Letter to the Speaker on the Housing Bill.
My dear Mr. Speaker:
I am very pleased to learn that the House plans to take action on H.R. 4009, the Housing Act of 1949, at an early date. This means that we are close to success in the five-year struggle to enact housing legislation that will strike at the core of the Nation's critical housing problem.
I have been shocked in recent days at the extraordinary propaganda campaign that has been unleashed against this bill by the real estate lobby. I do not recall ever having witnessed a more deliberate campaign of misrepresentation and distortion against legislation of such crucial importance to the public welfare.
The propaganda of the real estate lobby consistently misstates the explicit provisions of the bill, consistently misrepresents what will be the actual effect of the bill, and consistently distorts the facts of the housing situation in the country.
I know that most of the people engaged in the real estate business and the home building industry in this country are decent, respectable, honorable citizens. But there is a little group of ruthless men, claiming to speak for the members of these industries, who spend their time attempting to block progressive housing legislation. By letters, circulars, and paid advertisements, they continue to spread their misstatements, hoping that people will eventually accept them as true.
I am extremely anxious that when the members of the House vote on this important legislation they should be aware of the false and misleading nature of this propaganda. Consequently, I ask the privilege of calling to their attention some of the more flagrant claims of the real estate lobby and the true facts concerning these claims.
1. The real estate lobby claims that H.R. 4009 will cost the Federal Government 20 billion dollars.
This is an exaggeration of approximately 100 percent. The actual cost of the bill will be about 10 billion dollars, spread over a period of some thirty years.
The bill authorizes four programs--slum clearance, low-rent public housing, housing research, and aids to farm housing. Their respective costs are as follows:
a. The slum clearance program will authorize a total sum of 500 million dollars in grants to localities to assist them in wiping out slums and blighted areas and redeveloping those areas in a sound and healthy manner. This sum would be the total out-of-pocket cost to the Federal Government, except for administrative expenses. The bill will also authorize a 1 billion dollar revolving fund for loans to localities. These loans will be for a maximum period of 40 years, and will bear interest at the going Federal rate--approximately 2 1/2 per cent. Since these loans are to be repaid, with interest, this sum does not, of course, represent a "cost" to the Government.
b. The low-rent public housing program in H.R. 4009 will authorize Federal assistance for the construction of 1,050,000 housing units. These units will be constructed by private builders under contracts let by local public housing authorities, which are agencies of State and local government.
The construction cost will be financed through bonds issued by the local housing authorities and sold to private investors. The bill authorizes a revolving fund of 1.5 billion dollars for loans to these local housing authorities. It is expected that this authority will be used principally to support temporary financing of the projects during construction. Any loans so made are to be repaid to the Government with interest.
The major Federal assistance provided by the bill will be in the form of annual contributions to local housing authorities in amounts required to make up the difference between the rents which low-income families can afford to pay and the costs of operating and maintaining the projects and retiring their bonded indebtedness. The bill establishes maximum limits for such annual contributions, when all the construction has been completed, of 400 million dollars per year for 40 years. In fact, however, experience with public housing projects built under the United States Housing Act of 1937 has demonstrated that the actual contribution required on the average will be less than the maximum which must be authorized. A fair estimate of the annual contributions which will actually be made is 75 to 80 per cent of the maximum, or about 300 to 320 million dollars per year. Furthermore, annual contributions will probably be required only for 29 to 33 years, on the basis of the interest rates and amortization schedules expected for local authority bonds in the investment market.
The total cost to the Government of the low-rent housing program is therefore estimated at 9 to 10 billion dollars, plus administrative expenses, over a period of 29 to 33 years. Thereafter, the financial obligation of the Federal Government will cease, and the low-rent housing projects will continue in local ownership and operation.
c. The housing research program authorized by the bill should not cost more than 5 million dollars a year in the foreseeable future. The exact cost will be determined by the amount annually appropriated by the Congress. The objective of this program, of course, is to make possible reduced building costs and improved housing standards whose value will be many times the Federal expenditures involved.
d. The farm housing program in H.R. 4009 will authorize a loan fund totalling 250 million dollars. Loans made under this authority, to finance the construction or improvement of farm housing and buildings, will be repaid, with interest. In addition, for farmers whose incomes are now insufficient to guarantee repayment of such loans, but whose farms can be made self-sustaining through a program of farm improvements, the bill authorizes the Secretary of Agriculture to meet part of the debt payments by making contributions for not more than 10 years and totalling not more than 50 million dollars. Furthermore, to assure a minimum standard of decency for farmers on sub, marginal farms which cannot be made self-sustaining, the bill authorizes $12,500,000 in grants to finance minimum repairs to farm houses and buildings. Thus the actual cost to the Federal Government of this farm housing program, except for administrative expenses, is expected to be not more than $62,500,000 over a period of some 10 to 15 years.
These facts demonstrate the inaccuracy of the real estate lobby's propaganda. In order to reach their "estimate" of total cost, they assumed the maximum possible annual Federal contributions for low-rent housing (which will not occur), they counted Federal loans as "costs" (when in fact they are to be repaid, with interest)--and on top of that they added on a few hundred million fictitious dollars for which the bill offers no shred of support! This is a shocking example of an attempt to deceive the public and to stampede Members of Congress. I am confident that the House will not be misled by such tactics.
The real issue involved in this bill is whether the Federal Government should provide practical, workable and carefully limited assistance in improving the standard of housing of the American people and relieving the conditions of slum housing in which too many of our families are now forced to live. Of course this will cost money--and the facts on the cost are stated above. When the actual costs are balanced against the potential benefits to the welfare--and indeed the national security--of our people, I believe there can be only one answer--to enact this legislation. Apparently the real estate lobby is of the same opinion, since it refuses to debate the bill on its merits, but instead is resorting to false propaganda.
2. The real estate lobby claims that each low-rent public housing unit will cost more than $15,000.
The facts are that the amount of money provided in H.R. 4009 to build 1,050,000 dwelling units will permit an average cost, at the most, of $8,465.
The plain language of the bill requires the utmost economy and simplicity in construction standards consistent with providing decent and durable housing. Naturally, the construction costs will vary among different parts of the country, and the bill provides a normal ceiling of $1,750 per room. In most parts of the country this amount will be sufficient, but in order to permit construction in a few of the high cost areas, where the need is equally great, the bill permits a maximum cost per room of up to $2,500.
The real estate lobby seized this upper limit figure, multiplied it by five rooms, and added $2,500 for land and utilities, in arriving at its claim that all the units built would cost $15,000. Even at today's construction costs--and costs are dropping--few housing projects, if any, even in the highest cost areas, will require an expenditure of this amount per unit. Over most of the country the figure is utterly absurd. A representative group of the private contractors who had built housing projects under the 1937 Act were asked early this year what the current cost of duplicating these projects would be. Their replies ranged from less than $1,250 per room to $2,250 per room, and two-thirds were below $1,750 per room.
There is no foundation, therefore, either in the bill or in the current costs of building, for this charge by the real estate lobby.
3. The real estate lobby claims that "there is no longer any pretense that public housing is for the poor."
The facts are that H.R. 4009 requires local public housing authorities to give preference for admission to public housing projects to low income families having the most urgent housing needs. Furthermore, the bill requires the local authorities to establish upper income limits for admission to public housing projects--income limits calculated to admit only families whose incomes are at least 20 per cent below the income needed to pay rents charged in that locality for adequate private housing, whether new or old. These income limits will vary among different localities; at the present time five-sixths of the local housing authorities have maximum limits of $2,200 or less.
Thus only families of low income can be admitted to public housing projects.
Furthermore, the bill requires local public housing authorities to re-examine tenants' incomes each year, to adjust rents upward where appropriate, and to require families to move whose incomes have risen to a point where they can afford adequate private housing, so that additional low income families can be admitted to the project.
Actual experience in the present low-rent public housing projects, built under the 1937 Act, demonstrates that the bill will work in practice the way it is intended. In the first half of 1948, the average income of the families admitted to the present lowrent projects was $1,480. The average family income of all tenants in these projects who were eligible to remain was $1,590. These figures are well below the average of the lowest one-third of city and town family incomes.
Under these circumstances, it is obvious that "the poor," as the real estate lobby calls them, are precisely those who will benefit from public housing.
In recent years a number of families have been permitted to stay in public housing projects even though their incomes rose above the upper limit. This was done in some cases in order to provide housing for war workers, in other cases because of the acute housing shortage since the war. As a matter of fact, an Act of Congress was in effect from July, 1947, until August, 1948, prohibiting eviction of such families where hardship would result. Since last August, many of these families with over-limit incomes have been moved out, and by the end of this year, all ineligible families will have received notices to vacate.
The false claim that public housing will not benefit low-income families demonstrates the unpleasant "dog-in-the-manger" attitude of the members of the real estate lobby. They know that the private housing industry is not supplying, and cannot in the foreseeable future supply, adequate housing for low-income families. They know that H.R. 4009 specifically provides that public housing will be provided only for those with incomes at least 20 per cent less than that needed to afford private housing. Knowing all this, they assert a plain falsehood in their effort to prevent us from doing what is necessary to provide housing for low income families. I am glad to know that more and more members of the building industry are repudiating the blind and selfish dictation of the real estate lobby.
4. The real estate lobby claims that "public housing will not be used to clear slums, but will be built in areas where it can compete with private housing."
This claim is an excellent example of distortion of facts to confuse the people. I have already pointed out the provisions of the bill which insure that public housing will not compete with decent private housing, no matter where it is built. It will, of course, compete with slum housing--that is its purpose.
As to the claim that public housing will not be used to clear slums, the facts are as follows:
H.R. 4009 will authorize the first direct large-scale attack on slum areas we have ever had in this country. It provides a practical, realistic method for clearing blighted areas in cities and towns throughout the country.
When those slums are cleared away, it may be best to build public housing where they had been; it may be best to build private housing there; it may even be best not to build anything there, but to use the land for parks. In any event, the local community will decide what shall be done in each case.
The purpose of the public housing provisions of the bill is to provide adequate housing for low income families who are now forced to live in substandard quarters. Whether a public housing project is built in an area where slums have been cleared away or elsewhere in the city or town, families who lived in cleared slums have a first priority for admission to the project, provided they meet the income standard.
Thus, the bill does provide for slum clearance, and it does provide for public housing. But it does not, and should not, compel local housing authorities to erect public housing projects in every case exactly where the old slums were. To do so would obviously be ridiculous.
5. The real estate lobby claims that "the wishes of a local community will not be consulted but government housing will be imposed."
Nothing could be further from the truth. No slum clearance or public housing project can be initiated under the bill by anyone but a local agency, established under State and local law by the people of the local community. Before the local agency can request Federal assistance its proposals and plans must be specifically approved by the local city council or other governing body. The members of the local boards responsible for making plans, awarding contracts, supervising clearance or construction work, and operating the housing projects, are appointed not by Federal officials but by the mayors or governing bodies of the local municipality. The role of the Federal Government is very carefully restricted by this bill to furnishing technical advice and financial assistance, and assuring that the requirements of the law as written are faithfully observed.
The real estate lobby wants people to forget that for the past ten years we have had public housing projects of exactly this nature, in communities all over this country. The unpaid, public-spirited men and women who head the local housing authorities have been drawn from local business, professional, labor and farm groups-including, in many cases, members of the real estate and building industries. These men and women have been the first to testify that local wishes have been respected and local rights safeguarded.
This claim by the real estate lobby is an obviously false attempt to conjure up the specter of Federal domination, which is completely refuted by the plain language of the bill and by ten years of practical experience.
6. The real estate lobby, which last year cried that we should not construct new public housing projects because private builders were building everything that was needed, this year is arguing that we should not construct public housing projects on the claim that there is no longer any need for them.
Both claims are fallacious. Neither last year nor this year have private builders been producing houses to meet the needs of the low-income families who will be served by this bill. The average rent of private rental projects insured by the Federal Housing Administration in 1948 was $87.50 per month. This rent is clearly beyond the means of a family with an annual income of less than $4,000. Practically no private rental projects have been constructed to rent for as little as $60 a month--a rental which can be assumed, though with difficulty, by a family with an annual income of $3,000.
Two conclusions are inescapable. First, low income families cannot afford the housing that is being built. Second, it should occasion no surprise that the private building market for higher-priced housing is tapering off--it is easy to saturate the market for housing in this country at monthly charges of $87.50 or more. This is happening now, even though the housing needs of millions of low-income and middle income families remain unmet.
This claim by the real estate lobby is clear proof that many members of the private building industry are still looking backward to the days when the housing industry went through violent fluctuations--building as fast as possible for several years, then building hardly anything for several years. Those fluctuations contributed greatly to the boom-and-bust cycle of the 20's and early 30's.
Instead of trying to go back to those days, the private building interests should be doing everything they can to bring about a steady flow of home building and a steady improvement of housing standards, which will contribute to the steady growth of our economy. H.R. 4009 will help strongly to bring about the steadier rate of home building that is so badly needed. Instead of wasting their energies trying to block the bill, the spokesmen for the private building industry should be searching out ways to reach the great demand for housing among families of middle income for whom adequate homes are not being built now and who will not be aided by low-rent public housing. If they would do this they would find a tremendous and profitable market.
7. The real estate lobby even attempts to twist the local tax features of the low-rent housing provisions of H.R. 4009 into an argument against the bill.
From the beginning of public housing projects in this country, local governments have been required to make a contribution equal to 20 per cent of the Federal contributions. Cities and towns uniformly have chosen to make this contribution in the form of exemptions from real and personal property taxes. H.R. 4009 simply writes this practice into law, unless the locality is legally barred from doing so, in which case the local contribution may be made in cash.
In order that the public housing projects shall bear a fair share of the cost of municipal services, such as schools, streets, and so on, H.R. 4009 authorizes payments in lieu of taxes equal to 10 per cent of the rental income of the project.
These are sensible and time-tested arrangements for achieving a reasonable and proper local participation in the cost of the projects. The payments in lieu of taxes will not, and should not, be equivalent to full local taxes. The local government should make some contribution to the subsidy needed to achieve low rents. To contribute through tax exemption is the best means that has been found.
It is noteworthy that municipal officials do not oppose this tax exemption--in fact they strongly support it. It can only be concluded that the people who know most about the financial needs of our cities and towns, and who are honestly concerned with keeping their fiscal affairs on a sound basis, understand that the benefits to be obtained by the cities and towns from the provision of decent low rent housing under this bill are far greater than any costs which they will incur through tax exemptions or otherwise.
8. The real estate lobby claims that to provide adequate housing for low-income families will encourage indolence and shiftlessness and destroy thrift and initiative.
This is the hoary old chestnut that has been used as an argument against proposals to advance the public welfare ever since the Nation was founded. It was used against public education a hundred years ago. It was used against minimum wage laws fifty years ago. Apparently the real estate lobby thinks it still has some propaganda value, even though it has been disproved time and time again.
The plain fact is that thrift, industry, and initiative are encouraged, not discouraged, by clean and decent housing. It is among people who are forced to live in firetraps, in crowded tenements, in alley dwellings, that are found the highest rates of poor health, poor education, juvenile delinquency, and the other disabilities that sap energy and initiative, and result in heavy costs to the community. The provision of adequate housing for the people to be aided by this bill will be a long step forward toward a happier, more thrifty and industrious people in our Nation. Against this bill is the claim that it is ganda argument of the real estate lobby against this bill is the claim that it is "socialistic."
Insofar as this argument is intended seriously, it is false. H.R. 4009 will strengthen, not weaken, private enterprise. Private builders, operating under contracts, will construct all of the housing projects to be built under the bill. The requirement for a 20 per cent gap between the upper rental income limits for admission to public housing projects and the lowest rents at which adequate private housing is being provided, new or old, for rent or for sale, assures that there will be no competition between public housing and private enterprise. The local public housing authorities will sell their bonds on the private investment market. Under the farm housing program, loans would be made only to those farmers who are unable to secure credit from private sources on terms they can afford to pay. The research program authorized in the bill is specifically designed to enable the private housing industry to serve a much broader market through improved methods and lower costs.
I am sure, however, that this argument by the members of the real estate lobby is not meant seriously. They know better. And so do the many individuals and organizations who have studied the facts of the matter and concluded that the bill is desirable. The 24 Republican and 33 Democratic members of the Senate who voted for a comparable bill did not believe the charge of socialism. The many distinguished newspapers throughout the country who support the bill do not believe it is socialistic. The American Legion, the Veterans of Foreign Wars, the American Veterans of World War II, the American Veterans Committee, the Disabled American Veterans, the Jewish War Veterans, the Catholic War Veterans--all of them have seen through the charge of socialism and support the bill. So do the American Municipal Association and the United States Conference of Mayors. The American Federation of Labor and the Congress of Industrial Organizations support the bill. So do the National Conference of Catholic Charities and the Congregational Christian Churches. So do the League of Women Voters, the National Council of Negro Women, the National Council of Catholic Women and the National Council of Jewish Women. So do the National Grange and the National Farmers Union. And so do the many other outstanding organizations and individuals who have testified that this legislation is necessary in the public interest.
Yet the real estate lobby, shortsighted and utterly selfish, continues to cry "socialism" in a last effort to smother the real facts and real issues which this bill is designed to meet.
These attempts to mislead and frighten the people and their representatives in the Congress--these false claims designed to prejudice some groups of the people against others--these malicious and willful appeals to ignorance and selfishness--are examples of selfish propaganda at its worst.
But I do not believe the people of our country, nor their representatives in the Congress, will permit themselves to be deceived. The facts speak for themselves. The people know that the country needs a full-scale program to provide decent housing for low-income families, to eliminate slums, and to improve housing standards for the great bulk of the people.
This bill presents such a program--a practical and tested program. It is not, as some would have you believe, some new and foreign program to be fastened upon the backs of our people against their will. A similar program was authorized under the United States Housing Act in 1937. That program was carried out successfully and was widely accepted by the people. Projects were built in 268 cities and towns, located in 37 States, the District of Columbia, Puerto Rico, the Virgin Islands and Hawaii.
Some of these projects were, of course, located in the largest cities, since the need there was serious. But projects were also built in such cities and towns as Lakeland, Florida; Peoria, Illinois; Holyoke, Massachusetts; Portland, Oregon; Knoxville, Tennessee; and Brownsville, Texas, where the need was also serious. Of the 268 cities and towns in which public housing projects were built, 104--39 per cent--had less than 25,000 population in 1940.
When the war ended, applications for public housing projects were received from 357 towns and cities, in 37 States, even though the existing authorization for Federal assistance was exhausted. At present, 42 States have enacted legislation providing for the establishment of local housing authorities. More than 470 such authorities have been established. They are waiting for the enactment of this bill.
It is dramatically apparent from the vast public support for H.R. 4009 that the people know that this bill is a part of the long-range effort we must make to build toward a stronger economy, an increasing prosperity, and a happier and more secure citizenry in the United States.
I feel confident that the enactment of this legislation will greatly promote the general welfare. It will also prove of real benefit to those real estate interests that now oppose its enactment. To strengthen the whole fabric of our American society is to strengthen all its several parts.
Very sincerely yours,
HARRY S. TRUMAN
[Honorable Sam Rayburn, Speaker of the House of Representatives. ]
Note: For the statement by the President upon signing the Housing Act of 1949, see Item 157.
Harry S Truman, Letter to the Speaker on the Housing Bill. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/229572