HOUSING: Wanted: More McCrums

For four long years of War France and Britain tried in vain to break Germany’s 435-mile trench stronghold from the Channel to the Swiss border. For four years of Depression the U. S. Government has tried in vain to break the deadlock in the building business, to move the nation’s heavy industries once more into open country. Commander Hoover used exhortation. Generalissimo Roosevelt tried a more tangible method of as sault. In May he drew his plans. In June Congress approved them. In July organization began. Last week was launched the great housing drive whose unwritten slogan is “Recovery or Bust.”

Britain and France broke through the German lines in the fifth year of the War. If the U. S. fails to break through the building line in the fifth year of Depression, most economists believe that the result will inevitably be Inflation akin to revolution.

Organization. James Andrew Moffett, scion of an old family that had made its millions with Rockefeller in oil, proved his love for the New Deal last year by quitting as vice president of Standard Oil of New Jersey to back a more vigorous oil code than President Walter Teagle favored. For that he was rewarded with a job on the Planning & Coordinating Board of the Petroleum Industry, later got another job with Standard Oil of Cali fornia. This July President Roosevelt sat him down to organize the housing drive.

From the first, Housing Administrator Moffett met obstacles. The campaign mapped out for him called for: 1) modernization of 13,000,000 buildings in the U. S. ; 2) stimulation of a new building boom. Since both aims were to be accomplished without direct use of govern ment money, Mr. Moffett calculated that the Housing Administration would not need to hire more than 500 employes. On some days during the past month as many as 6,000 jobhunters haunted his offices. Politicians pulled wires on every side. By last week he finally had 250 carefully chosen employes, including his assistant. Albert L. Deane, able president of General Motors Holding Corp.

Housing also became Mr. Moffett’s immediate personal problem. He brought his 124-ft. yacht Bidou to Washington to live in. The District of Columbia has piers, at which yachts may be tied up, but the channels need dredging. The only pier with enough water to float Bidou was already rented for $30 per month to John Hays Hammond Jr. for his Ripple. Hence Mr. Moffett had to anchor Bidou out in the Potomac where he could not even have the convenience of a telephone.

His second housing difficulty was that the New Deal has filled every office in Washington. Mr. Moffett’s temper grew so short that for a while it looked as if the whole Housing Administration might be moved out of the Capital to Manhattan. At last some rooms were set aside in the new Post Office Building.

For these reasons Mr. Moffett, who had promised early in July that his organization would be functioning in 30 days, found his plan’s hung up. The campaign for new building was postponed to concentrate on modernization. Last week Alma McCrum, a Washington insurance agent, marched into a bank, signed a note, and as flashlights flickered, was given $1,200 to remodel the second floor of her home and rent it as an apartment. The housing drive was on.

Money Channels. Eighteen thousand U. S. banks had instructions how to provide money for millions of Miss McCrums. Building & Loan Associations, savings banks and insurance companies were soon to have their instructions. The plan was simple:

Each financial institution first applies to the Housing Administration for a contract under which the Government “insures” its building loans up to 20%. When this contract is issued, the bank can lend from $100 to $2.000 to a local property owner to modernize his home. The borrower need put up no collateral beyond his own good name in the community. The size of his loan is limited to one-fifth of his income. Repayments can be made in installments up to three years. In case of default the U. S. will pay the bank 20 cents on each lost dollar under the “insurance” contract. The maximum interest rate is nominally 5%, which on time payments works out at nearly 10% or slightly less than the interest charged on most commercial installment loans. Thus bankers were provided with a safe way of turning an honest penny. It was to their advantage to lend freely the idle funds of which they have a plethora. The Government is prepared to foot the bill for losses up to a total of $200,000,000—the maximum possible loss on $1,000,000,000 of modernization.

Prices. More than a year ago President Roosevelt called Dr. Oliver M. W. Sprague, adviser to the Bank of England, home to the U. S. to be his adviser. But when Dr. Sprague arrived he was not wanted. He disapproved of dollar devaluation, insisted on talking about the necessity of building construction and revival of the heavy industries.

England has lately had a building boom and last week Sir Raymond Unwin appeared in Manhattan to study U. S. efforts in the same direction. Sir Raymond was knighted in 1932 for giving nearly 40 of his 70 years to planning garden cities and improving Britain’s housing. But he found one significant difference between the housing boom in Britain and the hoped-for boom in the U. S. In England 260.000 working men’s houses were built in the past year after construction costs had fallen 25%.

Six weeks ago when Mr. Moffett took up his job he also had the idea that U. S. construction costs should be lowered. He got the lumber industry to reduce its prices 10%. There his success ended. Other makers of building materials pointed to rising prices, high costs of operation under NRA. The railroads, which were expected to cut freight rates on building materials, spent the entire summer busily calculating what rates they could raise to offset higher operating expenses (see p. 55). Labor, which constitutes the biggest single cost in construction, had set its face sternly against wage reductions. Michael G. McDonough, president of the A. F. of L. building trades, reported that 80% of his followers were without jobs. But these unemployed would apparently prefer to stay jobless rather than cut their sky-high wage demands.

Last week Administrator Moffett resigned hope of getting prices down. Said he: “Surely, if industry generally is op erating with little, if any, profit, it is not in a position to make a radical reduction in prices. I see no reason why repairs, improvements and modernization, and the building of new houses should be done without a fair profit to industry.

“Our position is simply that fair prices must be fair to both the producer and the consumer. We find that all of the leading items entering into building costs are below the 1926 price level.”

Miracle. For a decade U. S. citizens have been much readier to spend money on better automobiles than on better houses. Certainly they got better value for their automobile dollar than for their housing dollar. Since Mr. Moffett has no means of making better houses cheaper, the only means he has of starting a building boom is to make U. S. citizens care more for houses than for automobiles. To do so he must effect a miraculous change in public preferences. Last week he was at work on his psychological miracle. His tool was ballyhoo.

Ward M. Canaday of U. S. Advertising Corp. was his pressagent. Journals throughout the land were flooded with publicity material. Mr. Moffett went to see the President and from the sounding board of the White House steps the whole country was informed that the housing program was storming ahead. Comptroller of the Currency O’Connor gave an in-terview to the effect that all national banks were encouraged to lend. The American Bankers Association spoke likewise for its members. Secretary Roper declared that the U. S. needed 5,000,000 new houses, that a survey showed 61% of U. S. houses needed repairs. Abbeville State Bank of Abbeville, Ala. got national attention when it received the first contract insuring its modernization loans. Miss McCrum was photographed and newsreeled with the Housing Administrator. Mr. Moffett announced that in 22 states the average January temperature is 30° or less, that good houses are therefore greatly needed.

Presses ground out literally millions of copies of government circulars and pamphlets. A profusely illustrated booklet asked homeowners: “Are your basement stairs safe?” “Do the windows stick?” “Is the attic too hot?” “Does the fireplace smoke?” “How about the bathroom?” “Can you find things in closets?” Ardently the Government tried to cultivate a vast public desire for new toilets, more electric fixtures, bigger boilers, better kitchens, new rafters, new shingles, screened porches, insulation, fresh paint. Not since General Johnson undertook to sell his original Blue Eagle to the country last summer had the country been subjected to such a barrage of government ballyhoo and high-pressure pressagentry.

Results. Too early was it last week to count results. Modernization loan insurance was issued to 1,131 banks. Building stocks had a one-day flurry, 6,800 shares of Johns-Manville changing hands on the New York Stock Exchange, its price reaching $45¾—$21 under its January high. But then Mr. Moffett was only beginning his drive for a breakthrough.