No Santa Claus in Housing
I
ECONOMIC realists are coming to the front in housing. They are gradually developing the idea that a practical home-building programme for the United States is neither a holy crusade to be conducted regardless of expense to present and future taxpayers nor a speculative building boom regardless of the costs of a future depression.
In the summer of 1937, some Senators entertained the notion that subsidized housing for low-income families should work toward a budgeted maximum cost, just as practically all housing does which is built privately for families who pay their own way. Perhaps some of these Senators had read a taxpayer’s letter in the New York Herald Tribune which pointed out that, while Uncle Sam was finishing up a model-housing experiment in Brooklyn to the tune of $8500 or more per subsidized family, private enterprise was selling new houses in the outskirts of Brooklyn to unsubsidized families at $4000 each. In spite of protests, these Senators had their way and wrote into the Wagner-Steagall Act (known since passage as the United States Housing Act of 1937) top limits of construction costs at $1000 per room in cities with less than 500,000 population and $1250 per room in cities of 500,000 and up. Still other sections of this new Act give evidence of a marked advance in understanding the practical problems of a public housing programme, particularly the provisions for local initiation of projects and the sharing of financial responsibility between Federal, state, and local governments.
Another group of realists, the privately organized National Housing Committee, brought out a report in December 1937 which sheds some light on the supposed housing shortage that was going to stimulate automatically a nationwide building boom, cause stocks of building-material companies to soar to all-time highs, and create a prosperity hitherto unknown. The National Housing Committee found, as the result of its studies, a statistical shortage of 2,000,000 homes. But it introduced into its studies a novel idea, a consideration of the incomes of the people who need the houses. According to the Committee, 21 per cent of the needed dwelling units are for families who could pay from $20 to $30 a month in rent; 69 per cent of the estimated shortage is in dwelling units to rent from $10 to $20 a month; and the remaining 10 per cent is for units to rent at less than $10 a month. In this study, values of houses for potential sale to prospective owners were converted to a rental equivalent and included in the figures here quoted.
In short, most of the needed housing is for income classes that have customarily occupied second-, third-, or fourthhand housing; the families who used second-hand Buicks until Fords, Chevrolets, and Plymouths were invented. We have arrived at that stage of our economic and social development reached somewhat earlier in most European countries, where we must either do a better job on housing than we have ever done before or witness, in a country which has nearly sixty acres of land per family, a continuous process of greater and greater overcrowding of people and families in the lowest third of the income scale.
II
There is, therefore, one central problem in housing: the problem of producing better houses for less money. This simple statement summarizes a very complex set of facts. Confusion in housing discussion has arisen in part from the complexity of this primary factor, but also in part from the close relationship of housing to two other problems. The first of these, provision of decent living for low-income families, is essentially the problem of poverty, although it is frequently spoken of as ‘ the housing problem’; the second one, slum rehabilitation, is the problem of rejuvenating blighted real estate and of reclaiming the urban dust bowls we inherited from past eras of planless city growth.
A house, final product of a building operation, is a structure on a site, a parcel of improved real estate. It is, therefore, economically and legally in a different category from any other class of manufactured merchandise. This complex product consists of: —
1. Shelter (walls, roofs, floors, openings)
2. Mechanical equipment (plumbing, heating, air-conditioning, wiring, elevators, etc.)
3. Environmental factors (orientation, site proximity to public utilities, transportation, social and recreational facilities, etc.)
4. Financing and maintenance requirements (mortgage payments, taxes, insurance, repairs, etc.)
All four of these elements create cost factors which must be brought under control if the announced objective of the American nation, better homes and more civilized living for all the people, is to be attained. There is as yet no agency, either of government or of private enterprise, that has mastered the fourfold problem of cost, in any large way, though some real progress has been made both in understanding the true nature of the job and in certain developments that give great promise for the future.
If producing better houses irrespective of cost could meet the necessities of the situation, the United States would now lead the world in housing progress, instead of trailing along at the tag end of the procession. We are clever at inventions and at the technique of exploiting inventions, and we have developed home conveniences of every sort that are the wonder of the modern world. In recent years, a bewildering array of new structural materials has been offered in the market, greatly to be desired by everyone, but when they are assembled the constructed end product is beyond the purses of 90 per cent of American families.
In spite of the undoubted merit of many of the new materials, building accessories, and home conveniences that are offered in the market to-day, they have not yet tended very far in the direction of lowering the cost of building. Most of the modern improvements have been purposely adapted for installation in existing buildings, or for alteration and modernization of existing buildings. Consequently their effect in creating a demand for new buildings has been rather limited; they tend to make existing buildings obsolete, but they do not create an urge great enough to overcome the high cost of scrapping existing buildings on any wholesale plan. Thus the producers of parts for the building industry (materials, accessories, conveniences) have made enormous progress, which has far outstripped the methods of assembly.
Modern methods of organization for efficiency and economical procedure in actual construction operations are applied in a high degree to large-scale urban projects (office buildings, factories, schools, hotels, luxury apartments, monumental public buildings, and so forth) and also to great engineering structures. Our Rockefeller Centers and our Boulder Dams are wonders of the modern world. Machine processes for excavation and assembly are common practice in such enterprises. But even in this field many handicraft methods persist.
Smaller buildings (houses, private garages, stores) — most numerous of all kinds, and reaching a much larger total investment than large urban buildings — are usually produced one at a time or a few at a time. The more expensive homes are designed by architects and built under general contract, the less costly ones designed and built by local builders, frequently men without much technical training. In addition to these tailor-made buildings of varying quality and price, we do produce some readymade houses. Our housing developers, even the larger companies, nearly always produce for quick sale, and so at best build but a few houses at a time; a survey made in 1935 discovered only five homebuilding companies in the entire United States with capital of $250,000 or more. They scarcely have developed to the point where they can achieve any important economies of large-scale production.
If Ford cars were assembled to order from special or plan-book designs by local mechanics, you would have a parallel to the home-building industry; most of the cars so produced would be poor in quality and much more costly than the factory-assembled product. The general run of medium-grade apartment buildings, usually built to secure a prosperous-looking rent roll and a speedy speculative sale, are produced in much the same way as are speculative small houses. This is the method the American people have used to produce capital assets valued at $70,000,000,000 in 1930 — assets, although depreciating rapidly, valued at more than all the railroads, automobiles, canals, other transportation facilities, and public utilities in the entire country. We could not have achieved this staggering result if we had not had many home builders who were intelligent and competent. Most of them have in recent years worked earnestly to produce quality houses at low cost, but they were not organized or capitalized as modern industrial units.
To modernize the assembly technique it is necessary to remove many obstacles inherited from the horse-and-buggy era. The distribution system for materials and equipment is principally geared to retail sale in small quantities. Our homefinancing system is still in part a relic of the era of professional mortgageforeclosers. Labor costs, based upon sporadic and seasonal employment with frequent lack of production-organization morale, are very high: workers earning 75 cents an hour can scarcely afford the product of workmen who get $1.75 an hour, even though the 75-cents-an-hour man may earn more in a year than the $1.75 man. Local building codes, formulated ostensibly in the interest of public safety, in actuality arc only too often a legalized perpetuation of uneconomic and outworn structural procedures.
These matters have to do with the first two of the four elements of housing. The third factor, land, has grown to be an increasingly complicated and costly matter with the extension of urban communities, the increasing cost of urban community facilities, and the rapid and wasteful deterioration of urban residential neighborhoods. As our economic and social system has become more and more complicated, our housing production has tended more and more to become an adjunct to land speculation. In recent decades, the profits of subdividing raw land have tended to diminish to the vanishing point, and the addition of ready-made buildings to make the land sell at a profit has become more and more necessary. Speculative values of urban land have been legalized by continually increasing assessments and bolstered up by fixed mortgages based upon speculative appraisals.
III
Some real progress has been made in the field of home financing. The Federal Home Loan Bank System has been set up and is growing daily in effectiveness and strength. It serves principally as a reserve system for its member institutions, which consist mainly of building and loan associations. Its sister institution, the Home Owners’ Loan Corporation, by doing its remarkable wholesale salvage job of refinancing a million defaulted home mortgages, probably advanced recovery in the construction industry by a full year, but it was not planned for instituting reforms in ordinary mortgage-lending procedure. The Federal Housing Administration, with its authority to insure home-mortgage loans up to 80 per cent of appraised value, has done much to popularize and greatly broaden the use of mortgages providing for monthly payments of interest and amortization, and to eliminate the obnoxious, extravagant, and unsound second mortgage which was in almost universal use in pre-depression days.
Mortgage insurance is a peculiarly American invention, which is serving a very useful purpose at this time, under competent administration. Other countries have not had it because most of them have well-organized home-financing systems; they do not have to offer lending institutions special inducements to do business in what they regard as one of the soundest known fields of investment, any more than we have to bribe Macy or Wanamaker or Marshall Field to sell us merchandise. It has been recognized that the original insurance surcharge of one half of one per cent on the face of the mortgage (amounting to 10 per cent over a twenty-year amortization period) is much too high, and legislation now before Congress would reduce the insurance premium on smaller mortgages to a quarter of one per cent on declining balances. Even the higher rate charged until recently was less costly to borrowers than the old second-mortgage financing.
Interest rates on long-term investments are generally too high in America. We became accustomed to high rates when the country was a debtor nation and when speculative appreciation of capital values was looked to for final payment of a long-term loan, rather than current earnings of the pledged property. A cut of one per cent in the interest, rate is equivalent, over a reasonable amortization period, to a 10 per cent cut in the cost of the property. It should be admitted that there are obstacles in the way of home-mortgage interest rates as low as those enjoyed in other more advanced countries. In England a $4000 house sold on the installment plan can, upon default, be repossessed in a period of about six weeks at a cost of approximately fifty dollars; whereas in many of our forty-eight states it takes eighteen months for the mortgagee to gain possession, and it costs him four or five hundred dollars. By the time the mortgagee gains possession, the property is apt to have become so deteriorated from neglect that a considerable further expenditure must be made to put it in shape for resale. Consequently, every borrower must have added to the proper interest rate for rental of the money an insurance fee to cover the risks of default, the combined charge being customarily called interest. This is just one of the many uneconomic practices regarding real estate and mortgages that have been embedded in the laws of the land.
Our new governmental agencies for home financing, of which only two have been mentioned above, have done an excellent job so far. They have not been put together in a coördinated system, nor, with the exception of the provision (to be discussed later) in the National Housing Act for insuring mortgages on large-scale housing projects, do they go beyond the financing of the individual small house. A very important purpose is being served, however, by popularizing amortized mortgages. Not only do they eliminate the vicious second mortgage and provide a better security than most mortgages have done before, but they make the mortgage loans of large lending institutions relatively liquid; they actually introduce a revolutionary concept into mortgage finance — the concept of long-term credit.
On the whole, we may say that homemortgage financing is emerging from the horse-and-buggy stage into the horseless-carriage era, but that the streamlined home mortgage has not yet arrived in the United States.
IV
For a nation that almost invariably dodges its problems instead of solving them, these partial remedies of a bad mortgage-financing system represent real progress, though nowhere near enough. The trouble with us is that we are such inveterate believers in Santa Claus. We fall for all kinds of fairy tales told us by politicians who promise the more abundant life through curtailed production; promoters and advertising men who tell us how easy it is to keep up with the Joneses; statisticians who predict unprecedented booms based on selling millions of houses to people who have no money, and economists who advise letting nature take its course — ‘nature,’ presumably, consisting of tariffs, firstmortgage real-estate bonds, new-era stock-market speculation, and a financial system that throws the nation into bankruptcy just because it is rich.
Santa Claus has been expected to solve America’s housing problem in several different ways, some of which have merit and real accomplishment to their credit, but none of which in itself is enough. Of these Santa Claus methods, four have been outstanding: own-yourhome campaigns, prefabricated houses, government subsidies, and an imaginary housing boom based on cycle theories and fragmentary nineteenth-century statistics.
Own-your-home campaigns, local and national, have been for a generation the favorite promotional device of the home builders. They have engaged strong community efforts, salesmanship, and public oratory in chamber-of-commerce meetings and legislative halls. Part of the time there was a valid sales argument in the slogan that it was cheaper to own than to pay rent; part of the time the arguments had to stress more strongly the sentimental and citizenship values of home ownership. Yet the percentage of American families who owned their own homes in 1930 was 46.8, against 47.8 in 1890; home ownership barely kept up with population growth. The intervening forty years constituted a period of change, continued migration of families from place to place, and increasing costs and burdens of home ownership. Urban population, as defined in the census, increased from 35 per cent of the total in 1890 to 56 per cent of the total in 1930. There is no evidence yet visible to indicate that employment will be more stable and economic opportunities more fixed geographically than they have been before. Sound and fitting as the desire may be to increase home ownership, the record to date does not show that such efforts offer a complete solution for housing our increasingly complex society.
It has not been so very long since prefabricated houses were commanding steady attention in the popular magazines and press. Would they be the solution to the problem? If assembly lines could turn out automobiles by the thousands and sell them cheap, then why could n’t houses be produced the same way? It was rather generally intimated in the popular articles that it was only the excessive stupidity of architects and builders that had prevented this much-to-be-desired modern procedure — which overlooked the fact that prefabricated houses (called by the oldfashioned name of ‘ready-cut houses’) had enjoyed a profitable but limited market for rather a long time.
Several important factors were omitted in the acclamations that hailed the birth of the prefabrication idea. One was that you cannot produce the environmental factors of a house on an assembly line. Another was that you really had to get the new-style houses better and cheaper before you put them on the market in competition with houses built by conventional methods. Still another was that you could not get any real benefits of mass production until you created a mass market, which does not yet exist to any marked degree under our costly system of real-estate acquisition and our archaic system of home financing. Still other obstacles could be listed.
To-day the research investigators interested in prefabrication are taking a realistic view of its possibilities as a principle to be applied to structural units, equipment installations, and other physical elements of a building; they have already produced and offered to the market many improved products of great merit. They no longer expect to bring forth miracles overnight, but are willing to work patiently and watch their ideas and their plans evolve gradually as the housing needs of the people and their own opportunities develop. Prefabrication is widely accepted as a sound production principle, but the prefabricated house that will solve the housing problem quickly has not yet arrived.
But the favorite Santa Claus of recent years has, of course, been the government. Other countries have government housing, why not we? Why not let the government subsidize new houses for all the families that cannot pay the market price, regardless of what may happen to the large supply of existing housing, regardless of cost, and regardless of the fact that, when the government pays, it is really the taxpaying public which pays? Many of the selfsustaining taxpayers who are supposed to pay for other peoples’ houses cannot afford new houses for themselves. Some proposals of the more enthusiastic advocates of unlimited government subsidy actually looked to housing more than half the population in new dwellings, with very considerable subsidies. Some of the PWA housing projects represented a capital cost per family greater than the 1930 value of the dwelling units occupied by two thirds to three fourths of all the families in communities where the public projects were built. Manifestly the public purse, which is the taxpayers’ purse, could not stand the strain of housing large numbers of families on any such scale. I doubt if the most enthusiastic advocate of government housing would claim that our government accomplished very much in the direction of cutting costs.
The fourth Santa Claus, the predicted housing boom, was not expected to bring with him any such prosaic programme as cutting costs; he was simply a promise of unprecedented prosperity, soaring real-estate values and stock-market prices, and new opportunities for many people to get rich if they knew how to get out of the market in time. That bubble did not blow up very large before it burst in the late spring of 1937. It: was based on the theory of recurring cycles of real-estate and building speculation, without consideration of the demand factors that had produced speculative real-estate and building booms of the past — factors such as rapid growth of population, immigration, increased urbanization, expansion of railroads, the changing of America from a predominantly agricultural to a predominantly industrial nation, and, more recently, the coming of age of the automotive industry. These boom predictions ignored the fact that the United States is to-day an adult nation, and that some of the phenomena of growth from childhood through adolescence to maturity are behind us and will not be repeated over and over again in the future. The golden age of real-estate speculation as the prime moving power in a nationwide building programme has passed.
V
If there are no miracles and if there is no Santa Claus, it is just possible that the American people may have to lick their housing problem by solving it, much as some other peoples have done. Our British cousins have done a very good job.
Following the finale of its speculative jerrybuilding era, England had an extended period of slack building, during which overcrowding of its working-class population increased to a point far beyond anything we have yet seen in this country. Following the World War, the housing shortage was acute, and building costs were very high, including the costs of materials, labor, and money. Private enterprise could not supply housing to the people who needed it at prices they could pay. A government programme of subsidized housing was started.
From 1920 to 1928, when subsidized housing dominated the British programme, the construction costs of fourand five-room houses were reduced 60 per cent. This reduction resulted in part from post-war deflation of prices, wages, and interest rates, but it also resulted from the introduction of largescale housing production. The central government never built a single house. Nor did it look upon its builders and its business men as dumbbells and crooks. It opened up to them the field of largescale public-housing operations and gave them the opportunity to develop a technique of large-scale production. Even shipbuilding companies undertook contracts for municipal housing projects. By 1928 the cost of subsidy was very high and the cost of housing was low. The time was ripe for private industry, with its newly acquired proficiency, to take over the programme, which it did. From 1920 to 1928, 1,104,000 houses were built in Great Britain, 65 per cent of which had some kind of subsidy. From 1928 to 1932, the period of gradual withdrawal of subsidies, 752,000 houses were built, of which 45 per cent were subsidized. From 1932 to 1936, when subsidy was confined to municipal housing built for relief of overcrowding, 1,113,000 houses were built, with only 18 per cent of them subsidized. The large British home-building companies are modern industrial organizations, with a known market, a quality product priced right, and an ideal system of financing purchases. Two hundred dollars down and five dollars a week will buy a house in the outskirts of London; they are a little cheaper in the provinces. Home-building companies build and sell one or two thousand houses a year in planned-community developments; some of the companies have their stocks listed on the exchanges. When the British people faced a national need of major magnitude, they did not hire a lot of people to shriek to high heaven that there was bound to be a Santa Claus. They looked the facts squarely in the face, they got to work, they created an industry to do the job that needed to be done.
Other fine examples of practical accomplishment can be found in other European countries. Sweden is one in which private enterprise, encouraged by local and central governments and stimulated by favorable home financing, has produced noteworthy results.
There is evidence to-day of the beginning of modern industrial organization and technique for producing housing in the United States. I refer to some important new developments in the field of private enterprise.
For a long time we have had in this country such a thing as investment housing, built to earn an income return by the renting of decent dwelling accommodations to families of moderate means. The City and Suburban Homes Company of New York, founded by Mr. R. Fulton Cutting and Associates in 1896, has paid dividends continuously for the last thirty-seven years at an average annual rate of 4.65 per cent. The Washington Sanitary Improvement Company (a housing development, in spite of its curious name), in the capital city, paid annual dividends of 5 per cent continuously from 1897 to 1923, and 6 per cent per annum from 1923 to the present time, including every depression year. The Washington Sanitary Housing Company has paid 5 per cent per annum continuously through the past ten years. Six non-coöperative apartment projects built in New York City under the New York State Housing Board have all been consistent dividend payers in good times and bad. Chatham Village in Pittsburgh, until quite recently the finest planned-community project in America that was built as an investment to supply rental housing to medium-income families, opened its doors in January 1932. It had 98 per cent occupancy in six weeks, and has never had less than that. It has earned and paid a substantial dividend during each depression year.
I should like to ask some of my Wall Street friends to compare these earnings records with those of our leading railroads and industrial companies. Unfortunately, housing projects of this kind have been given an unattractive name. We call them ‘limited-dividend companies’; we ought to call them ‘ stabilized-dividend companies’ or ‘guaranteed-dividend companies.’ In housing, as in many other fields, learning to call things by their right names is frequently the beginning of wisdom.
Special provision for encouraging investment housing of this type was made in the National Housing Act. The Federal Housing Administration is authorized to insure mortgages on such projects of any size up to $10,000,000. Twenty such projects have been completed or put under construction; four more have had their financing plans approved, and many more applications for mortgage loans and mortgage insurance are being considered. These are private-enterprise projects without subsidy. Sixteen of the mortgages have been taken by three of our leading life-insurance companies. The standards of construction, of community planning, and of non-speculative financing imposed by the large-scale housing division of FHA, under the direction of Mr. Miles Colean, are such as to guarantee sound investment even if there were no FHA mortgage insurance. Investment housing is a going business in America, and has been recognized as such by the emphasis placed upon it in current legislation before Congress, which aims at liberalizing the mortgage financing of such projects though it does not provide means of securing working capital for home-building companies.
But the progress story of investment housing does not end here. Several months ago Mr. Charles F. Lewis made an address before the housing conference sponsored by the Chamber of Commerce of the United States. Mr. Lewis is the father of the Chatham Village project in Pittsburgh, already described as the finest middle-income rental project in America up to this time. Mr. Lewis stated that he had that morning inspected the Buckingham Community at Arlington, Virginia, and he said of it, ‘This beautifully planned project promises to be one of the most significant of all that have been constructed in America to date.’
Buckingham, one of the new FHAinsured enterprises, is unique among housing projects. It is being financed, constructed, and operated by an automobile manufacturer, who has for the first time brought the manufacturer’s technique into the field of housing production. By applying to this new job his previous experience in producing assembled cars, he has effected economies in buying, construction, and management that enable him to offer to Washington families with incomes of $1500 to $3000 a year far better values for their rent dollars than they ever got before. The first section of the project, partly completed and occupied, will have 622 dwelling units. The complete project will house 2000 families and will cost about $8,000,000. The late Allie S. Freed, President of Paramount Motors Corporation, Chairman of the Committee for Economic and Social Progress, Inc., and producer of Buckingham, once stated that he could fill 20,000 units to-morrow if he had them to offer. It is believed that Buckingham is destined to serve as the pattern for many more rental-housing projects.
VI
In this country we are finding our first opportunity for large-scale housing operations in the rental field. In Great Britain the private-enterprise programme has consisted entirely of small houses for sale. This important difference can be readily explained. In England only 25 per cent of the families owned their own homes in 1930, compared with nearly 50 per cent of American families in the same year. Great Britain has already achieved a streamlined homefinancing system. When we have so perfected our financing procedure that we can offer to well-capitalized homebuilding companies a mass market for homes built to sell, the home-ownership phase of large-scale production will get under way. At this time middle-income rental housing appears to be one of the best possible investments for the funds of American life-insurance companies, the institutions best equipped, at the moment, to finance such operations.
It is rather generally recognized now that the most desirable production of housing is the planned residential community, whether the accommodations be for sale or for rent or both. Chatham Village and Buckingham were both planned with large open spaces and other modern amenities by the late Henry Wright, probably the most distinguished land-planning expert we have yet had in this country. In this way the environmental elements of good housing are provided, and neighborhood depreciation and blight avoided. When Mr. Freed was manufacturing automobiles, his assembly line was in the factory; when he manufactured housing he put his assembly line on the site, much as the British home builders do; he made two trips to England to study their procedure.
The Buckingham project developed a ‘Ford unit’ suite of three rooms and a bath, so called because it was the size most in demand and, in its finally developed form, most easily repeated in large numbers in buildings of varying sizes and shapes. Buckingham also developed one U-shaped group of five buildings arranged about an open court, susceptible of being copied as a single small investment project or grouped in large community developments of either gridiron or irregular plan. Along with a reasonable amount of standardization, monotony was avoided by varying house plans, plot arrangements, exterior wall treatments, and entrance motives.
Continuous housing production by the same planning and construction organization would tend toward successive reductions of the cost of assembly. A considerable number of Chatham Villages and Buckinghams under erection at the same time would offer to building-product manufacturers the mass markets they need for their prefabricated structural and equipment units and thus help them to get their costs down. Furthermore, continuous production based upon a continuous flow of mortgage money and a continuous turnover of working capital would also permit continuous employment of building labor at a guaranteed monthly or annual rate and thus eliminate one of the present elements of high building costs, and would increase labor’s efficiency enormously. Mr. J. W. Laing, of John Laing and Son, Ltd., London, one of Britain’s largest home builders, has with his big general contracting business and his production of small houses for sale (9000 of them in the past five years) kept an organization of 3000 people at steady work; he told me on the day we inspected Buckingham together that in his first year of home-building operations he reduced his labor cost one third without reducing the hourly rate.
Large-scale housing projects like this offer exciting, practical possibilities with great promise for the future. They are no universal panacea. They will find their logical place in the larger metropolitan centres of the country and their suburbs, and to less degree in smaller communities. They are probably not destined to supplant established procedures in the building field, at least not with spectacular quickness; they will evolve gradually at first. If they act to reduce building costs by industrializing home building, the economics and innovations they engender will benefit all building. If they actually create a new market in the lower-cost brackets, they will ultimately add to the nation’s prosperity and thus tend to increase the market for custom-tailored buildings in the higher price ranges.
The Buckingham project, which is being developed entirely under the financial and managerial responsibility of Mr. Freed’s company, was sponsored by the Committee for Economic and Social Progress, Inc., to demonstrate that it is possible for private enterprise to produce without subsidy new housing for families with annual incomes as low as $1500 a year. Of the first four hundred tenant families, three fourths have incomes ranging from $1500 to $3000 a year, the remaining one fourth having larger incomes. A considerable range of suite sizes and of rentals was deliberately planned, in order to avoid the institutional character of a stratified income-level community. It seems entirely possible that continued effort along the Buckingham lines will eventually bring rents down to the capacity of families with $1200 a year, perhaps ultimately $1000 a year — subject, of course, to variations in local construction standards and costs.
Nearly everyone to-day who is anxious to see the greatest possible progress of private enterprise in the housing field grants that housing of decent minimum standards for families with incomes under $1000 cannot be supplied without financial assistance to a great many such families. However, many people who are sincerely desirous of doing everything practical and possible to raise the living standards of these poorer families do not see the necessity of housing them on very expensive land (which most slum land is to-day) or of building for them expensive model apartments of institutional character. One survey of New York’s slum families disclosed that half of those questioned would much prefer simple cottages in the outskirts to suites in model tenements; their wishes could be met at a moderate capital cost and with a moderate amount of rent assistance so long as they could not pay the full economic rent. One hardship of the poor families of our cities has been the lack of a range of choice as to where they may live and rear their children.
The United States Housing Act of 1937, with its provision for annual contributions provided jointly by Federal and state or local governments, makes a rent-subsidy system possible and likely to be tried out. This has worked successfully in a number of cities in England. Under rent subsidy the municipal housing project operates in the black, by charging a full economic rent; families needing rent assistance receive it, according to their needs and just as long as they actually do need it, from a pooled welfare fund; the neighbors do not even have to know which families are being assisted and which ones are not. In most of our cities there are doubtless numbers of old buildings that can be quite adequately and attractively modernized to a very decent standard, which may be done by private enterprise with FHA-insured mortgages or by municipal housing authorities with local and Federal government aid. These are a few suggestions as to practical ways of meeting the problem of decent housing for poor families. But there is no single solution. The need is real and must be properly met.
Slum clearance will usually mean demolition of old unfit houses, requiring the building of new houses on the old sites or elsewhere. Frequently the cleared land may be more suitable for middleincome housing, commercial development, parks, playgrounds, or parking spaces than for subsidy housing. This is really a problem of city replanning. It is difficult to see why the Federal Government should take any direct responsibility for slum clearance. Municipalities, which have long collected taxes from slum property on high assessed valuations, might very properly be expected to share the cost of slum clearance, perhaps by acquisition and development of land for open-space purposes.
VII
If the economic realists are coming to the front in housing and bringing their much-needed practicality and business efficiency to the solution of the central problem of costs, they as realists must recognize that their more idealistic friends were first to dramatize the need and insist upon a housing programme. There is to-day a greater possibility of substantial advance in raising the standards of American family and community life through partnership of private business, social welfare agencies, and government than there has ever been before.
We now realize that our era of rapid industrialization and of real-estate speculation produced civilization only as a by-product. To-day the job of civilizing America through intensive development of our facilities for production and improvement of our facilities for living is the paramount national objective. By improving the quality of family and community life we can engender that prosperity to which our resources in men, money, materials, and management so richly entitle us. But only if we can be patient! You plant some seed, you water, you fertilize, and you keep the garden free from weeds, and then you wait a bit, because you cannot harvest your crop next Tuesday. But when the planting and the cultivating have been done well, what a crop the harvest time can bring!