HOUSING: Slum Loans

Herbert Hoover, raised in the country, is a champion of the small home owner. His committees and conferences and finally the Home Loan Bank system have all been designed to preserve the independence of millions of little bourgeois kings in their little bourgeois castles. Herbert Hoover believes that, besides helping business, protecting and promoting the small home is good for the individualistic integrity of the citizens, for the soul of the nation.

Before the Hoover Administration began to get actively exercised about the Depression, New York’s Senator Robert F. Wagner introduced, among other features of his proposed Unemployment relief legislation, the idea of lending Federal funds for city slum clearance. Robert Ferdinand Wagner, born in rural Germany but raised in a teeming tenement district of Manhattan, well knows the housing conditions that exist and are for the most part steadfastly ignored, even denied, in every city in the land. Alfred Emanuel Smith and other political friends of Senator Wagner with city backgrounds lent him their support in pushing the idea of slum clearance with Federal funds on a self-amortizing basis. Thus it came about that Reconstruction Finance Corp.’s $1,500,000,000 new capital voted late in June was made available for replacing dark, filthy, unsanitary city stink-holes with light, airy, modern apartments at rents within the reach of humblest wage workers. Last week New Yorkers moved forward to get some of R. F. C.’s money for this purpose.

The Relief Act of 1932 was not drafted to put millions of dollars into the hands of speculative realtors and builders. Congress, in authorizing loans for slum clearance, demanded a measure of State or municipal supervision over such self-liquidating projects. Federal dollars are to go only to “corporations formed wholly for the purpose of providing housing for families of low income or for reconstruction of slum areas which are regulated by State or municipal law as to rents, charges, capital structure, rate of return and areas and methods of operation.” As New York is the only State today which has a law regulating limited-dividend housing corporations, R. F. C. slum loans will go exclusively to New Yorkers until other States meet this Federal provision.

In 1926 was created the New York State Housing Board, chairmanned by Brooklyn’s Darwin Rush James. Under its control private corporations were set up to: i) Build model apartments renting for $11 per room per month ($12.50 in congested Manhattan); 2) borrow 663% of their cost on mortgage bonds; 3) pay 5% or less on their borrowings; 4) restrict dividends to 6%; 5) apply surplus to reduce rentals. Since 1927 eleven housing projects around New York City have been completed under the Board, representing 1,918 apartments costing $10,161.074. Four of them were co-operative undertakings by the Amalgamated Clothing Workers of America. Ten of them are making money. All of them have supplied tenement dwellers with decent housing. But New York’s slums still teem.

Last week Chairman James of the New York Board went to Washington to pave the way for R. F. C. loans. His Board would not borrow money directly from the Government but would pass on the loan applications of local housing corporations which have already filed with the State agency plans for spending $120,000,000. He was hopeful that R. F. C. would advance two-thirds of the building costs, taking mortgage bonds as security. The Government interest rate, to meet the New York law, must be 5% or less. The R. F. C. was sympathetic. As a starter, a $50,000,000 loan was anticipated shortly.