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THE WHITE HOUSE
WASHINGTON

December 11, 1937.

MEMORANDUM FOR MARRINER ECCLES:
I wish you would look this over
and let me have any comments you care to make.




F.D.R.

form F. R. 1
BOARD OF GOVERNORS
DF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
Tn

Mr. Hersey

Date-December 15^1957
Subject:

Miss Egbert

Mr, Eccles would like you to look over the attached letter and
report received by the President from the National Housing Committee and
give him a brief statement of what you think of the information. He
would like to know if it appears to be reasonably accurate and a valuable
contribution to the housing situation. If so, he would like a very brief
digest of the problems raised and the conclusions which can be drawn from
the report both for his own information and to send to the White House,
if the information is of such value that it would appear advisable for
Mr. Eccles to send such a memorandum to the White House. In any case a
reply should be prepared for the President's signature. Mr. Eccles would
like to have this by the end of this week or the first of next week.




Form F. B. 131
BDARD OF GOVERNORS
DF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To

Chairman

Eccles

Mr. Goldenweiser/7 /)QtJx

r w December 21.1937
Subject:
"The Housing Market"

The attached memorandum prepared in this Division is a
brief discussion of the report of the National Housing Committee on "The Housing Market". It appears f rom the memorandum
that the principal valid point of the report is that most people
pay less rent than would be necessary to meet existing building
costs. This point, of course, is familiar. It appears that the
report is not reasonably accurate and contains no real contribution.




A proposed draft of a letter to Monsignor Ryan is attached.

.Form F. B. 131
BOARD OF

GOVERNORS

DF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
Tr»

Mr* Goldenweiser

Frnm

n a t P December 20* 1937
SiiKjWt!

"The Housing Market" — Summary

Mr* Garfield and Mr* Hersey

and general comments

The report of the National Housing Committee on "The Housing Market"
is an attempt to measure the demand for housing in different income and
rental groups and in different regions of the country. The principal conclusions* stated or implied* are that most non-farm families pay less for
housing than the current cost of providing new housing* that most of the
new construction should be for these lower-income families* and that a
large part of it should be in the South. The number of new dwelling units
needed in each of the next two years is estimated at 1*500*000*

Of these*

500*000 would be needed each year to take care of the increase in the number
of families and of the replacement of houses demolished and houses becoming
uninhabitable and 1,000*000 each year to make up the present estimated
shortage by the end of 1939*
The general conclusion that most people pay less rent than would meet
the cost of new housing is valid, and if the report* by calling attention
to the limited incomes people have* stimulates efforts to reduce the cost
of housing* it may prove useful. The report* however, can not be taken as
a basis for working out a program because most of the conclusions are based
on unjustified assumptions and unsatisfactory statistical methods* Recognizing this, at least three of the leading housing experts in Washington —
George Terborgh, Ernest Fisher, and David Wiokens —
their names appear in the list of consultants*




TBBTQ

unwilling to have

- 2 -

The total figure of 1,500,000 units per year is hardly realistic, as an
indication of actual demand, being five times the number built this year
and one and a half times the number built in 1925, the peak year*

The re-

gional distribution, showing, for example, that only 1*1 percent of the
total ought to be built on the Pacific Coast, when this year over 15 percent
are being built there, implies an extraordinary shift in building activity.
The rent and income comparisons have been arrived at through uncritical use
of existing data and are unreliable*

The conclusion that most of the new

construction should be for lower-income groups and that the amount of building for the higher incomes should actually be smaller than in 1936 assumes
that a larger volume of new housing can be provided for the lower-income
groups while the higher-income groups continue to live in existing structures*
There is no discussion as to how the higher-income groups will be kept from
bidding for the more modern units*

It is possible that through large soale

operations costs for modest units might be reduced or that through governmental subsidies, limited to families with low incomes, housing construction
for these groups might be stimulated somewhat, but not presumably to the
extent necessary to provide any such volume of new housing for the lowerincome groups as is contemplated in this report*

There is no discussion as

to how far the present and future needs for low-cost housing can be met by
construction of new dwellings and to what extent we can rely on a used-house
and a used-apartment market as we rely upon a used-automobile market*




December 20, 1937
Draft of letter to Monsigior Ryan

Thank you for sending me a copy of the report on a survey of the
housing market which the National Housing Committee has made*
The smallness of the rentals which so many people can pay i s a very
strong argument for more efficient and more economical large-scale production of housing.

I believe i t i s beooming widely realised that revival of

residential construction must be based on reduction of the costs of building and the payments for dwellings* The policy of t h i s Administration in
relation to housing recognizes this fundamental principle, as i s evidenced
by the amendments to the National Housing Act now under consideration and
by the United States Housing Act which was passed at the last session .of Congress*
One point in the introduction to your report seems to me important
to consider carefully*

I wonder just how far the present and future needs

fbr housing can be met by construction of new dwellings for the groups
who8e needs are most pressing* and to what extent we shall need to rely
fbr low-cost housing on a used-house and a used-apartment market as we have
relied for cheap automobiles on a used-automobile market*
I have asked that your report be studied further by the agencies of
the government interested in the housing problem*




December 23, 1957.

My dear Mr. President:
Herewith I am returning the Rt. Rev, Monsignor
John A, Ryan's letter of December 9th to you together
with the copy which he transmitted to you of the housing
market surrey report aade by the National Housing Committee.
In accordance with your request for cojmaents
thereon, 1 &sa also enclosing a brief memorandum prepared
by our Division of Research and Statistics, pointing out
that while the report reaches a valid conclusion as to
the high cost of new housing in relation to rents, in
other respects it is not considered altogether reliable
by some o£ the recognised housing experts.
In addition, I ara enclosing a draft of a suggested letter of reply to Monsignor Ryan,
Respectfully yours,

M. S. Secies,
Chairman.
The Honorable
The President of the United States,
The White House.
enclosures
ET:b




My dear Monsignor Ryan:
lour thoughtfulneas in sending me with your
letter of December 9th a copy of the housing market survey report prepared by the National Housing Committee is
greatly appreciated. As you know* I am wholly sympathetic
with the objectives of your Committee, and X am fully in
accord with your conclusions that the most acute shortages
are in housing for the great mass of people with small incomes.
The pending housing legislation which I recoiamended to the special session of Congress is intended, as
you are aware, to encourage private enterprise to make
more adequate provision for all kinds of housing, both
for sale and for rent, recognizing that this essential
purpose cannot be accomplished without a reduction of the
prohibitive costs which arrested the progress of recovery
in this important field.
In helping to focus public attention on the
housing situation and hence upon the importance of snaking
adequate provision for deeent dwelling places which will
be within reach of the lower income groups, your report
should prove valuable and useful, particularly at this
tise« X have requested that it be studied by the agencies
of the Government which are interested in the problem.




MEMORANDUM OK HOUSING MARKET SURVEY OF THE NATIONAL HOUSING COMMITTEE
The report of the Mational Housing Committee on *The Housing Market* is an attempt to aeasure the demand for housing in different in~
come and rental groups and in different regions of the country. The
principal conclusions, stated or implied, are that mo&t non-farm
families pay less for housing than the current cost of providing new
housing, that most of the new construction should be for these lowerineoiae fajalliee, <iad that a large part of it should be in the South.
The number of new dwelling units needed in each o! the next two years
Is estimated at 1,500,000, Of these, 500,000 would be needed each
year to take care of the increase in the number of families and of
the replacement of houses demolished and houses becoming- uninhabitable
and 1,000,000 each year to make up the present estimated shortage ty
the end of 1953,
The general conclusion that »ost people pay less rent than
would meet the cost of new housing is valid, and If the report, by
calling attention to the limited incomes people have, stimulates
efforts to reduce the cost of housing, it may prove useful. The report, however, cannot be taken as a basis for working out a prograa
because aost of the conclusions are based on unjustified assumptions
and unsatisfactory statistical methods. Recognizing this, at least
three of the leading housing experts in Washlngton—-George Terborgh,
Ernest Fisher, and David Wickens—were unwilling to have their names
appear in the list of consultants.




— 2 —

The total figure of 1,500,000 units per year is hardly
realistic, as an indication of actual demand, being five times the
number built this year and one and a half times the number built
in 1925, the peak year*

The regional distribution, showing, for

example, that only 1.1 percent of the total ought to be built on
the Pacific Coast, when this year over 16 percent are being built
there, iaplies an extraordinary shift in building activity. The
rent and income comparisons h&VQ been arrived at through uncritical use of existing data and ere unreliable. The conclusion
that most of the new construction should be for lower-income groups
and that tha araount of building for the higher incomes should
actually be smaller than in 1956 assumes that a larger volume of
new housing can be provided for the lower-income groups while th©
higher-income groups continue to live in existing structures.
There is no discussion as to how the higher-incoiae groups will be
kept froa bidding for the more modern units. It is possible that
through large scale operations costs for modest units might be reduced or that through governmental subsidies, limited to families
with low incomes, housing construction for these groups might be
stimulated somewhat, but not presumably to the extent necessary to
provide any such volume of new housing for the lower-incoae groups
as is contemplated in this report. There is no discussion as to
how far the present and future needs for low-cost housing can be
set by construction of new dwellings and to what extent we can rely
on a used-house and a used-apartment market as we rely upon a used
automobile


market.