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Arne Swabeck

The Housing Shortage

(February 1947)

From Fourth International, Vol.8 No.2, February 1947, pp.37-41.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The housing shortage is becoming more and more acute with no real relief in sight. The mounting cost of living and the shrinkage in housing are the twin burdens that weigh most heavily upon the mass of the people. And they can lead to the most serious upheavals. We are not speaking about ravaged, war torn Europe where millions of suffering human beings must seek shelter among ghastly rubble and charred ruins. We are speaking about the richest country in the world.

Labor productivity in the United States has reached undreamed-of heights; skills are available and so are the raw materials. Technology made new and great strides during the war years. And yet, not even the socially necessary minimum of shelter is available to the people who produce. Does not this indicate the bankruptcy of a system?

The housing shortage is not a new phenomenon in the United States. It existed before the war; it existed during and before the great depression of 1929. It becomes more and more aggravated as the capitalist system declines and decays. The housing problem, as well as the problem of other necessities of life, is indissolubly linked with the social and economic conditions of the masses. Nowhere in the world can capitalism point to having provided adequate housing for the people. Conversely there can be no real or lasting solution to this problem without a radical solution of the social and economic conditions of the masses.

The most conservative estimates for needs for dwellings in the United States vary from 3,500,000 to 5,000,000 housing units, with a minimum annual construction of 1,250,000 units. These estimates, however, do not at all touch the problem of rehousing that section of the population which is now condemned to live in the slums of the major American cities. To replace these sub-standard dwellings, according to the National Housing Agency, would require at least twenty years of record building which would provide 25,000,000 housing units.

Meanwhile the slum areas keep spreading relentlessly and irresistibly. Overcrowded, filthy, dilapidated buildings, in frightful state of disrepair, poorly heated in winter, suffocating in summer, lacking in toilet and bathing facilities, vermin and rat infested, disease-breeding hovels – this is the picture of the slums in the cities. These are the conditions in the teeming tenements of New York’s Lower East Side and Harlem; they are repeated in such well known areas as the “alley dwellings” in Washington, the “Hill District” in Pittsburgh, the “Irish Channel” in New Orleans, Detroit’s “Black Bottom,” Cincinnati’s “Basin,” Columbus’ “Sausage Row.” Among the worst is Chicago’s “Black Belt” where – although building experts agree that the density of urban population should not exceed 25,000 to 30,000 people per square mile – the density is 70,000 per square mile. This means 10 to 12 persons to a room in many buildings, and, five to six families sharing one toilet.

Those who live today on the rim of the slums are swallowed up on the morrow by this pestilential tide. Supplementing the big city slums are the shanties that are called “homes” in company towns. Here there is virtually no limit to the number of people per room.
 

Hovels and Palaces

From these hovels of the pariahs, let us now turn to the other side of the picture – the luxurious palaces of America’s “blue bloods.”

It is in their palatial country estates – says Ferdinand Lundberg in his monumental work America’s Sixty Families – that the rich families, niggardly in philanthropies, really extend themselves, for in these places they are sheltered from the prying eyes of the sweat-stained, fatigue-racked proletariat and the ever-trusting, infinitely gullible middle class.

It has become the recent fashion to point to the four estates and many apartments of William Randolph Hearst as representing the apogee of contemporary extravagance; but Hearst is merely “keeping up with the Joneses” and is doing it very noisily. We must disagree with Dixon Wecter when he writes in The Saga of American Society:

“The greatest attempt ever made to achieve lordly splendor in America is William Randolph Hearst’s 240,000 acre estate at San Simeon, California, with its estimated cost of $15,000,000 for furnishings and antiques alone. Its great dining hall hung with Sienese banners and a magnificent Gothic chimney piece from the Chateau du Jour, its sixteenth-century refectory tables, Flemish tapestries, seventeenth-century Spanish candlesticks and old English silver, six Gobelin tapestries costing $575,000, a notable collection of armour, and Cardinal Richelieu’s own bed, are witnesses to the spoliation of Europe.”

Mr. Wecter is impressed by the fact that Hearst once transported a castle from Spain to New York in packing cases, that he purchased St. Donat’s Castle in Wales, and that at San Simeon he owns a private railway spur and three cars and a diner to transport his guests to the main palazzo. Overlooking an entire Bavarian village that Hearst has constructed at Wyntoon, California, Mr. Wecter also overlooks the fact that all this is merely the minimum standard equipment of the contemporary American multimillionaire.

From this juxtaposition of hovels and palaces we cannot fail to draw the conclusion that the housing problem, as well as all other social problems, reflects the distinction of class, of economic position, of wealth and poverty. On the one hand, boundless luxury – on the other, an ocean of want and misery. But, as we well know, in a system whose production is governed exclusively by the profit motive, the needs of the people must of necessity be left utterly disregarded. Production for profit and peoples’ needs constitute two opposite poles.

The truth of this has never been more strikingly illustrated than in the whole record of the housing question. It is illustrated in the attitude and actions of the government and its agencies, in the conduct of the mortgage bankers, the real estate sharks, the material manufacturers, all the way down to the home building contractor.

That housing is one of the basic needs of the people nobody denies; and yet every housing program that has been projected since the end of the war has been stymied by the profit motive.

All that the Federal Housing Administration has to show to date are its so-called veterans’ temporary emergency units, to be exact: 187,000 Quonset huts, trailers without wheels, chicken coops on stilts. All these are potential new shanty-towns and Hoovervilles. And even this program had to suffer cutbacks first of 13,000 units and then of 12,000 additional units because of constantly mounting reconversion costs.
 

“Low-Rental” Housing

The Patman Bill, enacted into law early last year, set up a housing expediter with broad authority to issue directives for allocation of materials, prices and priorities. The aim was to speed construction of 2,700,000 homes, by private enterprise, over a period of two years. The Bill provided for an increase of one billion dollars in government authority to insure home mortgage loans. It authorized $400,000,000 in subsidies to increase production of scarce materials. Thus the basic provisions of this Bill served to protect the profits of mortgage bankers and material manufacturers. The Bill, however, did little, if anything, to speed the construction of homes for needy people.

Although allocations were made for subsidies, the materials went by and large into the black market. Naturally, building labor followed the flow of the black market materials – mainly into speculative commercial enterprises. And at the end of the first nine months of the building expediter’s tenure, only 286,200 permanent family home units had been completed in the entire country. Now “building expediter” Wyatt has quit.

The Wagner-Ellender-Taft Bill, which did actually contemplate some modest federally supported “low rental” housing, riot to exceed 125,000 units, during each of the next four years, contained in one of its provisions a guarantee of a certain fixed return to investors in apartment house projects built on slum land.

But even this modest proposal for federally subsidized housing proved too radical for the profit-minded legislators. The Bill never reached the floor of the House of Representatives. Such is the government’s record to date in relation to this urgent need of the people.

This do-little record dates back beyond Truman’s administration. Let us recall what happened when President Roosevelt, during the first year of his reign, proclaimed that one-third of the nation was ill fed, ill clothed and ill housed:

“We seek,” he said, “the security of the men, women and children of the nation. That security involves added means of providing better homes for the people of the nation. That is the first principle of our future program.”

These words were spoken to mollify the millions who were then out of jobs. A bone had to be thrown to the workers. So the President proceeded to set up such alphabetic agencies as the WPA, the FHA and the others. Yet no more than 133,000 units constituted the sum total of all public housing for the lower-income brackets constructed before the war began.

The FHA became one of the most substantial of these agencies, and it is still in operation. What is its achievement? Did it produce homes for the one-third who were ill housed? For the year 1940, according to FHA’s own report, 47 per cent of all American families earned less than $1,500 annually and only 5 per cent of FHA insured homes were built for them, while the other 95 per cent went for the higher income brackets.

Thirteen years later one-third of the nation still remains ill housed yet the government has not given any consideration whatever to the question of public housing. The reason is not far to seek. Champions of “free enterprise” are bitterly hostile to any public housing program. They understand very well that low rental housing for the working class would slash their juicy profits from speculative real estate values and from exorbitant rents. Thus the peoples’ needs collide with the profit motive; and the government, by its failure to act, makes it perfectly clear on which side it stands – on the side of the big profiteers. This is the fundamental contradiction that besets the housing program inaugurated by the Patman Bill. Moreover, this program is itself based by and large upon the outmoded idea of building for the individual home owner.
 

Plight of the Workers

Private home ownership is definitely on the decline. In 1930, for instance, not less than 46 per cent of families living in towns and cities owned and occupied their own homes. By 1940 a survey made of six large cities, not including New York, showed that private home ownership had gone down to 25 per cent. So far as the American working class is concerned, it can by now – in 1947 – be affirmed quite certainly that the workers’ standard of living will hardly permit the luxury of private home ownership – at least not in the urban centers.

Who can afford to own a private home today? On the basis of standard FHA practices, say its own housing experts, the average family cannot afford to pay more for a house than the equivalent of twice its annual income. To illustrate what this means it should be borne in mind that right now the minimum cost of any house, including the well-known type of jerry-built “defense” home, in any large city or suburb is $10,000. To afford such a home an annual income of $5,000 is required. Obviously the average worker’s income falls far short of sustaining such home ownership.

The end of 1946 saw even this minimum-cost housing washed away when President Truman swept aside all major controls, priorities and price ceilings, including the $10,000 ceiling on new buildings. Construction of new homes will henceforth become further and further out of reach of those who are in the most desperate need of housing.

World War II veterans are supposed to have first call on new housing. Not less than 4 millions of them, according to a survey conducted by the Census Bureau in June last year, want to rent new quarters or buy or build new homes. But they are now civilians and in the overwhelming majority are not any more fortunate than their fellow workers. The foregoing survey revealed that the average, veteran in need of new quarters is able to pay not more than $43 monthly for rent and not more than $5,500 to buy a house. The survey further revealed that the average weekly income of prospective renters was $44 and of the prospective buyers $48.

Proof that the housing problem is indissolubly bound up with the degraded economic and social condition of the working class becomes still more conclusive when we examine these conditions in greater detail.

The Federal Reserve Board and the Bureau of Agricultural Economics have published a survey of the nation’s 46 million families, their 1945 income and their liquid assets, including previous year’s savings. The survey lists its findings for the lower income brackets as follows:

The figures are for 1945. Most of these families are hardly in a position to own their own homes. And it may not be amiss to ask the question: What has happened to the liquid assets of all these family groups as a result of the steeply rising cost of living during 1946? By and large the liquid assets of the lower categories have been already wiped out. Besides, the lower incomes listed can only in rare cases be called secure incomes. Buying a home with a twenty-year amortization, under such conditions, would indeed appear a risky venture.

Much ado is being made over the high cost of building. It is high, of course, as are all other costs under the profit system of production. The high cost is usually attributed to the archaic conditions prevailing in the building industry, wherever it is not simply blamed on the high wages of building labor. The first explanation merely begs the question. So far as labor costs are concerned, all of the numerous surveys made of the “high” hourly rate of building labor nevertheless agreed that this category is on the same low economic level as other workers, when the seasonal nature of the building industry is taken into account. As for the high cost of building materials it is necessary to note merely the fact that during 1944 profits of the lumber industry were 164 per cent above the 1936-39 average!
 

Archaic Conditions

The building industry is the fourth largest industry of the nation, employing some 2,500,000 workers. Its archaic structure is disclosed by the fact that, at the last count in 1939, building contractors numbered 31,000 and sub-contractors 187,000. The natural outcome of this atomization is that production becomes snarled up in a multiplicity of small scale endeavors while additional charges accrue because of small scale material purchases and deliveries.

On the other hand, let us examine the huge project of Park-Chester, an outstanding example of efficiency, put up by the Metropolitan Life Insurance Company in the Bronx, New York, at a total cost of sixty-two million dollars. This project accommodates about 17,000 families. It was built according to the most up-to-date plans, with the greatest possible standardization, mass production methods and wholesale material purchases. Nevertheless rentals in Parkchester’s 51 apartment buildings average $15 a room. This project, reports the Metropolitan Life, renders a return on invested capital of better than 6 per cent.

Right here we come to the nub of the problem which is called “the high cost of building.” No industry is so speculative. Speculation enters into every phase – from the buying or clearing of the land to the finished product, and, for that matter, throughout the tenant or owner occupancy. The industry is infested with a veritable wolfpack of profiteering speculators and gamblers in real estate. Land prices, says the National Housing Administration, summarizing the experience of 200 pre-war projects, averaged a cost of $1,960 per family. This is a figure for cities where low values predominate.

And what about the cost of mortgage financing? Testifying before the Taft Senatorial Committee on Housing, one mortgage broker admitted that in his company’s experience of building financing, including risks of depreciation, loss or foreclosure, the costs of service totaled not more than 1.47 per cent. Yet building loans usually carry up to the 5 per cent annual interest charge.

Those millions who are searching ever more frantically for a home may be surprised to learn that mortgage investments set an all-time high in 1946. According to the Federal Home Loan Bank Review preliminary figures indicate that the total of new mortgages made on homes for the year may reach $8 billion. This is almost 40 per cent more than in 1928, the peak year of the building boom during the Twenties. Few homes were produced in 1946 but the mortgage bankers enjoyed unprecedented prosperity.
 

Prefabricated Houses

Is prefabrication perhaps the answer to the housing shortage? One of the most widely publicized experiments conducted so far is the Buckminster Fuller house. It is constructed of aluminum, stainless steel and plastics instead of bricks and lumber. It weighs around three tons instead of the usual one hundred tons. It is circular instead of square. It hangs rather than stands. It is suspended from a central mast with cables fanning out, supporting the roof, the walls and the floor. Its construction is based on the principle that metals are stronger in tension than in compression. Moreover, the curved material parts are designed for manufacture in airplane factories. A single Wichita, Kansas plant now claims an annual capacity of 250,000 housing units.

Wyatt, the building expediter, before his resignation, made a big fight to have the huge Chicago government-built Dodge Plant turned over to the Lustrom corporation to produce enameled steel five-room houses.

Other prefabricators have experimented with plywood panel construction. One of them, the Foster Gunnison concern, a subsidiary of the US Steel Corporation, has advanced funds for the erection of a new plant with a claimed capacity of one complete house every 18 minutes.

Despite all these spectacular claims, there is little evidence anywhere of prefabricated houses. Thus far prefabricated houses exist more in the exuberant ballyhoo of the press than in reality.

Very real, however, are the efforts to squeeze ever greater capitalist profits out of the misery created by housing needs. Included in this program are raids on the public treasury. The housing expediter backed up loans from the RFC to the tune of $75,000,000 to be advanced to 11 prefabricating concerns. The Lustrom corporation demanded $52,000,000 although it had put up virtually no private capital itself. This corporation, it is estimated, would stand to make a profit of $5,000,000 during the first 14 months of operation, or a profit of 1,400 per cent on its capital investment of – $36,000. It would take thieves or bank robbers to possibly do better than that.

In addition, it is becoming increasingly apparent that these prospective manufacturers, sniffing a potential bonanza, have set their prices so high that, as they themselves admit, there is little difference in cost between a traditional house and a prefabricated one. But, claim these manufacturers, costs will ultimately be cut because of the buying of material in bulk and because of mass production of the component parts with unskilled labor. In short, unskilled labor – cheap labor – that is their great hope. The peoples’ need for housing can go to the devil so long as their profits remain secure. Meantime, in their estimation, there could be no better start in the anti-labor offensive than to strike a blow against the well-entrenched building trades unions.

These are among the factors which cause these unions to be unfriendly, if not hostile, to prefabrication. Expansion of this type of building will bring the conflict to a head.

The building trades unions and the AFL, where these unions predominate, are rather critical of the present housing program. And this critical attitude is not confined to the prefabrication aspect. It springs also from their correct insistence upon large scale rental housing. With this in mind the AFL convention last year established a permanent housing committee. It also urged President Truman to call Congress into special session for the enactment of the Wagner-Ellender-Taft Bill. But these purely perfunctory efforts remained utterly ineffective. And even the modest objectives of this bill, which faces further modification in the 80th Congress, will prove ridiculously inadequate.

To sum up: the situation in housing is basically the same as all the other problems involving the necessities of life to the workers. Workers obtain only as much as they are prepared to fight for; only as much as they are in a position to fight for successfully. And as capitalism continues to decline, this maxim becomes more and more imperative.

The need for housing is an ever more pressing issue – a fighting issue. One year of buck-passing in Washington has terminated in a scandalous mess. What was originally a poor excuse for a housing program has been stymied, sabotaged by profit-hungry monopolies to whom the Democratic and Republican politicians are subservient. To effect any change in this situation will require a tenacious, militant struggle on die part of the workers.

With this in view, the Socialist Workers Party has advanced the demand that the eighteen billion dollars, now allocated by the federal government for war expenditures, be made available for a housing program. Such a demand has nothing in common with the dribbles for federally supported low rental housing provided for in the Wagner-Ellender-Taft Bill. The SWP demand proceeds from the basic assumption that housing for the people is a social responsibility which the government is obligated to assume. Resources of greater magnitude were available for war. They should be equally available for peace. The duty is very clear: Provide adequate housing for every family, including the rehousing of the millions of slum dwellers.

Our immediate demands acquire their full meaning, of course, only in the context of the general revolutionary program of which they are a part. Above all does this apply to our demands for adequate housing. The full and complete solution of the housing question is most intimately and directly bound up with a socialist solution of all the burning problems of society.

Let us recall the celebrated housing projects of Vienna, including the famous Karl Marxhof. Magnificent homes were erected in Vienna for workers, paid by taxation, with the heavier levies on the upper income brackets. Rentals were based on the expenses for upkeep and management. These projects were the proud creation of Austrian Social Democracy. For years the Austro-Marxists held an overwhelming majority in the Vienna City Council, receiving at one time as high as 90 per cent of the popular vote. This party never entertained any idea of leading its supporters to install the workers in power and build socialism. Perish the thought. Instead, it limited itself to building workers’ homes. This was a noble venture. But in February 1936, Chancellor Dolfuss, upon the urging of Mussolini, trained cannons on the buildings, demolished them, crushed all workers organizations, and in the counter-revolutionary civil war established the rule of the reactionary Heimwehr. Gone were the magnificent workers homes.

The lesson is inescapable. Without the socialist solution even such noble ventures come to naught. Conversely, the capitalist profit system itself remains the greatest obstacle in the way of adequate housing for the people, just as it stands in the way of satisfying all the other peoples’ needs. Hence our determination to fight for the socialist solution. In the last analysis only nationalized economy with planned production under workers’ control can operate in the interest of the people.

So far as the building industry is concerned, it may appear today one of the most difficult in which to introduce nationalized planned operation. While producing one of the most essential commodities, this industry is very complex, composed of many crafts and skills and coupled with a great diversification of materials. It rests on the basis of ruthless speculative financing.

Yet housing remains a social problem of the highest order. And the complexity of the building industry emphasizes only all the more the necessity of nationalization and planning. Witness the situation that now exists. The problem of securing shelter is one of the greatest uncertainties for most working people, subject as they are to the vicissitudes of the capitalist business cycles. Those who have sufficient savings for a down payment on a home stand to lose it during the depressions. Renting tenants unable to pay are mercilessly evicted. The need for homes is never satisfied, precisely because the profit system bars the way. Assuredly it is urgent to make a change here – a change to production for use, to planning.

Such a system would first of all put an end to speculative land owners, to real estate sharks and rent-gougers, not to mention the profit hungry mortgage brokers and financiers.

Once the building industry is nationalized it would be possible to plan according to the needs and the country’s ability to produce. Not only the field of construction, but all the branches producing material would be coordinated, allocations made and measures taken for improvement where shortages appear. Every building worker would be guaranteed steady employment and a living wage. Only then would it be possible to utilize to the fullest extent new inventions, new and more efficient methods, as well as new and better materials. Healthy and comfortable living quarters would be the rule. Every family engaged in useful work would obtain housing to which it is entitled. Profit returns would no longer enter into calculations for home building. On the contrary, the needs of the people would be the highest concern.

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