Bureau of Labor Statistics, U.S. Department of Labor

HOUSINGSource: Monthly Labor Review, Vol. 14, No. 3 (MARCH, 1922), pp. 138-144Published by: Bureau of Labor Statistics, U.S. Department of LaborStable URL: http://www.jstor.org/stable/41828192 .

Accessed: 17/05/2014 12:39

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact support@jstor.org.

.

Bureau of Labor Statistics, U.S. Department of Labor is collaborating with JSTOR to digitize, preserve andextend access to Monthly Labor Review.

http://www.jstor.org

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

HOUSING.

Housing Situation in Massachusetts in 1921.

A RECENT summary

issue of the

of housing the Monthly

situation Labor

in Massachusetts, Review 1 contained

as shown a

summary of the housing situation in Massachusetts, as shown in the report for 1920 of the Massachusetts Commission on

the Necessaries of Life. The report of this commission for 1921, of which advance sheets have been received, contains a description of the development of the situation during that year. The Commission finds that as the general business and industrial situation changed, there was a marked shifting of emphasis in what the public sought. "In 1919 and 1920 the demand was for better quarters; during 1921 the demand was for cheaper rents." Because of this, the trend of rents has varied considerably with the kind of housing furnished. For comparative purposes, the commission groups the housing accom- modations offered into three general classes, as follows: (1) Heated apartments in choice locations, with elevator and janitor service, etc.; (2) unheated tenements in one, two, or more familv houses of moderate value; (3) heated and unheated tenements without modern conveniences.

Rents for housing of the first class have shown a downward tend- ency during 1921, there having been a decline of from 20 to 35 per cent. The decline is attributed not to increased construction but to economic pressure, which has diminished the class demanding such accommodations; consequently, it has been accompanied by an increased demand for cheaper housing, which has rendered the situation wrorse for those who have always been limited to accommo- dations of the second and third class.

For accommodations of the second class, the commission believes that rents have now reached their peak. Those increases which are now being protested to this office represent belated efforts

on the part of certain landlords to get the increases which their neighbor landlords have already gotten, or an attempt to continue rent raising while the shortage exists. The increase of municipal taxes on real estate is the popular reason given for these increases, which usually total many times the amount of the tax increase.

The most serious situation is found in connection with housing of the third class, for wliich the demand has been increasing through- out the year.

In the case of apartments in the third class, increases are still general and attribu- table to the accentuated demand for this class of apartments, due to the effects of business depression. Business reverses, reductions in wages, unemployment, with the consequent necessity for rigid economy, are the factors which increase demand for low and medium price dwellings and slacken demand for more expensive homes.

The commission has not established a definite line of demarcation as to what type of home is in the luxury or necessary class, but it has never felt greatly alarmed over increasing rents in the first class of apartments. Families that can pay $100 a month

1 December, 1921, pp. 145-147. 138 [548]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

HOUSING. 139

for rent, which would borrow $10,000 on a 12 per cent basis, the commission believes could own or build a home. However, in the great second and third classes, serious and dangerous complications will continue to arise until new housing relieves the shortage. Under existing circumstances, when rental charges have already been increased from 50 to 100 per cent, the commission regards attempts to secure further increases as a reprehensible practice which should be discouraged.

One of the unfortunate features of this situation, the commission finds, is the opportunity it gives for discrimination against tenants with children. A family is a serious drawback to a man who must seek a new abode, and even the family which is occupying a domicile secured before the present emergency arose is liable to be forced out on account of the number of children it includes.

The commission does not hold out much hope of relief in the imme- diate future. Increased building of low and medium priced houses and tenements is the only permanent solution of the problem, and at the close of 1921 it was not possible to forecast with certainty the course of building construction during 1922. During 1921, it is pointed out, the number of building permits issued by local commis- sioners showed an increase over the number for 1920, but many of these were for public works, intended to relieve the unemployment situation. Residential construction is reported as being "clecidedly spotted,

" and as consisting principally of moderate priced houses costing from $5,000 to $7,000.

For the time being the commission is endeavoring to mitigate the situation so far as possible through the application of the emergency rent laws and personal mediation between landlord and tenant. In 27 cities and towns official committees or individuals have been appointed to hear complaints, give hearings and adiust difficulties when possible. Upward of 10,000 cases have been brought before the commission and its auxiliaries, of which 65 per cent concerned increases of rent, 20 per cent concerned orders to vacate, and 15 per cent included both increase in rent and notice to vacate. At the time this report was prepared, there seemed to be no falling oil in the stream of cases.

Complaints filed by tenants and landlords in this office and requests for advice and assistance, at the rate of 500 a month, from residents outside of Boston, indicate that thousands of families still are experiencing difficulty in securing suitable living quarters.

'On the basis of its experience, the commission makes some rec- ommendations for the future. Most of the emergency rent laws, ili thinks, should be extended at least until 1923. An exception is made in the case of the law forbidding an increase of rental amounting to more than 25 per cent over the rent paid a year previous. Many of the landlords, says the commission, are construing this as an invi- tation and authorization to make an annual increase of 25 per cent in rental charges. The desired result could be obtained more surely by giving the courts "the right in the emergency to establish rea- sonable rents for dwellings, on the basis of a fair return upon the investment, rather than specifying by law an arbitrary percentage of increase. "

One recommendation of special interest deals with the so-called cooperative ownership plan for homes or apartments, which, the commission believes, nàs been used as a means of defrauding tenants who are practically helpless, owing to the difficulty of finding homes. 3 6 * [549]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

140 MONTHLY LABOR REVIEW.

Ah a result of the housing shortage there has appeared in increasing numbers the promoter of cooperatively owned apartment and dwelling houses. One of the favorite devices of the promoter of such a scheme is to force up rents to show a profit upon an inflated valuation, then tenants are ordered to move out or buy their apartments. There are often several mortgages on the property. The equity is split up into shares, and each tenant must buy tne shares which represent his apartment. People of small means are being forced into these schemes, and it is highly important that there be some State supervision to protect the investment of the owner-tenant.

The commission believes that these tenants should be afforded the same kind of protection received by investors in cooperative banks, and recommends that all such plans of cooperative ownership of houses or apartments should be under the supervision of the State bank commissioner.

Summing up the situation, then, for the year, the commission finds that there is enough housing accommodation for the wealthy and decidedly well-to-do, but a distinct shortage for the poorer classes, and that there is no immediate prospect of relief for the latter. All the surplus of housing of five years ago is exhausted. Rents are still going up

and wages are coming down. The readjustment occasioned by high rents has resulted in mucn social unrest. In many instances the people are depriving themselves of other necessaries of life by paying a higher rent than their income justifies.

Building costs are slowly liquidating. In the case of building materials substan- tial reductions in the price asked by retailers may be secured by dealing direct with producers and wholesalers. Resumption of building has commenced, naturally in communities where rents have been advanced at a faster pace than even the cost of replacement would warrant. Much of this new construction is being put up by indi- viduals who have been victims of speculators and greedy landlords. Small builders are realizing a good profit and rapid turnover at the present time. While larger operations will probably be commenced next spring, rent reductions in the second and third classes will not be material for some time.

New Housing Ordinance in Buenos Aires.1

AN Aires ORDINANCE

on November sanctioned

18, 1921, by

provides the city

that council

any owner of Buenos

of a Aires on November 18, 1921, provides that any owner of a plot of land in the city, whether a private individual or a

cooperative society, may, if complying with the provisions of the law, petition the municipality to construct houses on his land. The houses are to be low-cost dwellings for workmen and employees, built according to plans chosen by the petitioner and approved by the municipality. One landowner may request the building of from one to twenty nouses, but must show clear title to the land. Front or back yards equal in area to the house are required. The city lets the contract to the lowest bidder, and within 60 days thereafter the petitioner must make a cash payment of 20 per cent of the building cost. The remaining 80 per cent is to be paid in monthly install- ments. The municipality is to be protected by a mortgage on the land and dwellings. Provision is made for the sale of tne property if desired, and for the procedure in case of failure to keep up the monthly payments. A commission of seven members is to be appointed to attend to the building of the houses and the financing of the project. 1 Crónica Mensual del Departamento Nacional del Trabajo. Buenos Aires, November, 1921.

[550]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

HOUSING. 141

Dwellings constructed under the terms of this ordinance during the years 1921, 1922, 1923, and 1924, will, for a term of 5 years from the completion of the building, be exempt from payment of street cleaning and lighting fees. Furthermore, the materials used in their construction will be exempt from import duties.

Housing Activities of the Municipality of Zurich, Switzerland.1

Construction of Municipally Owned Dwellings.

AN Zurich INVESTIGATION

made on December into housing

1, 1905, conditions showed that

in in the

the city whole

of Zurich made on December 1, 1905, showed that in the whole city there were only 97 vacant apartments as against 1,914

on the same date in 1900. In order to mitigate this housing scarcity caused by the stoppage of private building activity, or at least to prevent its becoming still more acute, the municipal administration on July 21, 1900, submitted to the city council a proposal for the construction of 25 houses on land owned by the city, at an estimated cost of about 2,500,000 francs ($482,500, par). On February 27, 1907, the city council resolved to adopt this proposal and to submit the matter to a referendum of the voting population. The referendum of April 21, 1907, resulted in 18,032 votes for and 7,500 against the project. This first building project of the municipality was followed Dy six other projects, and at every referendum taken the majority in favor of the proposed building activities of the municipality showed a large increase.

The first 25 municipally owned houses were built in 1907-8, and up to the end of 1920 the municipality had built 183 houses containing 1,124 apartments, at a total cost of 22,730,961 francs ($4,387,075, par). The houses built were intended to furnish housing accommodations at a moderate rent to families of workmen, low-salaried employees, and other people of small means. For this reason 80 per cent of the apartments in the municipally owned houses were constructed as small apartments of two or three rooms, as contrasted with the privately owned houses in which, according to the housing census of December 1, 1910, only 50 per cent of the apartments were of such small size.

In the first houses built by the municipality in 1907-8 the average annual rent charged originally for a two-room apartment was 401 francs ($77.39, par) and that for a three-room apartment, 543 francs ($104.80, par). During the war and in the years subsequent to the war, however, building costs increased so enormously that the original rents charged in houses erected between 1912 and 1920 were much higher, lne building costs per cubic meter (35.314 cubic feet) advanced from 26.65 francs ($5.14, par) in 1907-8 to 68.29 f nines ($13.18, par) in 1918-19 and 81.05 francs ($15.64, par)'in 1919-20. The increase in building costs in 1918-19 over 1907-8 thus was equivalent to 156 per cent and in 1919-20 to 204 per cent.

The ordinances relating to the construction of the groups of municipally owned houses built in 1907-8 and 1912-1915 provided 1 Der kommunale und subventionierte Wohnungsbau der .Stadt Zürich bis zum Jahre 1020. Zürich, 1921. Statislik der Stadt Zürich. Heft 27.

i MM í8í> ° -22 10 l M! ]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

142 MONTHLY LABOR REVIEW.

that the rents charged must cover the interest on the capital, de- preciation, taxes, costs of administration and maintenance, and de- ductions for a reserve fund. In 1917-18, when additional groups of houses were to be built by the municipality, it became evident, now- ever, that the high building costs wöuid make it impossible to comply with this provision unless rents were increased far beyond the means of the class of tenants intended to occupy the houses. It was, there- fore, for the first time resolved to deviate from the principle that the housing work of the municipality must be self-supporting by fixing rents below cost and having tne municipal treasury assume the deficit accruing during the first 10 years. It was further resolved that if after the expiration of these 10 years the rents received by the city still do not cover the capital and maintenance charges the capi- talized amount of the estimated annual deficit shall be written off as depreciation, so that these municipally owned houses will then be- come self-supporting. In 1921 the deficit for the six groups of houses (containing 599 apartments) built in 1918 and subsequent years amounted to 257,350 francs ($49,669, par) ; in other words, there was an average deficit of 429.63 francs ($82.92, par) for the year on each apartment.

Rents in the municipally owned houses built before 1918 had of course to be raised gradually. In the houses built in 1907-8 the rents charged in 1920 were about 45 per cent higher than the original rents. In those built in 1911 to 1915 the rent increase in 1920 averaged about 30 per cent. These rent increases amount, how- ever, only to one-fourth or one-third of the increases in building costs, and the rents in all municipally owned houses are even now much lower than those in privately owned houses. The rents charged in 1920 in the different groups of houses were the following: In tne houses completed in 1908-9 tne average rent for a two-roòm apartment was 584 francs ($112.71, par) and that for a three-room apartment 790 francs ($152.47, par). In the houses completed in 1912-1915 the rent of two-room apartments varies between 680 and 879 francs ($131.24 and $169.65, par) and that of three-room apart- ments between 1,031 and 1,275 francs ($198.98 and $246.08, par).

Subsidized Building Activity. Municipal Subsidies.

f)N ^ AUGUST 27, 1910, the municipal council of Zurich adopted ^ a set of rules for subsidizing building activities of public

welfare building associations. In accordance with these rules such associations were to receive aid from the city (1) through the sale of city-owned building lands; (2) through the granting of loans, and (3) through purchase of shares of the associations by the city.

The sale of building land is effected at moderate prices, but not below the inventory value. Building loans are granted by the city at a moderate interest on second mortgage up to 90 per cent of the purchase price of the land and of the bunding costs. The purchase by the city of shares in a building association is limited to 10 per cent of the capital stock of the association.

In view of the great housing scarcity that developed, the city council decided in 1917 to make mortgage loans also to private parties undertaking the construction of cheap workmen's dwellings.

[552]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

HOUSING. 143

Municipal aid to building associations is being granted only under certain conditions, the most important of which is that houses built with municipal aid to accommodate more than one family riiay not be sold, and one-family houses may be sold only without speculative

Erofit. ouses, If for

a proper building

compensation, association is

to dissolved, the municipality,

it must if transfer

the latter its

ouses, for proper compensation, to the municipality, if the latter demands it. In making mortgage loans to private builders the city reserves the right to approve tne rents charged by the owner.

The total amount expended by the city up to 1921 in aiding building associations and private builders was 3,344,170 francs ($645,425, par), and if it is assumed that the actual value of the land sold by the city to building associations is one-third greater than the assessed valuation, 421,393 francs ($81,329, par), charged for it, the expenditures of the city in promoting building activities of build- ing associations and private builders total about 3,500,000 francs ($675,500, par). During the period 1910-1921 a total of 289 houses, containing 964 apartments, were built with municipal aid.

State and Cantonal Subsidies.

In the fall of 1918 the Swiss Federal Council ( Bundesrat ) had received petitions from a number of municipalities, among which was that of Zurich, requesting State action for the relief of the existing housing scarcity. As a result the National Council ( Nationalrat ) voted a credit of 12,000,000 francs ($2,316,000, par) for this purpose on April 4, 1919, which amount was to be loaned to the cantons at 2 J per cent interest, repayable within 35 years, provided the cantons and municipalities raised for the same purpose double the above amount. The Federal Government soon perceived that the credit voted was too small and on June 27, 1919, the National Council voted an additional housing credit of 10,000,000 francs ($1,930,000, par) . The expenditure of these credits was regulated by a resolution of the Federal Council of July 15, 1919, which, briefly summarized, contains the following provisions :

Relief of the housing scarcity through State action shall be effected through nonrepayable cash subsidies to builders as well as through the granting of mortgage loans at 4 per cent interest.

The cash subsidy of the State shall, according to the nature of the building and the use for which it is intended, and with special consideration for rational settlement projects, amount to between 5 and 15 per cent of the total building costs, provided the canton grants a subsidy equal in amount to that granted by the State. Subsidies from communes or third parties may take the place of the cantonal subsidies.

The State guarantees to builders of new dwellings intended to relieve the existing housing scarcity a mortgage loan not to exceed 30 per cent of the total building costs, provided the canton grants one-half of the loan.

The subsidies and loans granted by the State and the canton may not exceed 50 per cent of the total building costs and the total mortgage charges may not be in excess of 65 per cent of the invest- ment value (total building costs plus market value of the land).

If a building is sold at a profit within the next 15 years the State and the canton shall, in proportion to their cash and loan grants,

[553]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions

144 MONTHLY LABOR REVIEW.

participate in half the profit. During the same 15-year period the revenue from rents may not exceed 6 to 7 per cent of the cost of the building.

A further credit of 10,000,000 francs ($1,930,000, par) fòr housing work was voted by the National Council on April 30, 1920. This credit was to be used exclusively for the granting of nonrepayable cash subsidies to builders. The regulations issued by the Federal Council for the expenditure of this credit were similar to those summarized above, differing from them only in increasing to 8 per cent the

Permissible ederal Council limit

voted of revenue

a credit from

of 15,000,000 rents. On

francs February

($2,895,000, 19, 1921,

par) the

ederal Council voted a credit of 15,000,000 francs ($2,895,000, par) for the relief of unemployment. The regulations of the expenditure of this credit provided that part of it might be used in granting non- repayable subsidies to builders of new dwellings but in a maximum amount of only 10 per cent of the building costs, while the regula- tions for the expenditure of previously voted credits permitted the granting of such subsidies up to 15 per cent of the Duilding cost. Apparently the Swiss Government intends gradually to do away witn these subsidies.

From all these credits there were allotted in 1919 and 1920 to the city of Zurich nonrepayable cash subsidies in the amount of 4,530,146 francs ($874,376, par) and mortgage loans in the amount of 1,985,911 francs ($383,281, par). In the subsidies the canton participated with 2,222,307 francs ($428,905, par) and the State with 2,308,139 francs ($445,471, par), while in the mortgage loans the respective shares of canton and State were 892,955 and 1,092,956 francs ($172,340 and $210,941, par). More than half of these amounts were allotted to public welfare building associations. The balance went to the municipality of Zurich for the construction of municipally owned houses, to building associations other than public welfare building associations, and to privare builders.

How much this State and cantonal aid was needed became evident from the numerous applications for subsidies. Owing to lack of funds, more than half oř the applications received could not be con- sidered. In 1920 there were built in the city of Zurich a total of 471 apartments, of which 409 were built with municipal, cantonal, or State subsidies and only 62 without subsidies, and of the latter more than half were one-family houses. Private nonsubsidized building activity had practically ceased in 1920.

T554]

This content downloaded from 194.29.185.23 on Sat, 17 May 2014 12:39:14 PMAll use subject to JSTOR Terms and Conditions