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FEDERAL HOUSING ADMINISTRATION WASHINGTON STEWART MCDONALD ADMINISTRATOR AUgUSt 2 1 , 194-0 • Honorable Marriner S« Secies, Chairman, Board of Governors, Federal Reserve System, Washington, D. C. Dear Mr. Secies: I am enclosing a copy of a letter which I have just sent to Mr. Palmer. While it is true that there will be a certain necessity for Government assistance in providing housing in connection with the defense program, I think there is a grave danger of throwing cold water on the large amount of privately financed construction now under way which it has taken the FHA several years to get established. I regret the amount of publicity already given the subject as I am afraid the repercussions might tend to cause private capital to restrict their present activities and if you agree with me I would solicit your aid in seeing that any further publicity is curtailed. Sincerely yours, tonal Administrator. Enclosures August 21, Mr. Charles *\ Palmer, Defense Mousing Coordinator, Advisor/ Commission to th© Council of National Defense, Washington, 1). C. Dear Mr. Palmers I enclose you herewith a chart showing the rate of construction of one and two family residences, which you will note at the present time is about equal to the 1928 rate. We find all through the country the defense program is stimulating residential construction and last weak new homes to be built under KttA inspections showed an increase of 40 per cent over last year. Also, there has heretofore been a building slump which usually starts about the first of July but which the defense program this year has delayed, l^aturally, real estate men, builders and others are anxious to take advantage of the defense program and build houses for sale or rent on property which they have been holding in the respective cities for some time. We are having, however, M M complaint not only from these operators but the Chairman of the Housing Com ittee of Los Angeles has expressed its apprehension that a great deal of talk in reference to Government participation in housing inay very well indeed slow up the present activities of private operators. I3r. .Ferguson tells me he sent you a copy of this resolution yesterday. 1 noticed last week there were quite a few newspaper articles in respect to Uovernment aid in defense housing, etc., etc., and 1 personally think tnat every effort should be made to keep items of this character out of the press. In fact 1 cannot see how these articles benefit the defense program at all, but on the contrary they may be actually retardant as far as private capital is concerned. As you know, private capital is very timid. A ^evelover Mty well have plans ready to go ahead but he will change his plans and stop work Charles JT. Paluier - 2 - August 21, Immediately at the slightest intimation that the Government may construct housing. inasmuch as tne Federal Housing Administration is the largest motivating agency in the construction of homes in America, contributing as it does to at least 75 per cent of all the construction now under way, I think rather than menace or threaten this program it would be well that all releases or any other form of publicity in regard to defense housing be approved in advance by our division maintained for this purpose under the direction of Assistant Administrator Robert B. Smith. Sincerely yours, Stewart McDonald, Administrator. Enclosure ESTIMATED NUMBER OF NONFARM SINGLE - FAMILY HOMES BUILT ANNUALLY NUMBER IN THOUSANDS NUMBER IN THOUSANDS 600 300 200 200 100 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 SOURCES NATIONAL BUREAU OF ECONOMIC RESEARCH BUREAU OF LABOR STATISTICS http://fraser.stlouisfed.org/ FEDERAL HOUSING ADMINISTRATION Federal Reserve Bank of St. Louis FEDERAL HOUSING ADMINISTRATION DIVISION OF RESEARCH AND STATISTICS CHART NO 554 A NEW F H A HOMES STARTED WEEKLY 1938, NUMBER 1939 AND 1940 NUMBER 4,0 0 0 ^ - ^ 4,G'OO — 3,500 — 3,500 3,00 0 - 3,0 0 0 - 2,5 0 0 1940* 19 39^^ - — — • 2,500 2,000 2,0 0 0 1933*^ 1,500 ,500 .0 0 0 1,000 NO T RE PORTi 500 500 JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. FEDERAL HOUBING ADMINISTRATION DIVISION OF RESEARCH AND STATISTICS CHART NO. 2 7 2 T
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