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Foifcn T. It. 131
BDARD DF GOVERNORS
DF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
io

Mr. Eccles

From

n afrP January i9 f 1957
Subject: Robert W. Aldrich Rodger

J* M. Daiger

Robert Rodger and his wife, botfc of whom have been much
in the housing picture in recent years, are persons of excellent
quality and social standing who have been driven to distraction,
and I think also to pecuniary distress, by their unseccessful efforts to promote various housing projects in New York and Washington.
I know both of them fairly intimately and have a great personal
sympathy for their plight.
Repeated frustration, after long-drawn-out negotiations
with one governmental agency after another, has unfortunately led
Robert Rodger to an embittered attitude toward many of the persons
he hae dealt with, and has even more unfortunately caused his wife
to make some hysterical appeals in his behalf to various persons
of prominence, including Mrs. Roosevelt.
Rodger is a real-estate man. His successful experience
in assembling options for the New York Central some years ago, in
its extensive operations on the West Side of New York City, was
probably responsible for his conceiving the idea, early in the
depression, of assembling options on properties covering a huge
area of the Lower East Side and projecting a $5Q,OOO,OOO^S0fi
housing development to be known as Rutgers Town. It was an extremely
ambitious and creditable undertaking, but as far as I know it never
had any real promise of financial support.
Rodger undertook to get help from the group of New York
savings banks chiefly interested in the Lower East Side, from the
Municipal Housing Authority, and then in turn from the RFC, the
FWA, and the FHA* Later he brought forward another large project
in New York, and also a project for the Henderson property (^Mrs.
Henderson1 s Castle11) on Sixteenth Street in Washington. This last
project is the one referred to in the papers that Rodger left with
you.
The Henderson project seemed on the verge of being financed
under the Housing Act by the New York Life Insurance Company, when
the Supreme Court decision in the NRA cause brought the Washington
rental demand into question and caused the Company to reject the loan.
Much opposition to the project also developed on the part of owners
and mortgagees of other Sixteenth Street properties, these properties
having a considerably higher scale of rentals than was contemplated
for the proposed Henderson Gardens Apartments.




— 2 —
After the loan was rejected by the New York Life,
Rodger entered into negotiations with Hemphill, Noyes S Co, for
a bond issue* These negotiations were later suspended and a loan
was sought from the RFC Mortgage Company. My understanding is
that the loan was tentatively approved by the staff of the RFC
Mortgage Company, but was rejected by the RFC Board on the ground
that the loan was too full and that the project, furthermore,
would impair the value of other properties in the neighborhood.
More recently, Hemphill-Noyes made an offer to finance
the project by means of a bond issue* This proposal was rejected
ty ltr# McDonald because of a policy previously established on my
recommendation after I had gone thoroughly into the bond-issue
question in the autumn and winter of 1935-36. It recommendation
fr
was that all efforts to finance large-scale projects by public
offerings of bonds be held in abeyance until (1) the Act itself
was clarified with respect to large-scale projects and (2) a group
of bond houses was formed that could be relied on for continuous
and orderly marketing.
The Henderson project well illustrates, I think, the considerations that prompted my recommendation. The proposed rental
for the project is $17 per room, which compares favorably with a
range that is probably from $20 to $25 in neighboring properties.
But is $17 designed for "families of low income* and is it "lowcost housing" within the meaning of the Act? And is the Federal
Housing Administrator, with the answer to this question depending
solely on his interpretation of the vague phrases I have quoted,
justified in giving his approval to an issue of bonds to be sold
to the general public ty a Hew lork Stock Exchange firm that is
in no sense an established mortgage-lending institution?
If a life-insurance company, for example, wishes to take
the mortgage in the circumstances I have related, there seems to me
to be no practical reason why the Administrator should withhold his
consent when the conditions of the FHA have been complied with.
Likewise if a small group of banks wishes to take the mortgage in
the form of a bond issue for their own portfolios. But the transaction takes on a different complexion in the light of a public
offering of bonds.
I am attaching the letter that I shall send to Mir. Rodger
if it meets with your approval.