedented degree of local initiative and local responsibility, devoted to the service of one of the country’s most basic and widespread needs, and combining recognized business soundness with profoundly humane objectives.

The USHA and the local housing authorities have coöperated in designing projects which will achieve the lowest rentals ever set in the history of decent housing, public or private, for our people in the twentieth century. Economies in construction have been achieved that compare favorably with the best achievements of private industry. A clear-cut practical programme, modeled upon the most successful public housing experience in the world, that of England, has been developed in this country in a field where a few years ago there were confusion and hesitancy and doubt.

In city after city the sound of the wreckers’ hammer is heard, sites are being cleared, the excavators are at work, and the superstructures are going up. Thousands of men who were idle last year are now working. Orders are pouring in to manufacturers for vast stores of building materials. The first projects will be ready for occupancy late next summer. Every month thereafter five thousand families will be moving from the slums into new and decent homes. By the beginning of 1940, this stream will reach ten thousand families, or nearly forty thousand persons a month.

The facts of the case as they are unfolding should enable the friends of housing to accept valid criticism with composure, and to withstand hostile and unfair attacks with complete confidence and equanimity. The results during the next few years will constitute the most eloquent testimony that the programme of slum clearance and low-rent housing is indeed a national achievement.