RECOVERY: $1 for $29

New Dealers generally admit that the first four years of the New Deal had two outstanding failures: 1) The building industry was allowed to lag behind general recovery. 2) The Government did not provide decent low-cost housing on a scale big enough to make a dent in U. S. slums. Last week when Senator Robert Wagner of New York thrust a housing bill into the legislative hopper, President Roosevelt was prompt to announce that the Wagner measure or one similar was “must” legislation for this session of Congress.

Year ago Senator Wagner got a similar measure passed by the Senate but the House failed to act on it. Now he has revised his bill, modeled it alter England’s successful housing measures. Chief features of the Wagner housing bill, 1937 model:

All the diverse housing activities of the Government would be lodged in one three-man Housing Authority. During the next four years $1,500,000,000 of low-cost housing would be erected by local authorities under Federal supervision. Two-thirds of the money would be obtained by the sale of bonds which the Federal Government guaranteed, principal and interest. The remaining third would be issued directly by local authorities. Dwellings for 375,000 families (houses or apartments) would be built at an average cost of $4,000. Rentals would be $6 (or less) per room per month. Only families which could not get safe and sanitary housing elsewhere would be accepted as tenants, thereby eliminating competition with private landlords.

To do all this, the only money which would be taken directly from the taxpayer’s pocketbook would be the difference between the $6 room rent and the rent that would otherwise have to be charged. This subsidy, paid by the Housing Authority and limited to 45% of the necessary rental income on any project, would amount to $450,000,000 spread over 60 years. Thus Senator Wagner estimated that the Government would put up only $1 for every $29 put up by private investors during the first four years and in the long run would pay about 2% of the $1,000,000,000 Federal loan for better housing.

One trouble with the housing bill, 1937 model, was that it was not launched four years ago. Construction costs have already risen sharply. If a building boom starts in the next four years, costs may go so high as to wreck some of Senator Wagner’s nice arithmetic.