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authorized by law, in the carrying out of such function than existed with respect to the exercise of such function by the agency in which it was vested prior to the taking effect of such reorganization; except that this prohibition shall not prevent the abolition of any such function."

The Home Loan Bank Board, under section 17 of the Home Loan Bank Act, is directed by Congress to make such rules and regulations as may be necessary or proper to administer the Home Loan Bank Act, and the National Housing Act under section 211 expressly directs the Federal Housing Administrator to make similar rules and regulations. They are functions given to these agencies by express acts of Congress, and are beyond question quasi-legislative functions. This reorganization plan imposes a very serious limitation upon the exercise of these functions by giving the National Housing Administrator the authority to approve or disapprove all such regulations as may be made with the result that the real power to make regulations is transferred from the agencies created by Congress to an agency created by the President.

We respectfully submit that Reorganization Plan No. 1 should be disapproved by the Congress, because it is not in accordance with the terms of the Reorganization Act of 1945, and the concurrent resolution disapproving it should be passed.


Washington 25, D. C., June 13, 1946. The Honorable CARTER MANASCO, Chairman, House Committee on Expenditures in the Executive Departments,

Washington, D. C. DEAR CONGRESSMAN MANASCO: I understand that in testifying before your committee on June 7, Mr. Frank Kirkpatrick, of Milwaukee, stated that I have long been committed to a “war against free enterprise.” In support of this charge, he referred to a paper I had written in 1937 for the Annals of the American Academy of Political and Social Science, and made the following statement :

"He says a housing shortage 'emphasizes the need for a practicable working arrangement between private and public enterprise in the production and control of housing space.' Then, he goes on to say: ‘Although such a policy in respect to private and public enterprise in housing seems most desirable from many points of view, it does not follow necessarily that it can be made under our present scheme of economic organization. It is entirely possible that private and public enterprise in housing cannot enjoy a vigorous life at the same time. Many persons dislike to face the fact that a highly desirable or even necessary social result cannot be obtained under the present economic order, with modifications that are possible within the near future.'' [Emphasis supplied by Mr. Kirkpatrick.]

In the article to which Mr. Kirkpatrick referred, I pointed out a large and increasing demand for private building and the existence of considerable areas of substandard housing lived in, by and large, by families whose incomes were so low that they did not constitute a profitable market for private building enterprise in their localities. Calling attention to public housing, which was then the subject of lively public discussion, as a means of meeting this latter need, I raised the question whether we could expect from the evidence then at hand that private building could go ahead vigorously in the immediate future if, at the same time, a public-housing program were undertaken to improve the condition of these low-income families. Because I thought that this question had not been sufficiently considered, I stated my opinion that it was an inportant question—a question that should be examined on its merits and the answer not taken for granted. The sentences quoted by Mr. Kirkpatrick ap peared at this point in the article, and when read in context have this meaning and no other.

If Mr. Kirkpatrick had been interested in giving you and your committee a fair summary of my views on private and public housing as set forth in this article he could scarcely have avoided quoting the following sentences from the summary section of the article:

Avoiding the assumption that the need would necessarily create a practicable, working arrangement between these types of agencies, I have examined their chief relations to see if there are any basic reasons that would


prevent the actual integration of their activities. Although the evidence avail. able on the major question is scanty, it does not bear out the claim that both of these two types of enterprise cannot be pushed vigorously in the immediate future. It is true that the method of determining the relative fields of these two kinds of agencies must be the subject of careful and critical study.

"The following statement has been suggested as a guide or principle för public policy: Public enterprise should be limited to developments to house those families whose normal incomes do not enable them to afford the soundly constructed product of private building enterprise, meeting modern minimum standards, produced in substantial volume at prevailing wages, in the localities in question

I believe it is also pertinent to point out that the Congress has adopted, in the United States Housing Act of 1937, a similar definition of the need to be met by public housing. As you know, this act provides for Federal assistance to State and local public agencies that are empowered to provide housing for families of low income. In the act Congress defines families of low income as "families who are in the lowest income group and who cannot afford to pay enough to cause private enterprise in their locality or metropolitan area to build an adequate supply of decent, safe, and sanitary dwellings for their use."

I am calling this matter to your attention not because I believe that my opinions on housing or Mr. Kirkpatrick's opinions of me are of any particular importance to you or to the Congress. I feel sure, however, that your committee does not wish its public hearings on any matter under its jurisdiction to be used as a forum for distortions or misrepresentations. Under the circumstances, I hope that your committee would permit this letter to be inserted in the public record as a part of the hearings, preferably as a footnote on the page where there appears the statement by Mr. Kirkpatrick quoted above.

I understand also that Mr. Kirkpatrick stated that I have been and am in a position to influence considerably the present and future policies of the National Housing Agency. As a matter of fact, in accordance with my intention when I came to Washington in 1942 to do what I could to help the war effort, I resigned as Assistant Administrator of the National Housing Agency in early March of this year. Since then my sole connection with the Agency has been as a consultant, and I have not played a major part in the development of the Agency's policies and program for the present or immediate future. Within the next few days I shall be leaving Washington for my home in Illinois.

I hope that you will be willing to have this letter made a part of the public record of your committee's recent hearings. Sincerely yours,




The National Public Housing Conference, a 15-year-old consumers' educational organization with the objective of promoting the principle that every American family should be decently housed at a rent or price it can afford to pay, is grateful for this opportunity to submit a statement in support of the President's reorganization plan consolidating permanently in one National Housing Agency the main activities of the Government relating to housing.

The conference has long felt that all Government aid to housing--direct subsidies, insurance, credit, or loans-should be coordinated, through a top policy officer high in Government councils with constituent units handling operations in their respective spheres. Convinced that such a plan makes for administrative, operating and coordinating agencies, the conference strongly endorsed title 1 of S. 1592 when that bill was being considered by the Senate Banking and Currency Committee. For the same reasons, because this reorganization plan is substantially the same as title 1 of S. 1592, the NPHC repeats its approval of such consolidation.

The National Public Housing Conference is satisfied that your committee will not be misled or misdirected by the irresponsible and distorted arguments which have been advanced against the reorganization plan.

Some of these arguments such as the contention that the plan was too hastily presented—are simply not in accord with the facts. As is perfectly well known, the principle of unification of the housing agencies has been discussed as far back as the 1944 hearings by the Taft Subcommittee on Housing and Urban Re

development of the Senate Special Committee on Postwar Economic Policy and Planning. The principle was elaborately discussed when S. 1592 was being conconsidered by the Senate Banking and Currency Committee; it has been the subject of comment, study, and planning for several years. It is perfectly obvious that any charge now that the unification of the Federal Government's housing agencies is an idea too hastily conceived can better be described as an argument too hastily conceived,

Some of the arguments--such as the contention that the plan is illegal or that. it is not a purpose of the Reorganization Act-are so palpably frivolous as to merit no attention at all.

Some of the arguments—such as the contention that no economies would result, coupled with a recommendation that a board would be better than a single administrator-are so inconsistent that merely to express them in conjunction is to disclose their weaknesses.

Some of the arguments such as the contention that FPHA was wastefulare not only inaccurate, are not only addressed to the wrong forum, but reveal a frame of mind calculated to make unsupported charges against an efficient agency in the apparent thought that some advantage must accrue to those who stop at nothing in order to prevent unification of the Government's housing agencies.

Some of the arguments—such as the contention that under the reorganization plan private housing would be subordinated to public housing--constitute nothing more than a reflection on Congress. Obviously, any program by any of the constituent units would have to be within the area defined by Congress, with funds made available by Congress, under limitations prescribed by Congress, and for objectives declared by Congress.

The conference does not feel it necessary to elaborate on the arguments which have been advanced against the reorganization plan. Many of them, as the above sketch indicates, are the desperate contentions of interests to whom the idea of a unified National Housing Agency, with all of the advantages which would result from such a unification, is so repugnant that in order to attack the reorganization plan they must avoid discussing it.

To the conference the proposition appears simple: The basis of the Federal Government interest in housing—whether it be insurance of loans, aid to distressed property owners, facilitating financing by private lenders, subsidies for low-income families—is the public welfare. That congressional concern with public welfare takes the form, through the channel of various programs, of making it possible for American families to live decently at prices they can afford to pay. The object of our Government's concern in this field is not primarily to protect lender, to make financing easier, to get local housing authority bonds in the hands of private purchasers, but rather the single, direct purpose of making it possible for Americans to live as Americans should.

Once this fundamental proposition is understood, it follows that the Government can do no less than to mobilize all its resources toward accomplishing this objective. The wartime experience, as the President has said, has fully demonstrated the necessity for unifying the Government's housing functions. The best proof is the effectiveness of the housing consolidation in 1942.

A national housing program, no matter how well conceived, is only as good as the machinery provided for its execution. Any national housing program, worthy of the name, will attack the problem in every level where the attack is needed-public and private, lowest and middle-income groups. A unified national housing organization is absolutely necessary if a national housing program is to be achieved and if a national housing catastrophe is to be avoided.


Washington 6, D. C., June 11, 1946. Hon. CARTER MANASCO, Chairman, Committee on Expenditures in Executive Departments,

House Office Building, Washington, D. O. DEAR MR. MANASCO: In connection with the hearings before your committee on the President's Reorganization Plan No. 2, I wish to file the following statement:

“The department I represent serves over 600 American insurance companies, as well as serving the entire membership of the national chamber, comprising

more than 1,500 chambers of commerce, 500 trade associations, and more than 700,000 underlying members on insurance problems from an objective point of view.

“The policies of the national chamber are established by referendum vote of organization members.

"I wish to bring to the committee's attention 'views respecting the inadvisability in Reorganization Plan No. 2 appearing in the President's message to the second session of Congress as printed in Document No. 595 and particularly section 3 which transfers the functions of the United States Employees' Compensation Commission to the Federal Security Agency to be performed in such manner and under such rules and regulations as the Federal Security Administrator shall prescribe.

"On this point we wish to point out that we do not believe the transfer of this agency meets or has a bearing which would be of any benefit to either employees or employers. In fact, such a transfer might result in great confusion. Such a transfer would not come under point 1 of the President's letter re: To facilitate orderly transition from war to peace. The Employees' Compensation Commission is not a war emergency agency, although it performed outstanding service to the war effort. The duties of the Compensation Commission were worked out and tested for a period of more than 30 years prior to the termination of World War II and to make a change at this time would upset sound practices and tested work that has been very satisfactory.

"Nor would a transfer meet the President's point 2, "To reduce expenditures and promote economy.' Such a transfer would result in great expense not only by way of Government expenditures in promulgating new rules and procedures, but also in great expenses to insurance carriers and self insurers who would be affected by this proposed transfer. On point 3, "To increase efficiency,' we feel that the immediate result would be a decrease in the efficiency since the Administration will be placed in totally inexperienced hands. We know of no lack of efficiency in the present Administration and can see no justification for assuming that even ultimately the Federal Security Agency could administer the law more efficiently.

"On point 4, To group, coordinate, and consolidate agencies and functions according to a major purpose,' this change is ill advised. The Compensation Commission, as now constituted, corresponds to like agencies created under State law in the several States and to make such a change would break an established precedent.

"On point 5, "To reduce the number of agencies having similar functions,' we believe the administrative semijudicial functions of the Compensation Commission are entirely different and in no way similar to other agencies now under or proposed to be put under the Federal Security Agency.

"On point 6 we do not believe there is any overlapping or duplication of effort or if any does exist, it is not enough to warrant the great disadvantages and increased work on both the part of Government and business if the change is effected.

"We urge Reorganization Plan No. 2 be disapproved and further study be made by Congress.” Sincerely yours,




My name is H. R. Northur, and I am secretary-manager of the National Retail Lumber Dealers Association with offices at 1713 Rhode Island Avenue NW. This association represents 23,000 retail lumber dealers located in practically every community in the United States. In normal times, our industry plans, builds, and finances more than 70 percent of the homes built in this country.

At the outset, I would like to have it understood that this association has consistently backed every sound, constructive proposal which encourages individual home ownership. It is one of the original advocates of the establishment of the Federal Housing Administration. Any plan which will accomplish any one of the six purposes set forth in section 2 (a) of the Reorganization Act of 1945 also will have the unqualified endorsement of this association.

We have carefully studied Reorganization Plan No. 1 and the message of May 16, 1946, transmitting this plan to the Congress, and we fail to see how the establishment of a National Housing Agency on a permanent footing, with the Federal Public Housing Authority, the Federal Housing Administration, and the Federal Home Loan Bank Administration as constituent units, will effectuate efficiency, economy, or provide for the elimination of overlapping and duplicating functions of the Government.

Our industry opposes this reorganization plan not only because it establishes the National Housing Agency on a permanent basis, but also because it would give that agency control over the home-financing institutions of the Federal Government. The Federal Housing Administration and the Federal Home Loan Bank Administration are mortgage-financing institutions and properly would be a part of the Federal Loan Agency. This would restore these agencies to the status President Roosevelt placed them in under the Reorganization Act of 1939. The Federal Public Housing Authority should properly be under the jurisdiction of the Federal Works Agency.

As you know, President Roosevelt's Executive order which created the National Housing Agency as the coordinating agency over the Federal Housing Administration, the Federal Home Loan Bank Administration, and the Federal Public Housing Authority was explicitly a wartime measure and clearly provided for the restoration of these agencies to their prewar status after the termination of the war. We have never taken issue with President Roosevelt's handling of these agencies and we would like to see these agencies restored to the status intended by President Roosevelt when he created the National Housing Agency to serve the wartime emergency.

In the transmittal message accompanying Reorganization Plan No. 1, emphasis is placed on the veterans' housing program. It is hard to tell whether the author of this mesasge was confused or is attempting to confuse. The veterans' housing program is in no way affected by this proposed plan. The Administration has ample power under the First War Powers Act to maintain the present temporary National Housing Agency as a coordinating body. The Administration has ample authority under the Second War Powers Act and the veterans' emergency housing legislation to deal with the veterans' housing problem. Congress has at least 18 months to consider the advisability of creating such a permanent organization. Possibly some people question whether it is advisable to let Congress pass on this question but prefer to present the Congress with the fait accompli." Obviously, the veterans' housing program is a smoke screen and is another instance in which the symbol "GI” stands for “Ghost Issue.” We strongly suspect that the advocates of this plan are fearful that Congress will not finally approve the Wagner-Ellender-Taft bill; otherwise, they would have left it to the proper determination of Congress.

Some advocates for a permanent National Housing Agency claim that through technical research the National Housing Agency will develop better and cheaper housing accommodations. Since its inception, it cannot point to one single technological development in the housing field. We have the best War and Navy Departments in the world, yet never have I heard those Departments claim that they were responsible for the development of the best fighting machinery the world has ever known, nor have I ever heard those Departments criticize industry for its lack of initiative. Yet strangely enough, the National Housing Agency would have one believe that the only solution to technological developments in the housing field is through the creation of a Federal bureau which will show industry how the job can be done.

We never stood in a better position to encourage individual home ownership. Restore the Federal Housing Administration and the Federal Home Loan Bank Administration to their relatively independent status, free the building industry from wartime restrictions so that we can rapidly get back on a competitive basis, and you may be assured that the American people will be provided with the very best housing at the lowest possible cost. Continue crippling restrictions and Federal interference in the housing field, and you may be assured that the solution to the housing problem will be seriously retarded. The best way is the way we have always done it—under our free, competitive system.


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