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October 28 # Mr* Daniel w. Bell Uader Secretary of the treasury Treasury Department Washington* &. C* Dear D a m You m y recall that sosi© tin® ago I sent you copies of nwaoranda prepared by Mr* Stark and !&•• Wood on the War Bousing Program, and m&® Bom suggestions about -t^&t program* For the safes of tha reoor&# 1 am seisdiiig you a copy of Mr* Bland£or&*s letter In response to timsm nemoranda and suggestions, and a copy of my reply, which fully states ay position* Tery truly yours. Chairman, Sruslosures Also sent to Mr* Harold D. Smith, Director Bureau of the Budget Room 252, State Department Yfashington, D* C* October 23, Mr* John B* Slandford, Jr», Administrator, National Housing Agency, I, B* C* Dear Jack: This response to your letter of September 11 has been so long delayed because I had to leave the city before I could give consideration to your comments, and, since my return, other natters have required ay attention. Since you apparently misunderstood the spirit and purpose of my letter of September 2 and the iseaoranda that accompanied it, I shall restate lay position* At the time Title VI was added to the national Bousing Act there was some Justification for believing that it was desirable to ineet the housing emergency under a xaodifieatioxi of the regular raeehanisn of private building — although even then not all of the evidence pointed to the procedure adopted* This justification existed as long as we were com*' fronted with unemployment of economic resources, while housing so provided •was indistinguishable, both in physical desirability and in cost, from other sound housing in the oomnainity, and while it -was fairly certain that such housing could be absorbed by the post-emergency market. For at least the past year these conditions have not prevailed* We have been confronted with the imperative need to concentrate all possible resources in war uses* Maximum housing standards have heen promulgated in the interest of eon* servatlon of materials and labor, and compliance with these has removed the last pretense that Title ¥1 housing; is the same as peacetiiae housing, in either quality or cost* As the migration of population has increased and the customry modes of life of more and more families have been changed, the certainty of the stability of population in xnany areas has steadily declined* It is for these reasons that I insist that the building of permanent housing, whether publicly- or privately-financed, ought to have been discontinued some time ago, and should certainly be stopped now* The original authorisation under Title YI was for |100 million; the present authorisation is #1,600 million* Surely, in the circumstances, there should have been a reappraisal of the program before now, especially - 2 - since, by the time the Title VI authorisation is exhausted, the amount of insured isortgage debt outstanding on this admittedly risky stuff will be over one-third as imich as is outstanding under the regular FH& program* I shall not undertake to discuss your letter in detail at this tiiae, although I mast say that as a reply to the issues that I have raised , it does not stand up under close analysis• Here I shall merely point out a few of the sore obvious inadequacies* Your contention, for example, that I am concerned only with the postwar implications of the housing program is not accurate. As I have said above, my first concern is with the proper utilization now of scarce economic resources* If permanent housing were the only possible kind of shelter that could be provided for war workers, it would have to be built, but you have proved in your own program that a given amount of resources will provide store housing if it is used in temporary, publiolyfinaneed structures than if it is diverted to permanent buildings, whether publicly or privately-financed. Begard for these real and present economic facts, therefore, dictates that the war housing program should be completed with temporary housing* To say that I am not solely concerned with the future is not to say that consideration of future problems is unimportant. Housing is an exceedingly durable product, so that decisions to build permanent housing for the present have effects far into the future. It is for this reason that the postwar effects of the program should not be ignored* You take irse to task, for example, for assuming that war production centers will lose population when the war boom is over, although at the SQ.WB time you admit that you have no better idea than I have of how population will be distributed* fo dissipate our precious resources on permanent housing where there is any doubt at all about its future usefulness is, in ray opinion, unjustifiable* Y«:hether an area loses population or not. Title VI housing, especially that built in the last year or eighteen months, is going to have unfortunate effects. In any area that retains a substantial part of its wartime increase in population, peacetime building is apt to be of so ssuch better quality for the price that owners of Title VI houses will lose what equity they have* If, on the other hand, a war production area loses population so that, after public war housing has been removed, there is a surplus of accommodations, that cosKaunity can hardly rely on house building to provide employment* This is not to say that 1 endorse the restrictionist view that present needs must go unfilled so that we aay keep a backlog of work to be dona at some time in the future* The point is that the present program is nurturing a DOOM in the construction of inferior -3housing and thereby Intensifying the factors staking for postwar depression, since this cut-down housing will stand for siany years where decent and substantial housing might otherwise be built* Your concern for the continuance of the building industry in readiness for the postmr housing boom suggests two observations* First* if carried to its conclusion, it argues that the automobile* electrical equipment, and other industries, which will have important parts to play in the postwar econoay, ought tm'ter to have been converted to war production — a conclusion which you will admit is ridiculous* Second, iiaplicit in your position is the idea that private war housing Is being produced by the groups which produced our peacetime hou&ing* What the general situation is may be open to question, but In ny own experience Title 11 housing is being ballt, not by the typical builder who, in 1939* put «P fewer than ten houses, but hy large concerns which work on tens, hundreds, and, in a few eases, thousands of units in a single project* It is unrealistic to insist that the present program is necessary to prevent the housing Indus try as we have known It from languishing* Much more to th© point is the fact that, by encouraging the building of Title VI housing now, you are killing postwar aarkets which might otherwise exist* You object to m& observations on the war housing program on th® grounds that I am ignorant of the day-to-day problems involved la formiatimg and i^leiaentlng a housing program* I freely grant that I do not have the specific background in the administration of housing that you have, and it was, indeed, because of the Bational Housing Ageneyf8 background of fact and experience that I wished to present the issues 1 raised for your consideration. I cannot concede, however, that only those charged with its administration are capable of forming judgments and iaaking sound recoiaoend&tions about the housing program* As you well know, I was intissately connected with the setting up of the insured ssortgage system in the first place, and I think I have as full an appreciation as the next laan of the principles which saist be observed if our mortgage credit and housing programs are to reomin sound. Furthermore, 1 have wide and numerous contacts with what Is gcing on in the world as as fairly intimate contacts with th© situation in Utah* When you insist, therefore, that I am wrong in saying that, at least in some instances. Title VI housing has been financed on the basis of excessive appraisals and has afforded irresponsible builders speculative profits, has rented for more than it is worth, and has been located in areas which have a doubtful future, I must object* Information which I obtained on rag recent trip to the Salt Lake City area has strengthened my conviction that cases embodying these conditions, which I have already cited to you in conversation, are not exceptional* I have no reason to believe that area to be unique* -kI have given sore attention in this letter to the past program than I feel it deserves because that was the esaphasis of your letter. kll of say questions and suggestions have been directed to the program to be followed from now on, which is my real interest and the only aspect of the problem which will be affected significantly by any changes in policy which nay be ssade now« We have been at soae pains to weigh all information available to us so as to obtain the proper perspective on the problem* To the extent, therefore, that we differ* we have looked at different facts or have not appraised our common store of facts in the sane way* Heedless to say* I should be more than happy to have indicated specifically what facts we have overlooked or what facts we have stressed too Mich* I hope that we can get together souse tiiae soon for further discussion of the problems connected with the war housing program — probleas which are of great concern to us both* Very truly yours, [, S. Eccles, Chairman* OFFICE OF WAR MOBILIZATION WASHINGTON, D.C. November 2, 1943. James F. Byrnes Director Dear Marriner: Thank you for your letter of October 28th, giving me your vigorous and forthright discussion with Jack Blandford on Article VI Housing. I am sure the discussion will clear the air and do some good. Sincerely yours, Ben V. Cohen Honorable Marriner S. iccles, Federal Reserve Board, Washington, D. C.
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