FDR Press Conference #161, Little White House, Warm Springs, Nov. 28, 1934
Press Conference Held at the Little White House,
Warm Springs, Ga., Nov. 28, 1934
ROOSEVELT: I do not know—I haven’t the vaguest idea of any news this morning. There are various people coming down before we leave next Wednesday. You can carry the story that we are probably leaving here next Wednesday, a week from today. That is the fifth, is it not? What time, I do not know, but we will be in Washington Thursday.
Q: Mr. President, has Secretary of State Hull referred to you an invitation of the League of Nations to collaborate with the Chaco Peace Movement?
ROOSEVELT: No, I have not heard anything about that at all in over a month.
Q: Mr. President, can you tell us just who is coming down besides Farley, Walker and Moffett and Harry Hopkins?
ROOSEVELT: Harry Hopkins, Henry Morgenthau. We have not heard from Ickes, by the way.
MR. McINTYRE: No, sir.
ROOSEVELT: And we have not heard from Tugwell. He may come down again.
Q: Will Hopkins and Morgenthau be here together?
ROOSEVELT: I do not know; I have no idea. I think Hopkins is coming Saturday. In other words, there is no object of their all coming together.
Q: Mr. President, there was a dispatch out of Dublin day before yesterday—there were reports that one of the Drexel Biddles, I forget whether it was the older or the son, would be Minister to the Irish Free State. Was that a rumor?
ROOSEVELT: What do we call it?
Q: An “S.C.S.”
Q: Speaking for Mr. Duer of the Post and myself, have you any comment to make on that petition received for a more equitable agreement on the fiscal relations (between the Federal Government and the District of Columbia)?
ROOSEVELT: I will give you a Washington story, to the two of you. Since 1913, when I first came to Washington, I have been tremendously interested in the relationship between the Federal financing of the District of Columbia and the local financing of the District of Columbia, in other words, their taxes, and so far the relationship has been more or less hit or miss. We all know why. It depended a little bit on who the District Commissioners were and it depended a little bit on how the Congressional committees on the District were constituted. There has been no more or less regular policy. I have been talking—I have not done it yet but I have been thinking the thing over the last three or four days. I do not know who I will ask but probably I will ask the tax experts of the Treasury Department to make a study of the cities that are larger than the District of Columbia—I do not know how many there are but call it X number of cities that have a bigger population than the District of Columbia—and the same number of cities that are smaller than the District of Columbia—in other words, enough cities of each size so that Washington will be right in the middle as far as population goes, and then try to get from all of those cities, the bigger ones and the smaller ones, what they call an evaluated tax rate, in other words, how much the citizens of those cities have to pay on real estate which, of course, is the principal form of city revenue everywhere. Then we will also find out what they have to pay in other forms of city revenue which, of course, fall mostly into the license class.
Now, an evaluated tax rate, of course, ought to be explained to the average citizen but it is a perfectly simple thing. If one city assesses values on its real estate at 50 per cent of its true value, that is to say, its selling price, and has a tax rate of four dollars, the people are not paying any heavier taxes than the city which assesses its real estate and full value and the tax rate is two dollars. You see how simple that really is?
Now, an evaluated tax rate simply means that they find out what relationship the assessed value is to true value, and then they fix the actual tax rate of that particular city on the basis of true value to find out what it will be. That is the evaluated tax rate.
Now, the reason for this study is that nobody in the District has ever agreed on whether the citizens of the District, the owners of real property, are paying a higher rate of taxation or a lower rate of taxation than other cities of similar size—that is to say, bigger or smaller. After that study is made, we will know pretty well where in this list of cities the District stands. If the tax rate on the District shows that the owners of real estate in the District are paying below the average of other cities, there isn’t very much kick coming from the owners of real estate in the District of Columbia.
If, on the other hand, the study shows that they are paying above the average of the other cities, it probably means of two things: either that the District Government is not as efficient as it ought to be or that the Federal Government is not paying its share of the necessary expenses for maintaining the District. We will have to await the outcome of those figures. If the District people are paying more than the average, we then proceed to find out whether the Federal Government should pay more or whether we can save in the cost of Government by putting in more efficient methods.
Now, that is the first time, so far as I know, that a definite study of that kind will have been undertaken and it ought to do a great deal to prevent this everlasting, year in and year out, squabbling between the people in the District of Columbia, the real estate people, the newspapers, et cetera and so on, seeking additional funds from the Federal Government.
Q: Why wouldn’t it be helpful to extend that survey to all cities? Not as a tax rate of $1.50.
ROOSEVELT: What is that based on, 100 per cent?
Q: Sixty per cent. Of course it is based on—
ROOSEVELT: (interposing) There are various organizations that have those figures already. You will find quite a number of organizations that have already worked out figures showing how much—what the relative tax is on the larger cities.
Q: Presumably those figures are gathered for selfish purposes?
ROOSEVELT: A great many are.
Q: What if the survey were extended to all cities and sanctioned by the Government?
ROOSEVELT: The difficulty is this, that the Federal Government hasn’t any authority to offer them to any other government. In other words, all cities are creatures of the State. I will say this, off the record, that it would be a perfectly practical thing for the Governors’ Conference to take up.
Q: There are two more points: Irrespective of what the tax rate is, large or small, could you tell us whether you think the Federal Government is paying fairly for what it receives in the District of Columbia?
ROOSEVELT: I do not know. Nobody has any idea, newspapers to the contrary notwithstanding. Nobody knows. You will find an editorial a week in the Star and often in the Herald, et cetera, stating facts and nobody knows whether they are facts or not. They say the Federal Government ought to take over this and ought to bear this and ought to bear the other thing. I do not know.
Q: Do you think that Congress ought to put through a law putting it on a 60-40 basis?
ROOSEVELT: I don’t know whether it ought to be done or not. It might be less and it might be more. We just plain don’t know.
Q: You are going to look into it?
Q: Is there any possibility of a release of that power material you gave us the other day?
ROOSEVELT: I do not think so.
Q: The Edison Electric Institute, as you saw, of course, is going to test the constitutionality of the T.V.A.
ROOSEVELT: Yes, McCarter (Thomas McCarter of the Public Service Corporation of New Jersey) and so on. Mac, we got a request from McCarter for an appointment, did we not?
MR. McINTYRE: I do not think it was McCarter.
Q: Down here?
ROOSEVELT: Yes, but I cannot see him down here. And we got a request from Floyd Carlisle and (Wendell) Wilkie.
MR. McINTYRE: I do not think we have had any from McCarter.
Q: Mr. President, could you tell us about your plans for tomorrow and Thanksgiving Day?
ROOSEVELT: I do not know. You had better check up with Carp (Arthur Carpenter) on it. They are having something planned for—a fellow is coming down to give an exhibition to all the patients.
In the afternoon we have a Trustees’ meeting. Right after lunch we all go down to dedicate two new buildings, up to the present time referred to as Unit A and Unit B. They will be christened tomorrow.
Q: Are you going to christen them any other names besides Unit A and Unit B?
ROOSEVELT: Oh, yes; we are going to give them names.
Q: Who will decide what they are going to be?
ROOSEVELT: We have decided already. And then after that, off the record, a cocktail party and then dinner.
Q: How many turkeys have you?
ROOSEVELT: I do not know. I think we have been given about five. I have eaten one already. I am getting another one too, a wild turkey.
MRS. ROOSEVELT: When are you going to use that large one?
ROOSEVELT: That is the one to be used tomorrow night. You better not put that down because there are four or five going to be used tomorrow night.
Q: Mr. President, would you care to tell us about the dispute between Moffett and Ickes over housing? That all came out of Washington. We didn’t get anything here at all.
ROOSEVELT: Do you want me to talk, off the record?
Q: That will be fine.
ROOSEVELT: This has to be off the record because again there is no use of injecting me into it, because somebody will say it is denial and some will say it is affirming and some will say it is settling a row.
Apparently, what happened was this: Last Thursday Ickes had his press conference, and he talked about one form of housing plan, having that in mind perfectly clearly himself. But the fellows in the conference did not get what he had in mind. He was talking about slum elimination and rural housing, the thing we were talking about the other day, which of course cannot be done by private capital. He said, “Why, of course, private capital won’t go into this thing. We cannot rely on private capital for it.” It was perfectly true. The Post story was darned good and made it perfectly clear. But one or two of the other stories gave the distinct impression that what he was referring to was housing in general. Whereupon Moffett, upon reading this, went up through the roof, thinking that Ickes is going into the kind of housing that he is doing. Thereupon the hell hounds of the Press got around Moffett in the afternoon and worked up a controversial story which, of course, was in large part Moffett’s fault because he thought that Ickes had been referring to general housing, which he hadn’t at all. Finally, on Saturday, they had a meeting and put the onus of the whole thing on the Press and said that they were in complete accord and that their two programs did not conflict.
Now, the real answer is a perfectly simple one. Obviously the two things do not conflict. We have four and three-quarters million people on relief. Probably half of them are living under very terrible conditions. There are probably another four and three-quarter million people who are not on the relief rolls. Now, that just does not mean people, that means that the four and three-quarter million people on the relief rolls represent eighteen million people on relief.
Taking the two groups living under undesirable conditions, it means that there are nearly forty million people who are of such low earning capacity that they cannot get credit. They cannot get credit and private capital won’t give them credit. I am not saying improperly, because I think very properly. You take the ordinary person, if he hasn’t a job or any capacity, private capital isn’t going in and lending him money to build a house. Obviously not. Now, what are we going to do? Are we going to leave him where he is just because he hasn’t security to offer for a private loan?
If he falls into the higher class, he comes to Moffett. Now the simplest illustration is this: That of all the loans made through this Housing Administration today, the average earning capacity of the people getting loans is $2,750 a year. Now that figure of $2,750 a year is nearly three times the average family income in the United States. Therefore the Housing Administration is taking care of people with sufficient earning capacity to obtain a private loan and it is doing a grand job. It is taking care of what might be called the very large number of people, again millions of people, who fall into the category of having an income somewhere, let us say, between $1,500 and $3,500 a year. Those people have found it difficult to go to the bank and get a loan at a low rate of interest because the bank was not certain of things. Therefore Moffett’s organization goes to the bank and says, “If you put this thing through, it is your responsibility, but you will get Government insurance up to a certain point.”
Now, that is going well for certain people, that group, (earning between $1,500 and $3,500 a year) but it was never intended for and nobody had any thought that the Housing Administration could persuade banks to lend people with incomes of $750 a year. There was not enough security. Nor could they do it for people on relief who haven’t any income except what they are getting from a Government job or through relief.
That raised the question, “Are we going to call ourselves licked?” Now, I will give you the best illustration: It raises other complications. Joe Day in New York is a very old friend of mine, and one of the best real estate men in the City of New York. He and I have been carrying on a very interesting correspondence. He started of by telling me that it was terrible for the Federal Government to go into slum clearance. I said, “Joe, this is all very well, but you have not eliminated the slums in New York’ He wrote back, “Give us a chance, I think we can.” I said, “At what cost per room per month?” He said, “You have me there, we cannot do it for less than $12 per room per month.” I said, “How many families are in the City of New York that cannot afford to pay that?” He came back and said, “We hope that with the return of prosperity there will be more.” I said, “That isn’t any answer to my question.”
Now, the very simple fact is that in the City of New York there are probably a million people—there are probably about two hundred thousand families alone—that is probably a rough guess—whose earning capacity brings them under the thousand dollars a year class. They probably ought not to pay, out of that thousand dollars or less, more, let us say, than a hundred and fifty, a hundred and forty or a hundred and fifty dollars a year for their rent. They cannot afford it because they have to eat and clothe themselves.
Now, what does that mean if the cheapest rooms in the City of New York rent for $12 a room? That means that the whole family can afford to live only in one of those $12 rooms and no other room. If, on the other hand, you can get them rooms for $6 a month, the family can use two rooms.
What is the result? They are living today under most terrible conditions, in old tenement flats, on the East Side, also on the West Side, in the middle West Side and the middle East Side. We all know the conditions they live under. They are able to get, on the average, perhaps two rooms at $5 or $6 a room. There is no sanitation, no light, no nothing. They are pretty terrible living conditions.
Now, Joe says, “We are licked. Private capital could not afford to build for $5 or $6 a room. That is not enough.” That is his answer, “We are licked.”
Q: Is he convinced?
ROOSEVELT: Yes, but he says the Government ought not to go in.
ROOSEVELT: He says it is not the prerogative of the Government. It is unconstitutional. Like T.V.A. It is illegal. He says the thing, over a period of years, will work itself out some way. Then he also says, “If you go in and tear down these tenements, you are going to cut real estate values very much.” Well, that is true. The value of tenements in the City of New York, including the City assessed valuations, is much too high. They are being held at those high prices with the hope of the owners that some Fairy Godmother is going to come along and take it off their hands at this price.
And that is the great difficulty of the Government going in to remove slum conditions in the big cities, the fictitious cost we would have to pay for that land. Yet I suppose there are tens of thousands of parcels of land in the City of New York which are only bringing in on the assessed value, which is higher than what they can sell them for, bringing a yield of 11/2 or 2%. But there is always the hope on the part of the owner that something is going to happen.
Q: If the Government built these homes, who would own them?
ROOSEVELT: In the case of a tenant there are practically only two methods. One is tenant ownership, which has been used in a great many buildings in the City of New York, such as the Bronx buildings that the labor people put up. The tenant, by making extra payments over and above the rent, eventually, in twelve or fifteen years, owns his apartment. That is tenant ownership.
The other method, especially in those places where you have a floating population that moves out and in a great deal, you make it a straight Government proposition which, after the Government has been paid back, could probably be sold to private people. In other words, it does not mean that the Government would stay in forever.
Of course Joe day has this other thought, and in another letter he talked about the terrible socialism and what had been done in Germany and England and Vienna in clearing up slums. He said it was just straight socialism and of course we couldn’t do anything like that. But if you had knowledge of what happened in Germany and England and Vienna, you would know that “socialism” has probably done more to prevent Communism and rioting and revolution than anything else in the last four or five years. Vienna has practically cleaned out her slums and has done a grand job.
Then, of course, there are the other phases such as rural housing. We talked about that the other day and you understand the whole objective of it. There, again, we have got to put up houses that private capital cannot put up. We have to reach an entirely different group in the community. It is a secret at the present time, but there are two or three fairly good-sized things we are working on, plans for a new type of house. Don’t use this, because they are not ready—it would not be fair to them. It would be a complete, fabricated house, with pre-fabricated steel an an essential part of her construction.
The house would have all of the latest developments in it. It would have heating and air-cooling system for the summer time. It would have all the electrical equipment you could possibly put into a house and they believe that they can sell a house of that kind for $3,800. Now, that is perfectly magnificent. It is an important step ahead. I think it is a five-room house.
Now, who can buy a $3,800 house? None of the people on relief. It is too much. It will be taking too much of a chance for private capital to take a fellow off the relief rolls and put him into that house. Now, there are what I call the “marginal” people who are just out on the line, people who have a job, a little bit of a job, making $20 a week as a family. Private capital cannot afford to put them into a $3,800 house. They are too close to the line. It is not a good risk. So, what we are trying to do is to put up houses where these people can go in and, because of the much lower monthly payments, there is a chance of getting the money back, but private capital cannot do it. It is a field into which the Government alone can go, and the Government only can do it.
Government cannot say, “We are licked.” Other countries have done it and have put up perfectly grand houses at $1500 and $1600. We can come pretty close to doing it here and it does not interfere in any way with the outlet for private capital, not one bit, because they would not go into that field at all.
Q: How much money does it cost the Government?
ROOSEVELT: It depends on the program. In other word, when it comes down to that, you can take your program and run it from $100 to a hundred billion. I mean, that becomes a matter of financing rather than a matter of policy.
Q: Is this off the record?
ROOSEVELT: No, this is all on the record.
Q: On this housing program we were just talking about, has that been decided on at all?
ROOSEVELT: In figures, no. In policy, yes.
Q: Could we use that fact?
ROOSEVELT: Depends on what you use with it. In other words, if I were writing the story today I think it would be perfectly all right to say this, without putting it on me: It has been made increasingly clear by people coming to Warm Springs to see the President, meaning the Press, that the Government recognizes as a matter of policy its obligation to those people in the United States whose standards of living are so low that something has to be done about it, but whose pocketbooks are so small that private capital cannot properly lend them money. And if somebody ask the question, “IS Government going to consider itself licked in its effort to take care of people who cannot otherwise be taken care of?”, the answer is, obviously, “No!” And further, as a matter of policy, the Government is going to continue every reasonable effort—that answers Stevie’s question, and I cannot give you any figures—continue every reasonable effort to give the lowest income group in the United States a chance to live under better conditions, for the very simple reason that if Government does not do it, nobody else will or can.
Now, of course, a Government program of that kind is not all one-sided. My “missus” suggests a very excellent addition to it, that it means a very definite lift to the heavy industries not only during the construction period but also means that after that period is over there will be an additional consumers’ demand, because, once people get a better standard of living, they are going to insist on maintaining it.
In other words, the policy story is all right, as long as you don’t try to get too factual about it, because I haven’t any more idea than you have as to the dollars and cents or whether it will be done or anything of that kind. It is a philosophical policy story.
Q: Mr. President, in this connection, stories have been printed that the Government’s guaranty of 20% of any loses be extended to other fields so that private banks and private financial agencies could do this financing which they don’t see how they can do today. In other words, they could lend money to people in the lower income brackets.
ROOSEVELT: There you have to come down to practical cases. This has to be off the record, too. Probably private capital, in most cases, is not efficiently organized to carry through a very large operation. Let us take a very simple example: Suppose we were to start here in Georgia a new community with decent homesteads for people on relief—decent homes for people on relief. Nobody thinks much about it. Should the community consist of a thousand people, in other words, two hundred families, or five thousand people, a thousand families, or should it consist of ten thousand people. That immediately brings up a question that probably only the Government can plan for. We would try several types of communities of that kind.
Incidentally, and you will have to leave this off the record too, I had an awfully interesting talk with Edsel Ford about it because old man Ford—Edsel brought me quite a number of photographs—as you know, went into the valleys above Detroit and took little villages and put in very small manufacturing plants, plants that ran anywhere from twenty or thirty people up to a couple of hundred people. Well, a plant of a couple of hundred people probably supplies a community of 2500 to 3000 people because a lot of people have to run the grocery stores and the post offices and so forth and so on. He pointed out that it was perfectly true that in the case of Ford doing it, it means a pretty good assurance that the plant will run because it is a great, huge corporation and you can assure a good income to the workers in the community. Actually, he showed that the smaller plants of the companies are paying $1350 annual income to the employees in that community, which is pretty good and away above the average.
If you can get a factory to come in, a small factory of a big concern that has a fairly steady demand for its products, that is all right, but there is a limit. They are all working on it, General Electric, Westinghouse, Steel, et cetera. Decentralization, if you can get enough, will probably be all right, but you probably cannot get enough.
Then you come down to the next question, “What can you use as a substitute for a branch factory of a big corporation?” Probably not very much except by trying to make the community itself self-supporting. That means a fairly good-sized community, big enough to make its own dresses, clothes, shoes, shirts, besides its own food supply. If a community of that kind can be made somewhere around 80% self-sufficient, it probably can be made a go of. But the point is that private capital, obviously, won’t go into that. Some of the big companies with fairly large capital will, but, as you know, the big corporations—the corporations employing, say, over a hundred men—they only employ 40% of the industrial workers of this country. 60% of the workers are employed by companies employing less than a hundred men. They are not big enough to go into this sort of thing. Government has to help them do it.
I think that is about the only answer you can give on that, that again private capital is not in as favorable a position to do it as Government would be, and that private capital won’t do it because there is too much risk.
Q: That would make this a good story, Mr. President.
ROOSEVELT: They never have before.
Q: Are you willing to insure up to that amount?
ROOSEVELT: We cannot insure. Suppose we did. Suppose we said to the private capital, “You go ahead and do it.” I don’t know. I don’t suppose, in the first place, that private capital would do it. They haven’t been organized and don’t know enough about it. In the second place, they would consider that 20% was too little insurance. I just plain think they would not come in if we extended it.
MR. McINTYRE: In connection with what you said about housing policy, would you have any objections to the use of that part in which you pointed out that there is no conflict between the two?
ROOSEVELT: That is perfectly all right to us. There was absolutely no conflict. The private dollar won’t go into the Government housing that we are going ahead on. If private dollars show any desire to come in, we will be willing to give them every opportunity to do so.
Q: I cannot say we haven’t very much; you did pretty good.
ROOSEVELT: You got a real Washington story.
Q: Yes. It is getting kind of late. Looks like you are trying to take me out of it. (laughter)
Q: In the papers this morning there is a story that the Nye Committee is going to consider the complaints of investigators that Government officers are holding up the investigation into munitions.
ROOSEVELT: I do not know; I have not heard anything about it because all the Federal Government officers are very much willing to give them everything we have.
Q: You stated that at Hyde Park.
ROOSEVELT: The last time I saw Gerald Nye (Senator Nye) he told me he was delighted with all the cooperation he was getting. Did he say where that is?
Q: No, he did not.
Q: He is calling a meeting on Monday.
Q: Does your Order still stand?
ROOSEVELT: Yes, on everything that is not a military secret.
Q: Did you hear about the report of pine wood resources? The Hearst papers are very much interested and New York is very much interested (showing the President a clipping).
ROOSEVELT: You know, I have been tremendously interested in this right along. Herty (Dr. Herty) came down here six years ago and did that.
Q: I knew you had in general.
ROOSEVELT: Why don’t you get a story of of George Foster Peabody while he is here?
Q: I would like comment from you.
ROOSEVELT: The only comment I have is that I have been interested in it for five or six years and have been following the progress they are making with the belief that there are real possibilities for many, many new uses to which the wood resources, the forestry resources of the South could be put. They have only scratched the surface on that.
Q: This is a report merely on the resources and not on the possibilities.
ROOSEVELT: The resources can be increased too.
Complete Presidential Press Conferences of Franklin D. Roosevelt, Da Capo Press, New York, 1972, Vol. 4, #161