rapidly; that they tended to become unwholesome and unsightly unless they were built of the best materials, carefully put together, and with good foundations. It was pointed out that types of emergency construction such as had been erected at San Francisco after the earthquake and fire and in Galveston after the flood, though built for temporary use only, tended to become the permanent residences of the poorer classes. The houses, instead of being torn down, were moved to the back of the lots, and became the homes of alley dwellers, new houses being constructed on the street. Or, where new houses were not constructed, the unsightly shacks remained, depreciating property values and retarding the development of the community. In some parts of these cities "shack towns," ugly clusters of dilapidated, insanitary structures, remained, and in such quarters low standards of health, and often of morality as well, were prevalent. The building of shacks was, therefore, bitterly opposed by all who had had experience in this subject.

In the North, where winters are severe and where houses must be heated and must be weatherproof, so substantial a house is required that it was thought there would be no economy in the use of temporary structures, except for the housing of single men. The difference in cost also, is relatively slight between a substantial ready-built house, with proper foundation, cellar, and equipment, and a permanent frame house, when built with all the economies which can be secured through largescale production. Yet the salvage value of the latter type of house is materially greater than that of the former. Chiefly for this reason it was determined to construct permanent houses in all communities in which there would be a demand for such additional housing after the war emergency should be over. Temporary structures were designed, however, for remote communities in which the war-time population would be abnormally large and in which permanent houses would have no salvage value, except for the materials employed in their construction.1

In many communities in which there would be a demand for permanent family housing there would be no permanent demand for dormitories built to house single labor during the war period. In such places temporary structures were erected. In Washington the Government hotels for women were of temporary construction. Few exceptions were made to the ruling above and the experience of the corporation since the armistice has amply demonstrated their wisdom.

1 Ready-built houses were constructed, for example, at Norfolk, Va. (see vol. II p. 274), and at Seven Pines, Va. (see vol. II, p. 34.-3). At Pompton Lakes small dormitories convertible into cottage homes were erected.

STANDARDS OF HOUSING.

The Federal Government having determined to build permanent family dwellings, it was incumbent upon it to decide upon standards with reference to planning, materials to be employed, lighting, ventilation, heating, sanitation, and fire prevention. The purpose of such standards was twofold-to provide for the health, safety, and well-being of the occupants of the house, and to standardize construction in order to economize in the use of materials and labor in so far as such economy might be consistent with the wellbeing of the occupants of houses.

The first step taken by the Housing Bureau was to prepare a manual of standard instructions for the use of its architects. The housing committee of the Council of Defense had already begun a compilation on this subject, which was carefully formulated and revised by the Bureau of Industrial Housing and Transportation in February, 1918, and published in March under the title "Standards Recommended for Permanent Industrial Housing Developments." Twenty-five persons were associated in the preparation of this pamphlet. The standards were presented, not as inflexible requirements, but with the statement that "any plans which failed to conform with them were not likely to be accepted, unless supported by very strong reasons." These provisions, which are published in Appendix X of Volume II, specify in some detail the size, arrangement, and equipment of dwellings of each type that the bureau contemplated erecting. Their publication was closely followed by the preparation of detailed specifications of sizes and materials of house parts, specifications which, however, had to be materially modified from time to time by rules issued periodically by the War Industries Board. (See report of Requirements Division, p. 192.)

Standard house plans were drawn up by the architects of the Housing Bureau applying these printed standards and providing for the economies which come from large-scale standardized construction. (See Vol. II, Chap. V, and Appendix XI.)

GOVERNMENT LOANS TO PRIVATE BUILDING COMPANIES VERSUS GOVERNMENT CONSTRUCTION.

The most difficult question of policy which faced the Bureau of Industrial Housing during the early months of 1918 was to determine upon the best method of investing Government funds for the promotion of quick construction of suitable houses in quantity. No one plan ever secured the unanimous approval of the staff of the Housing Bureau. Three main types of plan were considered, but various modifications were

suggested to each. In brief, the three plans may be described as

1. Supervised Government loans, through local financial institutions, to individuals, operative builders, and corporations.

2. Federal loans to a single representative local housing corporation to be formed and to operate under the direction of the Housing Bureau.

3. Construction and operation of houses by the Government direct.

The first of the above plans was offered by the Real Estate Division; the second plan was favored by the rest of the staff of the Housing Bureau, and was virtually the same plan as had already been put in operation by the Emergency Fleet Corporation. It was the expectation of the Housing Bureau until early in June, 1918, that some form of plan 2 would be followed. On June 13, 1918, plan 3 was formally adopted as the policy of the bureau at the order of the Secretary of Labor. The details of each of these policies and the reason for abandoning plans 1 and 2 are submitted below:

THE REAL ESTATE DIVISION PLAN.

Under plan 1, in its final form, attention was called to the "thousands of building organizations, individuals, and property owners normally engaged in the production of new houses throughout the United States who are idle" and to the fact that "in every community there are lands that owners hold and would be glad to improve if money could be procured, even upon the customary loaning basis." The following plan was submitted by the Real Estate Division to "get such agencies in motion upon a minimum entailed expense. The original wording of this and other office memorandums has been retained throughout this chapter.

1. The making of loans through local banks, trust companies, and commissions appointed as trustees for the Government not to exceed 80 per cent of the cost of the land and buildings, said loans not to exceed a term of 15 years, installments on principal payable semiannually with interest at the rate of 5 per cent per annum, said loans to be secured by a mortgage or deed in trust, which shall be an absolutely first lien on the property. The approval, terms, and conditions of loans are to be controlled by this bureau and the said trustees acting merely as representatives of this bureau in the execution of the c'etails in connection herewith, thereby avoiding the entry in the matter of any influence or personal interest on the part of such trustees.

2. The assumption of excess war cost by the Government.

3. Payments on building loans to be made as the work progresses. 4. Where practicable, to provide priority shipments and reduced prices on material available to the Government.

In order to overcome possible objections to this policy, such as profiteering and shoddy construction, the Real Estate Division has seen fit to

1. Require, prior to the making of such loans, the submission by the prospective borrower of detailed plans, specifications, map of project, showing the layout of proposed houses, survey of the land intended to be developed, and the signing of an application for a loan, which calls for further material information, a copy of which is on file in the Real Estate Division.

This bureau to consider the suitability and location of the land for war housing in making of loans herein contemplated. The

appraisal of land made in connection here with shall control and be applied in fixing cost for sale and rental.

2. Limit the sale price to purchasers to an amount not to exceed 8 per cent plus the cost of land and structure.

3. Require rent not to exceed 13 per cent, which includes maintenance, interest on mortgages, taxes, assessments, etc.

4. Require amortization of loan at the rate of 3 per cent per annum, payable semiannually, as above mentioned, last payment to include unpaid balance of principal.

5. Provide for proper inspection on construction by the Govern

ment.

6. Require as a protection to the Government in arriving at the excess war cost a sworn statement of cost of the building, supported by vouchers filed with the bureau upon completion.

The following argument was submitted for this plan: Under this policy all questions are settled before the prospective borrower secures the loan, thereby avoiding endless delays that naturally result where questions are left to be decided on or approved by the Government subsequent to the making of the loan. This policy consequently contains sufficient points of attraction for practical builders and sufficient limitations to avoid profiteering and shoddy construction. *

*

*

Furthermore, too much stress need not be laid upon the limitations of the sales and rental of the houses for industrial workers only. Generally speaking, all of the people must be housed. As soon as residents other than industrial workers living in a given locality have houses in excess of their needs, the war workers derive the benefit thereof, and vice versa. Therefore, whether the houses are occupied by war workers or not, the practical result desired is the adjustment of supply and demand. The value of this plan is that it translates the requirement of the Government into terms of local custom and procedure, largely dissipates community resistance, and stimulates immediate action.

CRITICISMS OF THE REAL ESTATE PLAN.

The objections to the plan of the Real Estate Division were summarized by the assistant director of the Housing Bureau as follows:

The advantage claimed for the real estate plan is that it will secure houses more speedily than under the adopted plan. While there might be single instances in which this would be true, it is difficult to see how a plan involving the operation of so many different small builders in the same community, with the diversity of plans and the necessary preliminary investigations as to financial responsibility, etc., and in the making and carrying out of the various contracts with them, and by them with others, could do otherwise than tremendously retard the whole plan of supplying houses in the quantity needed in the given community.

The chief disadvantages which appear in the real estate plan can be briefly summarized as follows:

1. The success of the real estate plan depends on speculative profits. Only such profits would call the local builders into the field. This alone is a serious objection since, with the already exceedingly high cost of labor and material which must be met, we would so burden the expense of the houses to the worker that we might largely defeat the purposes of making them attractive to him, and thereby fail to induce him to take up his abode in the community. The Real Estate Division recognizes that "the machinery of competitive housing operations is already paralyzed." Therefore, there must be a greatly increased inducement in the form of speculative profits before these housing operations could be revived.

2. The widely scattered and unrelated building operations in a single community would result in—

(a) Greatly increased difficulties of control or supervision by the Government with entire absence of control after completion. This applies to every feature outlined above in discussing the control maintained by the Government under the adopted plan.

(b) The advantage of large scale or quantity production would be completely lost, and there would be constant competitive bidding in each locality for labor and material, with the consequent increase in cost as well as delay in construction. Nor would any one of these smaller projects contemplated by the Real Estate Division be large enough to attract and enlist the services of the more skilled contractors, architects, and town planners, all of whom could be employed at a relatively small cost in a single large project.

(c) Practically all the advantages in uniformity of design and plan with reference to the character of houses constructed and the peculiar needs of the particular community would also be lost. The Real Estate Division well says that the small operators seriously object to "limitations."

(d) It is entirely conceivable that in many communities it might not be possible to secure a sufficient number of small independent builders to supply the number of houses required by the Government, and much time would be lost in an elaborate investigation to determine their existence, number, and capabilities, with the result that the Government itself would have to step in finally and supplement the program after much time had been lost. Furthermore, the most careful investigation and subsequent supervision would fail in many cases to prevent the community and the Government from being victimized by builders who were later found to be wholly irresponsible. The adopted plan (plan 2) amply secures against such a result.

(e) It would involve almost endless delays and complications to secure the necessary priority orders for a number of small builders or contractors in each community, whereas this is comparatively simple with a single large contractor operating directly under Government supervision.

GOVERNMENT LOANS TO LOCAL HOUSING COMPANIES.

Plan 2, as submitted at the staff conference on May 29, contends that the primary purpose in the whole scheme of industrial housing is to provide such living conditions as will conduce to the highest degree of efficiency of war workers, without which shipyards, arsenals, and factories will run short-handed and produce less than their maximum output. Our housing plans are and should be, therefore, a part of the larger 'win the war' policy, and time is the very essence of such policy. In working out this policy new houses should be built, therefore, only after every other means of stabilizing labor in a given community has been exhausted, as by saturation, transportation, etc.

The development of these new communities, for that is what many of them will be, should be attended by as many factors as possible making for community stability, and this requires a consideration of the social interest or welfare of the individual worker of the particular locality and of the country at large. The maximum of these latter factors, susceptible of introduction in any case consistent with the speedy accomplishment of the pri mary purpose above mentioned, will make what for brevity may be called the ideal practical plan.

The detailed suggestions below were offered as a tentative scheme for the promotion of housing development "where the Government extends aid to local housing companies."

HOUSING DEVELOPMENT PLAN WHERE GOVERNMENT EXTENDS AID TO LOCAL HOUSING COMPANY.

1. A housing company to be formed under the laws of the State in question. All the capital stock to be subscribed for by local interest, and to represent at least 20 to 30 per cent of the total fund for the enterprise. The subscribed capital stock to be paid for from time to time pro rata as the Government loan is made. The company to procure the necessary land, build the houses, and manage and sell the property.

2. The Government to loan the company the balance needed for the work, approximately 70 to 80 per cent, at not less than 5 per cent interest payable semiannually, secured by a first mortgage on all the property of the company, the loan to mature in 1933. Interest to run from the time when the Government advances begin and until completion of construction and to be added to the principal; interest shall run from the date of completion, but the right to foreclose for any default in interest to be suspended for the first year.

3. The company will develop and improve the property and construct the housing and community features according to plans and specifications, and with a choice of architects, engineers, and contractors, all of which, as well as the contracts, must receive the approval of the Bureau of Industrial Housing and Transportation. The management of the property and the administration of the reserves will be subject to Government inspection and audit.

4. It is proposed that the board of directors be of such size as to allow representation of a number of the local public-spirited interests to become stockholders in the company. The Government should have ample representation on the board of directors. This can be secured by a pledge of enough stock to protect the Government's interests until the Government loan shall have been paid in full, and minority representation can be provided for in the articles of incorporation. The active operation of the company can be conducted by an executive committee chosen under the by-laws with majority and minority representation.

5. The policy of the company will be to rent houses to workmen in the war industries at moderate rentals and in case of sales to sell at prices attractive to the same class of employees. Rentals and selling prices will have to be fixed to give the returns necessary for the various financial needs of the company, including the amortization of the investment during an assumed life of the improvement and the amortization of the local capital.

In fixing rentals and installments the following factors will have to be taken into account:

1. Fixed charges.-Interest to the Government, interest to the housing company or its successor, insurance, and taxes.

2. Reserves for upkeep of rented houses.-Repairs, renovating, and redecorating.

3. Reserve for loss in case of non-occupancy.

4. Overhead expenses of administration.

5. Amortization of total investment.-Government advance and local capital.

The amount of rental ought to be sufficient, if possible, to cover all the above, and certainly should be kept as low as possible.1 In case of sales the installments should not be less than the fixed rentals thereon.

While any lease or deed will run in the first instance to an industrial employee, no selling restriction will be placed upon a subsequent sale by the purchaser, except that in case of the intention of any purchaser (original or subsequent) to sell before the amortization of the total investment he shall notify the company and per

1 This was intended to mean that the rentals should not be so high as to cause hardship to the industrial workmen for whom the houses were built.

mit it to purchase from him at an appraised value before he may exercise the right to sell to an outsider (the appraised value to be determined by three appraisers chosen in the usual manner), the company on its part not to be bound to buy but to undertake to use its best efforts to obtain a purchaser satisfactory to it to purchase at the appraised value, an effort being made, as far as legally possible, to restrict the occupancy to war workers.

6. On a date not more than five years after the close of the war an appraisal shall be made of all the buildings to fix their reproduction cost1 as to that date. This appraisal to include all houses sold as well as those still owned by the company. If the reproduction cost found on that appraisal should be less than the total original cost of the buildings, the Government will abate the principal of its loan to an equivalent amount in favor of the company, the amount of this abatement to be called the excess war cost, but the Government to be given the benefit of the land increment.

Separate appraisal shall be had of each house sold by the company to a purchaser (whether fully paid for or not), and he shall receive the benefit of the allowance of the excess war cost upon his particular house, either by a credit upon the balance of his purchase price, or where that balance is less than the excess war cost by payment of the difference to him in cash.

7. Deeds to purchasers shall contain in full restrictions against nuisances, business occupations, except in permitted localities, and also restrictions of the character of business, setback, sheds, outbuildings, backyard and alleyway development, minimum cost of any new building to be erected in place of that built by the company, percentage of lot, occupation, etc. All these restrictions to be permanent for the benefit of all other purchasers.

8. The mortgage in favor of the Government to run directly to a trustee to secure the bond or bonds given to the Government, this trustee to be preferably a local trust company. Before any sale the trustee will give a release of the property in question so that the company can give the purchaser an unencumbered deed. The trustee will receive the amount of each payment (which will go to the Government) and purchase-money mortgages of the purchasers for the balance in each case, these purchase-money mortgages to be held by the trustee as security for the Government loan in substitution for the properties released. As the purchasers from time to time make payments on account of the purchasemoney mortgages, these payments also will go to the Government.

9. After payment of accrued interest on the Government loan, operating expenses, fixed charges, and the sums necessary for the service of the various reserves, the company will apply any surplus income to the amortization of the Government loan at the rate of about 2 per cent on the original total amount of the loan.

If by reason of installment payments the company shall have available a greater amount than about 2 per cent per annum of the Government loan, the additional amounts also shall be used to amortize the loan. If amortization takes place in any year in an amount greater than such per cent on the loan, the amount of the surplus amortization shall be deducted from the amount of the original loan in order to furnish the basis on which future amortization will be required.

10. After meeting the annual requirements covered in the preceding paragraph, the company may pay dividends on the stock representing the local capital at a rate not exceeding 6 per cent per annum, payable at such dates as the board of directors may decide. The dividends shall be cumulative, so that if less than 6 per cent is paid in any year or years, the deficiency may be made up, when possible, out of subsequently accumulated reve

nues.

The words "and their value" should be inserted.

11. After the Government loan has been retired any surplus income may be used by the company for retirement of its capital stock.

12. After all the capital stock shall have been retired except the amount necessary to keep the company alive and to qualify directors, the company will apply its remaining assets in refunding to the Government the amount of any excess war cost which may previously have been written off. The company shall contribute any surplus to the locality for such public benefits as the board of directors of the company may decide to be the most appropriate at that time. They might, for instance, require cash assets to be applied in reduction of the city's bonded indebtedness; or, if available land remained, they might dedicate it for public uses, such as parks, school sites, etc. The articles of incorporation will cover this point in general terms.

13. Finally, during the life of the loan to the housing company the Government shall have the option of canceling the agreement and acquiring its interest by paying to the company all that the company has reasonably expended in the enterprise, with interest from the several dates of expenditure, less the total amounts received at any time by the company with interest on such receipts from the dates of their accrual. This option may be exercised whether the company be in default or not, and will be a means of insuring the management of the enterprise for the best interest both of the Government and of the worker.

In the operation of the foregoing plan, the Government would suggest that the housing company should rent rather than sell to the industrial workers during the period of the war, if it is feasible to avoid making sales of the houses, the company, however, to make a provision in each lease or otherwise that should the house be sold to the tenant after the war, the housing company will give a credit on the purchase price for a reasonable proportion of what he has paid in the form of rent. This plan would leave the community freer to readjust itself to postwar conditions and to adopt such plan of private or of community owership as may then seem most desirable, both from the standpoint of the individual worker and of the community. It would also leave much more flexible the matter of controlling the character of occupancy of the property during the war and would obviate the necessity of inserting in the deeds (or mortgages) restrictions against alienation or special occupancy, which are of very doubtful practicability. It should always be kept in mind as of first importance that the houses built or acquired must be occupied only by war workers during the period of the war. In case of a sale, it would be difficult if not impossible in many cases thus to control the occupancy. Death, discharge, disability, or removal of the original purchaser, or a resale by him to a nonwar worker might thus entirely defeat the purpose of the appropriation. But all this could be effectively controlled if the property is rented and not sold to the worker during the war.

CRITICISM OF COMPANY PLAN BY DEFENDERS OF REAL ESTATE PLAN.

The Real Estate Division was opposed to the plan adopted because

1. It is so vague and general as to be impossible of practical application.

2. It is of such a nature that practical builders will not operate thereunder on account of the numerous limitations and conditions, notwithstanding that the business of housing ought to be operated by those who understand it.

3. It gives to one company a monopoly of the housing problem in a particular locality.

4. The almost impossibility of sufficiently protecting the Gov

ernment.

5. Workers will not live in houses owned or controlled by their employers.

6. Loss of time and money inherent and incidental to such a policy on account of inexperience and lack of knowledge of the subject.

The policy suggested by the staff at the conference above referred to, other than the Real Estate Division, in substance is a copartnership consisting of the local interests and the United States Government. The Government to furnish practically all the money and practically build the houses. In this plan the first thought apparently seems to be the community feature. It is well to have these community features, but we are at war, and the first problem is housing. Community features will come in due course. There is no question that this plan will be attractive to practical builders and consequently will resolve itself into the construction of houses by local housing companies consisting of manufacturers, bankers, chambers of commerce, and the Government, which on account of the many interests represented will naturally be conducive to a great loss of time, due to such diversity of interest. Practical builders will not operate under this plan because they are subjected to too many limitations. These local housing companies in turn will very likely be compelled to resort to practical building companies or individuals to do their construction who will require a profit. Furthermore, in addition to such profit, these local housing companies will be obliged to add their administrative expenses, which will, therefore, add to the overhead, and consequently unduly increase the cost of construction. Sight should not be lost of the great loss of time incurred in the process of organization of such companies.

The great advantage of the plan proposed by the Real Estate Division is that the Government will not only get its money back because the builders in protecting their interests will simultaneously protect the interests of the Government, but at the same time will secure the much-needed houses at a maximum speed.

The construction of houses is a business just as the manufacture of guns, ammunitions, ships, banking, etc. Let gun manufacturers manufacture guns, ammunition manufacturers manufacture ammunition, shipbuilders build ships, bankers do banking, and let practical builders build houses.

There seems to be no difference of opinion in regard to the alternative plan, viz., that if no other feasible method of operation can be arrived at, the Government itself shall enter upon construction of houses.

THE OBJECTIONS OF THE REAL ESTATE DIVISION CONSIDERED.

The criticisms of the local housing company plan were answered by the assistant director as follows:

The following numbered objections in opposition to the adopted plan have been raised by the Real Estate Division:

(1) That it is vague.

This conclusion was perhaps reached because the Real Estate Division had before it the very brief outline of policy, which of course was not intended to go into details of operation, but which will be covered with ample detail and specific safeguards in the loan agreement, the mortgage, and other instruments that may be found necessary in putting this policy into effect.

(2) That practical builders will not care to enter upon the work because of the numerous limitations imposed by the Government. This criticism is in striking contrast to the charge of vagueness, and, in fact, it is not altogether clear just what the basis of the criticism is. Certainly the housing companies will be amply prepared to employ practical builders of the first order, since the contracts will be of a size to attract them. And in the subsequent operation of the development the housing companies will have ample means to employ men experienced in handling the sale and rental

of houses on a large scale. The Government itself will have the services and advice of its own practical builders, who will doubtless be of great aid in securing the services of other practical builders by the particular housing companies. If, however, it is meant by "practical builders," the small building operators who may be of limited or doubtful financial ability, we would consider it a distinct advantage to have such builders eliminated from the plan of operation.

(3) That it gives to one company a monopoly of the housing problem in a particular locality.

It would seem to be clear, from what has been said, that "monopoly" in this instance, with the adequate and continued Government supervision and control, has many advantages in these building operations which can not be secured in any other possible way. The stock objection to monopolies (which the Real Estate Division could scarcely have had in mind) that monopolies make inordinate profits out of the community has no possible application here, as the profits are limited absolutely to a 6 per cent dividend. But there is nothing in the adopted plan that would prevent the local builders from pooling their interests and bidding on the construction work. Other things being equal, no doubt the local interests would be favored in letting the contracts.

(4) That it is impossible sufficiently to protect the Government. One of the great advantages claimed for the adopted plan is the ease with which the Government's interest can be protected, as above explained. Conversely, it would be almost impossible to protect the Government's interests if it had to supervise and audit the accounts of a large number of small building companies in each community, whose limited financial proportions alone make them doubtful risks, aside from the multiplicity of individual managements which would have to be considered.

(5) That workers will not live in houses owned or controlled by their employers.

It is conceded that in many cases it is true that employees will not occupy such houses, while in many other cases it is not. But, true or untrue, the statement has no application here, since the Government will control these houses under the adopted plan.

The ownership of the manufacturers (if it could be accurately called such where they are mere stockholders in a company controlled in its policy by the Government) would be at most a divided ownership. No single manufacturer would own any group of houses or have any control over them. On the other hand, the small real estate operator would be found not infrequently to be dependent upon the local manufacturers for his financing, either directly or indirectly, and nothing would be simpler than for a single manufacturer to secure exclusive control of a group of houses through such real estate operator. While the manufacturers will be among the stockholders in the housing companies, the houses will after the war be sold wherever possible to the workers and precautions taken to protect them from falling into the hands of speculators. Provisions will be made that rents paid during the war will be in part applicable to purchases subsequently made. We should not lose sight of the fact that we are dealing with unusual conditions and where already workers have suffered greatly at the hands of profiteers in securing homes, which evil the adopted plan will attempt, as far as possible, to prevent. In view of these unusual conditions it is not anticipated that there will be any great difficulty in disposing of all the houses that may be built. Furthermore, the Government has reserved the right of "recapture" in the event efforts should be made to secure control of the company, whether by manufacturers or others, to the detriment of the workers. This "recapture," in such an event, would be impossible if we were dealing with small real estate operators.

(6) That there would be loss of time and money because of inexperience and lack of knowledge.