of the Housing Corporation, to make an investigation of the feasibility of transferring taxes from improvements to land values.

There are shortages of houses. You ask another witness whether he had been in cities. Within about 9 months I have been in cities from Boston to San Francisco and Seattle to New Orleans, and all over the country, and the housing conditions are desperate and nothing has been done on the housing situation. You know that Langdon Post, commissioner of tenements in New York City, has commenced to do what we urged when I was there for many years should be done, a simple thing, just enforce the law and close these insanitary tenements instead of repairing them. It is true that at least 40,000,000 people in America live in substandard housing, but guaranteeing mortgages is not going to affect the housing situation except to make it worse.

And we have tried these other experiments-and it is admitted that they are experimental-and God knows I never imagined that one administration would try so many economic futilities and experimentation. And they are not working. That is not my indictment; the indictment of the American Federation of Labor in this May Monthly Review of Business.

I am not at all criticizing people who want to help housing, but not a single European country-and I have studied municipal housing in most of them-has gotten at the basic principles involved in housing the people; that is, unskilled workers and people of small incomes, at a decent rent or helping them to get homes.

Furthermore, Mr. Chairman, it is not going to be possible in my judgment to do this. I note in this morning's paper that the President anticipates that there is going to be exploitation next year because he is going to ask you-I will just read it briefly-to do the following things in the New York Times this morning: Creation of a permanent labor board within or independent of the Department of Labor. That will not make one job additional.

Federal unemployment insurance. That will help people to exist. National old-age pensions, Nation-wide insurance against sickness among industrial employees; provisions for a long-range Federal housing program.

Well, if it is anything like the contemplated one it means subsidized land speculators, because I took it up carefully with Mr. Kohn, with Secretary Ickes, both of whom I have known for a great many years, and on the cheapest land that they know they could get, with 22 families per acre, which is all it should be except in very congested areas, each family would pay $100, in round figures, a year land rent, and they cannot afford it, and that was the cheapest they could get.

The next proposal is an amendment of minimum-wage provisions of the N.R.A. to relate wage rates to living costs. Now, that program is social insurance against exploitation, but Germany did it. When I was over there in the early nineteen hundreds they were going wild over it. England did it. And none of them have settled the issue.

Now, with the purpose of this bill, of course, I am in hearty accord, but I suggest that the Federal Government should not enable any insurance company or any mortgage company or any other

company to continue to take excessive interest rates from any individual. The Government has no right to do that. In my judgment, no government has a right to guarantee any return on income from property until the people of the Nation are assured a decent living, and I trust that Mr. Hopkins will talk as frankly to you if he appears as he has at other times.

If you want to meet this housing situation, you will have to create a Government housing corporation with the right of eminent domain to go into every city of the Nation and condemn property and insist that the local authorities clean insanitary properties. You will have to give the Federal Government the power to insist that cities and States tax the Vincent Astors and the Vanderbilts and the Morgenthaus-I speak from my wide experience in New York Cityand stop taxing people who put up little homes. You may know that savings and loan associations, the national president, Charles O'Connor Hennessey, has advocated this for years.

If you want to have public works, a big program, and increase what we did last year, which was roughly a little over a third of the 1930, or approximately a third, you will have to get the N.R.A., the public-works section, to provide that you assess the cost of improvements on property benefited.

I have submitted to Mr. Ickes a statement prepared by an important commercial institution in New Jersey showing by counties, six counties, the increase in land values due to the improvement, for which they were asking the Federal Government to give them money, and it was almost exactly six times as much as the cost.

This is a reactionary measure, in my judgment this section. Housing I am discussing particularly, because it is a complete evasion of the economic issues; and you cannot get us back to prosperity by trying to keep the overhead burden of rent, interest, and profits.

I hope you will pass a real housing bill. I will be very glad, Mr. Chairman, to see this committee substitute a really intelligent bill for the measure which was handed to you; and if you have even 25 percent of a success in such a measure as you had in curtailing the peculations of the New York Stock Exchange, you will have conferred another very great benefit upon the American people. I thank you.

Senator GOLDSBOROUGH. Mr. Marsh, I gather from what you say that you favor the principle laid down in this act, but thing it ought to be amended in very many particulars. Have you any constructive amendments that you can submit to the committee?

Mr. MARSH. I am not a bill drafter. I outlined the principles of the bill for a Government housing corporation, and, adding a detail, I will state, as I shall on the radio tomorrow, that the Government, if necessary to do this, should take over the Steel Trust and the Cement Trust and the Hardware Trust and the rest of them, so that they can provide housing decently.

Senator GOLDSBOROUGH. That is a big job, sir.

Mr. MARSH. All right; if you cannot do that, there will have to be-no; you are on the other side. A party will have to come in which can do it.

Senator GOLDSBOROUGH. I hope you are not far wrong.

Mr. MARSH. I am not discussing politics, because my slogan about politics is: "If Thou, O Lord, should mark iniquity, O Lord, who would stand?" And I do not talk politics.

But I think you realize when the A. F. of L. says there is no increase in purchasing power of those who are employed or reemployed, because the cost of living has gone up as much, and the only reason we have not a complete chaos and collapse in the country is because the Government has dished out-it had to-in loans on relief more than the total increase in the wage bill and the total increase in the amount farmers get.

And how do they get it? By borrowing from the rich instead of taxing them. My first concrete suggestion-I will have a bill drafted within a few days if you like one-is if you will guarantee its

enactment.

Senator GOLDSBOROUGH. I am afraid you will have to leave that with the President. I do not think I could guarantee that.

Mr. MARSH. Your interest in the question aroused in me the hope that you can do so, Senator.

sir.

Senator GOLDSBOROUGH. No; I am afraid that is too vast a power,

Mr. MARSH. But Congress has not yet surrendered its right constitutionally to initiate legislation and to pass legislation. Don't get me started on that, please.

Senator GOLDSBOROUGH. I am not going to start you on that; no. Mr. MARSH. Second, as the whole building problem is involved in this, you can amend the public-works section, as I suggested with Senator Wagner sitting with the Senate Finance Committee when this bill was pending, to provide that the cost of improvements be assessed upon property benefited; that is, of Federal improvements. Out of that $3,300,000,000 carried in that measure Secretary Ickes wrote me the other day-I am using round figures-$2,550,000,000 is to be paid by the Federal Government. The States and the cities do assess a lot of the cost of these improvements upon property benefited, and I was informed that there is nothing in the Federal Constitution to permit the Federal Government to do what cities and States do-that is, assess at least part of the cost of improvements on property benefited-but equally I was informed that there was nothing to prohibit it.

If you seriously would like to have such a bill drafted, I will get it to you in a few days, and I think the best man to draft it would be Hon. Robert D. Kohn, head of the Housing Corporation.

The other is a simple amendment which will save the Federal Government billions of dollars in the course of a year or two.

I thank you very much and appreciate the privilege of appearing. The CHAIRMAN. We will be glad to consider anything you submit, Mr. Marsh.

Mr. MARSH. There are some minor verbal amendments. Suppose I write a letter on that and do not take the time. But please do not think that by submitting amendments I endorse the methods which this bill contemplates.

The CHAIRMAN. I understand.

Mr. MARSH. Thank you.

The CHAIRMAN. Now we will take a recess until tomorrow at 10 o'clock.

(Letter referred to is as follows:)

HON. DUNCAN U. FLETCHER,

THE PEOPLE'S LOBBY, INC., Washington, D.C., May 19, 1934.

Chairman Senate Committee on Banking and Currency,

Washington, D.C.

DEAR SENATOR FLETCHER: In conformity with the suggestion of the committee, I am submitting herewith in addition to my testimony on the bill (S. 3603), suggestions as to the bill.

Section 2, page 3, lines 5 following, provide that the President may in lieu of calling on the Reconstruction Finance Corporation for funds, allocate amounts from funds available to him or may be made available for emergency purposes.

66

It seems unwise in undertaking a project of this sort, to have this open, instead of making adequate and specific provision. Same section (p. 4, line 1, ff) permits the board of directors 'without regard to the provisions of any other law" to appoint employees, etc. Such latitude is unwise in a measure of this importance, for civil-service rules should be enforced even in an emergency. Section 5, page 6, line 8, permits the corporation "upon terms to be determined by it" to insure mortgages, etc. If this is to be done, and I opposed as you recall the general principles of the bill, Congress should determine the basic principles upon which Government insures mortgages and liens. Section 6, page 7, line 18, following, not only unconditionally guarantees bond principal and interest by the United States, but stipulates that such obligations" shall be exempt, both as to the principal and interest from all taxation (except surtaxes, estate, inheritance, and gift taxes)" now or hereafter imposed by the United States, etc.

It is somewhat crowding the mourners to guarantee principal and interest and not to tax income therefrom. We should get away entirely from the issuing of tax-exempt bonds. Section 202, page 13, line 5, has a typographical error, the word "of" appearing twice consecutively. Same page, section 3, line 7, stipulates that the minimum amount of capital with which any association can commence business "shall be not less than $5,000,000." This would seem to preclude smaller institutions from participation in the benefits thought to be obtained by the bill. Section 210, page 16, line 24 following, precludes the Board from winding up the affairs of any association until the value of its assets" is less than one-twentieth in excess of its outstanding liabilities." This would permit a corporation to continue up to this point and where principal and interest are guaranteed by the Government, this certainly is not a safe margin. The assets should be at least one-third in excess of outstanding liabilities. Section 215, page 19, line 6, makes a reference to section 5243 of the Revised Statutes, which, of course, may be intelligible to a lawyer, but is a dangerous precedent. Section 307, paragraph (b), page 30, line 21, states the insurance companies shall pay "all valid credit obligations of such Federal savings and loan association, etc. The word valid should be defined in the law, and not left to political interpretation. Section 308, page 33, line 14, states that the insurance corporation "shall perform all such reasonable duty" as depository and fiscal agent as may be required of it." The duty of the corporation should be specifically defined in the law, and not left to the interpretation of the Board.

Yours sincerely.

BENJAMIN C. MARSH, Executive Secretary.

(Accordingly, at 12:15 p.m., the committee adjourned until 10 a.m. the following day.)

NATIONAL HOUSING ACT

SATURDAY, MAY 19, 1934

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met at 10 a.m., pursuant to adjournment on yesterday, in room 301 of the Senate Office Building, Senator Duncan U. Fletcher presiding.

Present: Senators Fletcher (chairman), Barkley, Bulkley, Costigan, Adams, Bankhead, Steiwer, Kean, and Couzens.

Present also: Senator McCarran, of Nevada.

The CHAIRMAN. The committee will come to order, please. We will hear first this morning Mr. Edison. Mr. Edison, will you please come forward to the committee table and take a seat opposite the committee reporter?

Mr. EDISON. Certainly.

The CHAIRMAN. Give you name, residence, and occupation.

STATEMENT OF CHARLES EDISON, LLEWELLYN PARK, WEST ORANGE, N.J., PRESIDENT OF THOMAS A. EDISON, INC., AND STATE DIRECTOR FOR NEW JERSEY FOR THE NATIONAL EMERGENCY COUNCIL

The CHAIRMAN. Mr. Edison, will you tell us what has been your connection here in Washington with this work?

Mr. EDISON. Mr. Walker asked me to come down to help on this housing program. I have been in Washington just a short while associated with him in working up some of the details of this program.

The CHAIRMAN. We will be glad to hear your views about this bill (S. 3603), and its plan.

Mr. EDISON. I should like to discuss this bill from the angle of one who has been out on the firing line. I have just come from New Jersey, which New Yorkers call "the sticks", where I have been out on the firing line meeting people. As State director for New Jersey there have been many problems we have had to handle in coming in contact with people, problems that have to do with the various agencies of the recovery program.

Prior to becoming State director for the National Emergency Council I served, since last summer, on the State recovery board and on the regional labor board, which service brought me in contact with people, all of the time with people, and with their problems, with the every-day human problem that would come up to a man occupying such position.