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unpaid balance and amortization. By this arrangement the buyer will own his home free of mortgage in about twelve years.

Title is given to the buyer immediately upon payment of 10 per cent of the appraised value of the property. The United States Housing Corporation takes back a mortgage on the property, which is of the same form as that which is customary in building and loan associations. The buyer, therefore, immediately assumes the cost of taxes, insurance, and upkeep and relieves the Government of these costs. This early transfer of title is advantageous also to the communities in which the properties are located, for while the property is in the hands of the Federal Government it is tax exempt.

head. The field expenses, therefore, actually run less than those earned in private undertakings. If, however, the overhead of the Government office is included in the cost either of construction or operation of properties, the expenses would run higher than those which are current in private business, due to the expensiveness of the elaborate routine in the

purchase of materials, in the hiring and discharge of labor and office help, and particularly due to the necessity in the public interest of keeping abundant fiscal records and general records of operations, which no private builder would find it advantageous to keep. Government practice requires its records to be kept with many copies in elaborate detail and filed under various headings or distributed among various interested officials, so as to be accessible at short notice.

The cost of Government business is further increased by the entirely legitimate general interest in public undertakings. Requests by mail for information and frequent visits to the estates by persons interested in building houses absorbs a good deal of time on the part of Government representatives. It is hardly fair, however, to charge these latter costs against the management of the properties, as they constitute a legitimate extension of the educational function of the Government.

COST OF MANAGEMENT. In the handling of its properties the Government has in the latter part of 1919 conducted its rental business at a cost of 6.3 per cent of the total rentals received. This figure is, however, exclusive of the overhead of the Washington office. In conducting the sale of its properties the fees to the board of survey and the cost of the services of selling representatives together amount to from 3 to 5 per cent of the appraised value, exclusive of Washington over

CHAPTER VII.

SALVAGE.

Magnitude of operations at time of armistice-Quick measures to stop construction Policy with reference to
curtailment of projects—Statistics of disposition of contracts--Sale of materials--Sale of furniture and equip-

ment-Adjustment of claims—Total salvage. Upon the signing of the armistice it became possible der to ascertain how far construction had proceeded to make immediate and drastic reductions in war and to what extent materials were on the ground or in expenditures because of the improbability of a fresh transit. Careful analysis was made of the obligaoutbreak of active warfare. Under these circum- tions of the Housing Corporation for each project. stances war contracts could be curtailed. Among the The probable value of the completed project after defirst of the expenditures which were indispensable to duction of the cost of its completion was contrasted an active war program, but open to immediate with the probable salvage to be secured from the sale reduction, were the expenditures for housing.

of the unfinished project and of materials already

purchased. No project was ordered completed unMAGNITUDE OF OPERATIONS AT TIME OF ARMI.

less it seemed clear to the members of the staff who STICE.

were present at such meetings that more could be One hundred million dollars had been appro

saved by completion of the project than by its abanpriated for housing for war needs. Investigations

donment. and vacancy canvasses had been conducted in more

In general the completion of projects would inthan 100 cities, and plans had been drawn for 128

volve loss rather than saving in communities where sites in 71 different communities. Sixty general con

only temporary housing was being provided. Projstruction contracts had been let, plans were ready

ects of this character were therefore abandoned. Exfor contract for 23 additional projects and were or

ceptions to this rule occurred in the city of Washingdered or in preparation for 7 more. Construction

ton, where temporary hotels for women employees of work was already begun in some 40 projects.

the Federal Government and temporary dormitories When the armistice was signed, on November 11,

for navy-yard employees were completed. The latter 1918, the projects of the Housing Corporation were

were finished upon urgent request of the Navy Debeing developed at a remarkable rate of speed. Some

partment, which contemplated the continuance of its $30,000,000 worth of materials had already been

large scale operations at the Washington Navy Yard. ordered and purchases in the latter part of October

As the Navy program was subsequently curtailed amounted to nearly a million dollars worth a day.

these dormitories were not needed when finished. Some 2,000 carloads of materials were being delivered

This, a result of change in the Federal naval program, each week at the projects which were under way.

is the only instance where housing accommodations QUICK MEASURES TO STOP CONSTRUCTION MADE

completed by the corporation have proved unnecessary. UNNECESSARY BY ARMISTICE.

The completion of the Government hotels for The foremost responsibility of the Housing Cor

women war workers was justified by the urgent deporation prior to the armistice had been the speedy

mand for suitable housing accommodations on the provision of suitable housing, but on the day of the

part of the women engaged in Government service. signing of the armistice its foremost responsibility

The seriousness of the housing conditions endured by was to salvage the largest possible fraction of the

Government clerks in Washington during the latter $100,000,000 which had been appropriated for hous

part of the year 1918 can be appreciated only after ing.

reading the testimony submitted before the House The first step was to stop the fabrication and sh

Committee on Buildings and Grounds in January, ment of vast quantities of materials which had been

1919. The demand for quarters in these buildings ordered. In the first week of the armistice some

has subsequently proved the wisdom of the policy of 5,000 telegraphic stop orders and explanatory letters

continuing construction of these hotels, which it has had to be sent and replies noted and filed.

been easy to fill and for which there is a long waiting

list of applicants who have not been able to find suitPOLICY WITH REFERENCE TO CURTAILMENT OF

able housing accommodations elsewhere at reasonable PROJECTS.

prices. Executive staff meetings were held in which the Orders had been placed for 2,600 ready-cut houses progress on each of the contracts was reviewed in or- and 40 dormitories, for 10 temporary projects. These

were primarily for shell-loading plants and airnitrate plants which had been established in remote communities where there would be no advantage in building houses of a permanent character. All projects for temporary or ready-cut houses were abandoned except those at Seven Pines, Va., where 100 houses had already been completed; at Pompton Lakes, N. J., where 15 houses were completed; and at Norfolk, Va., where 97 houses were completed.

For many projects permanent houses had been proposed, but with standardized plans and material. It was judged desirable to complete some or all of the permanent dwellings designed for the larger industrial communities in case it was quite certain there would be a demand for these houses after the community should be upon a peace-time basis, and provided also that the construction was already well begun. There was some uncertainty as to whether the war industries would be able to make a quick transition to the production of goods for a normal market and to continue to employ labor steadily at good wages. Yet the shortage of housing for industrial workers was so apparent in the cities where the Housing Corporation completed its projects that there has been little difficulty in renting and selling at good prices.

two contracts at Bethlehem, Pa. The cancellation of the Bethlehem project involved a very difficult decision because preparations for housing in this large housing project had been carried very far and building operations were already well begun. It was at first decided that construction at Bethlehem should proceed, but a more careful examination of the condition of the project led the executives of the Housing Corporation to the conclusion that the Federal Government would lose less by cancellation. It was deemed that the cancellation of the two contracts together, which amounted to a virtual loss of $1,691,000, would involve less loss than would be involved in the completion of this $6,000,000 project or any part thereof.

SALE OF MATERIALS.

Immediately upon the signing of the armistice a sales branch was established in the Construction Division. It was the function of this branch to arrange for the disposal of materials purchased for abandoned projects and of surplus materials on curtailed proj. ects. A considerable proportion of the transactions of this branch at first consisted in the transfer of materials from abandoned or curtailed projects to active projects wherever it was to the interest of the Housing Corporation to make such transfer. Altogether transfers to the amount of $501,234.21 were made in this manner. Up to June 30, 1919, materials had been sold to the extent of $793,085.01. On this liquidation of surplus materials which amounted to $1,294,319.22 there was a net loss of $341,840.65, or of only 21.2 per cent. On June 30 there still remained material to the value of $913,071 to be disposed of, of which nearly one-half was already in process of sale and delivery.

STATISTICS OF DISPOSITION OF CONTRACTS.

Altogether contracts to the amount

of over $29,000,000 had been canceled prior to June 30, 1919. Contracts amounting to over $23,000,000 had been completed and contracts amounting to over $11,000,000 were still proceeding. In the case of temporary housing projects at shell-loading plants there was no salvage value in completing the houses, for these plants were all located in remote communities and the houses in process of construction could, therefore, be used only by workers in the shell-loading plants. As the shell-loading contracts were among the first to be canceled such housing project contracts were also immediately canceled, thereby saving over $700,000. These projects, which were located at Seven Pines, Va., Tullytown, Pa., and Woodbury, N. J., and which had cost approximately $2,883,000, were thereupon turned over to the War Department, so that the Federal Government might economically dispose of this material in conjunction with the buildings erected by the War Department for the shell-loading plants.

Altogether over $26,000,000 was saved on the amount of contracts (including essential additional work) by cancellation and reduction. Of the canceled contracts 9 were canceled without cost to the Federal Government, 24 were canceled at a cost ranging from $611.75 for the smaller of the two contracts at Elizabeth, N. J., to $1,000,000 for the larger of the

SALE OF FURNITURE AND EQUIPMENT. The sale of furniture and equipment was at first handled by the Operating Division. Orders for equipment for abandoned projects were canceled by telegraphic stop orders immediately after the signing of the armistice. Furniture which was en route or which had already been received at the project was transferred where advisable to continuing projects. Altogether, transfers of equipment were made to the extent of $108,554.82. Much of this merchandise was sold by competitive bid at public auction. By June 30, 1919, furniture and equipment costing the corporation $427,989.51 had been sold for $277,675.21, or 65 per cent of cost. Unsold equipment to the value of $188,112.28 remained to be disposed of on June 30, 1919.2

1 For detaied figures on sales and minor qualifications of the above statement see Appendix XXIII on sales and adjustments, particularly table entitled “Statistics of sales by projects as of June 30, 1919".

? For details see Appendix XXIII, pp. 384 and 385.

ADJUSTMENT OF CLAIMS.

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The drastic reduction of orders and contracts inevitably involved claims for damages on the part of vendors of goods or services. Altogether 352 such claims have been submitted to the Housing Corporation and referred to the Committee on Adjustments.' The basis of the claim and the value of goods received or services rendered were analyzed with great care. Claims ranging in size by projects from 1 claim at Ilion, N. Y., for $97.26 to a group of 12 claims for the combined projects of Pompton Lakes, N. J., and Port Penn, Del., amounting to $436,324.13 were referred to the Adjustment Committee. These latter claims were adjusted for the sum of $270,426.83. Altogether the 352 claims amounting to $5,572,952.40 were settled for $4,096,204.10, or a net reduction of 264 per cent. The amount of this reduction was made possible only by the most careful examination into all claims and by the earnest effort of the committee to protect to the utmost degree the funds of the Federal Government and to give no more than fair compensation to each clainiant. Careful scrutiny of each of these adjustments by the executive committee of the Housing Corporation insured the observance of this principle.

TOTAL SALVAGE. By virtue of the above policy of salvage, which was confirmed in substance by the House Committee on Buildings and Grounds in January, 1919, and by the House Committee on Appropriations in the act of Congress for sundry civil expenses approved July 19, 1919, the United States Housing Corporation has already been able to return to the Federal Treasury $32,500,000 out of the $100,000,000 originally appropriated. It was possible through careful management to return this large sum even after deducting all the war losses on account of excess cost of construction, the abandonment of uncompleted projects, the essential costs of overhead for all investigations, negotiations, and operations of all divisions of the corporation throughout the country, and the costs of the

Total amount finally to be returned to
United States Treasury

72, 995,000 Pending the sale of the finished projects the Housing Corporation has rented its houses almost as soon as they were completed. Already 93 per cent of these properties are rented, bringing in an income to the Government at an annual rate of over $2,000,000., The Government hotels in Washington are also completely rented and have a waiting list of over 1,000 applicants.

In conformity with the act of Congress for sundry civil expenses approved July 19, 1919, the Housing Corporation is now engaged in selling such property as remains undisposed of and is concluding its contracts and other obligations, collecting the principal and interest on loans made and is taking such other steps as are necessary to protect the interests of the Government and to fulfill obligations already incurred in exercising the powers granted under this act. By December 31, 1919, appraisals had already been made at most of the finished projects and the plan for disposition of the properties was practically perfected. The details of these operations will, however, be covered in the reports of the Housing Corporation to be submitted on December 31, 1919, and on June 30, 1920, in accordance with the above act.

· See p. 386. 142178—20%VOL 1-5

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