Industrial Housing/The Economics of Industrial Housing

by Andrew J. Thomas

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CHAPTER I

Economics of Industrial Housing

THE economic factor is the main obstacle in industrial housing. The heart of the problem lies in the disproportionate increase in the cost of housing as compared with the general level of commodity prices and wages. As a result of this maladjustment, the average thrifty wage-earner can scarcely afford a suitable home.

What has caused housing costs to soar? As mentioned in the introductory chapter, the cause will be found, not in circumstances which are beyond control, but rather in the inefficiency and disorganization of the housing industry itself. The removal of this inefficiency is the immediate purpose of contemporary housing technique, which has for its ultimate goal architectural and social progress.

Economics, therefore, is fundamental in industrial housing. Housing economics is an extremely complex subject, and is involved deeply in the technique of housing architecture. It is generally misunderstood, perhaps because the housing industry is divided into many parts—into finance, real estate, city planning, architecture, contracting, house furnishings, real estate management and household operation—so that housing is usually looked upon from the point of view of one or two of these many, often conflicting, interests, and rarely is it considered as a whole. As might be expected, when any one group in housing seeks to advance, the contribution which it makes to progress is either unimportant or else is blocked by inertia in other quarters.

The effect of the new housing architecture

Notwithstanding this disorganization, there has been a steady improvement in housing design, particularly since the World War. During the time that housing costs were rising, architects have given their best efforts to improve housing architecture and they have finally succeeded in perfecting a home for the American wage-earner which in all respects measures up to his standard of living, the highest in the world. This technical achievement introduces a new factor into the situation. As compared with the older models of the speculative builders, the superior economy, efficiency, convenience, firesafety and beauty of the new architectural types should create a revolution in industry besides which the changes wrought by the automobile seem slight in comparison. One may safely assert that, had the new housing architecture, which includes the new system of site-and-town planning based upon it, been perfected ten years ago, so that it could have been introduced at the same price level on which the older types were produced, it would already have begun to transform the entire physical aspect of American industrial districts. Housing blocks, neighborhoods, towns, whole districts, would be covered with better homes and gardens, interspersed with playgrounds, parks and open spaces.

The social transformation would be no less profound. For, in such an environment, life would be fuller, finer and more reasonable, and democracy, for the first time since the days of the beautiful old towns of the Early Republic, would again be on the way to having a setting worthy of it.

The contrast of slums

To draw such an ideal picture seems an odd way of beginning a discussion of economics. Nevertheless, the subject of housing economics is so intricate and so generally misunderstood that it easily loses point unless it is illustrated in a clear picture which we may keep before our eyes, revealing the vision of the future, when intelligence, organization and imagination are at last brought widespread into housing. Nor will this ideal painting alone suffice. If we are to grasp its meaning to the full we must have another picture to place beside the first one which will show, by contrast, the present lack of leadership and of statesmanship and the resulting disorganization, from which issue huge social and economic waste and the demoralization of slums. This latter is the picture of the outward tenements of New York City and of the ramshackle wooden houses of other cities. By comparing these two pictures one sees which way progress lies.

Floor plan of typical building of the Bayonne housing

The factors of high cost

It is necessary to understand the tangle of economic and human factors which has caused the existing situation in industrial housing. In dissecting the corpse of the housing industry, we soon find, as already stated, that high prices was the disease which killed the patient. Everything that enters into the cost of a home—land, site utilities, building construction, finance, taxes, municipal assessments, household furnishings, maintenance, operation of the completed home—has enormously increased in price. Over the last generation, in nearly all items this increase is over one-half, and in many cases it is double or even triple. The popular impression is that the change in economic conditions after the World War was the cause of the unprecedented increase, but the truth seems to be that the war only served to bring to a head a crisis which had been slowly gathering force for many years. Housing costs have risen, but so have wages, and it is claimed by some students that the wage-earner was not much better off before the war than after it. There are some pitfalls in this claim, as will be pointed out, but it is to a large degree true. At any rate, there is little hope of solving the problem of high costs in housing by merely waiting until the economic readjustment, which is now taking place after the war, is completed. America must tackle the situation in a more fundamental manner. America must reorganize her industrial housing industry. This means that first there must be a thorough understanding of conditions in the housing industry, and of its organization and methods of operation. This knowledge will form a basis for reorganization.

The place of housing in American history

The key to the puzzle of the housing industry lies in understanding its place in the economic history of the American nation. Housing has always been intimately related to the real estate exploitation of a continent. This exploitation has made housing a small-scale business, individualistic, very loosely organized and highly speculative. Its roots reach down to pioneer economics, back to the days when each householder built his home in a clearing, cutting down the trees of the forest for building materials. As towns and cities developed, the primitive method of the frontier soon gave place to a system of division of functions and of responsibilities. In this more specialized system the local real estate sub-divider, the small capitalist investor and speculator, and the local builder, banker and lawyer, each had a part. The same system prevails to-day in most parts of the United States with but slight modification. Its method of operation is common knowledge and needs no description here. In fact, people are so accustomed to it that they overlook its defects.

In the latter part of the nineteenth century efforts were made to give to this small-scale local system the benefit of large-scale finance. Capitalists organized the large mortgage companies, and the huge insurance companies like the Metropolitan Life Insurance Company and the Prudential Life, which invested a part of their funds in mortgages. The workingman himself developed the extensive system of building loan societies, for the sole purpose of financing his own home. In this connection one may also mention the growth of large industries in the manufacture of building materials.

The introduction of these large-scale factors, however, although they were steps in the right direction, could not correct the fundamental defects of the system. The large mortgage companies found it more profitable to make loans on large building operations; the building loan associations, although stimulating the production of small homes in many districts, did not use their financial power to influence an improvement in housing technique and architecture, nor did they promote large-scale methods of production; and, in consequence, the economy of large-scale production of building materials was somewhat nullified.

Despite its grave defects, however, this system undoubtedly did function with fair success in many parts of the country. In many districts, particularly in the very smallest towns and villages, thrifty, well-paid wage-earners could obtain a home of four, five or six rooms and bathroom, with "modern" conveniences of heating and plumbing, at a price which they could afford to pay. In this way were built those millions of little homes which dot the industrial map of the United States.These houses are the familiar single houses, mostly wooden, or those other well-known types, the two-family houses, the brick row houses of the cities, known as the "Philadelphia" row house, and the New England frame "three-decker."

Weaknesses in housing production

"But," it may be asked, "how could this system of producing wage-earners' homes be wrong, if it provided homes by the millions?" The answer is that the system was wrong, first, because the architecture of the homes was usually inferior; secondly, the system could not minister to the lower-paid ranks as a general rule; and thirdly, because such success as the system did achieve in housing well-paid workers was due to certain favorable economic conditions in the nineteenth century, which for a long period offset the disadvantages of inefficient, small-scale, disorganized and speculative production, which were rooted in the housing business. Moreover—here is the point of it all—when these favorable economic factors gradually ceased to operate, the inherent weaknesses in the system came out. The result of the change is now apparent. The system on which the wage-earner had come to rely for supplying his home is failing him.

What were these favorable elements which enabled the obsolete system of producing wage-earners' homes to last so long? In general, they were exceptionally low costs of land, labor, building materials, transportation, and of taxes and finance.

Feature in rear wall of comfort station

These were advantages which dated from pioneer times and they belonged to the period of extensive economics, which coincided with the development of the United States and its earlier industrial expansion. They lasted until well into the twentieth century.

The factor of land value

But to-day these differentials are disappearing rapidly. Land, which, when the country was being settled and when our big industrial centres were being founded, could be had at almost nominal cost, is now scarce and, in most districts, is very high priced. The influx of population from the countrysides into the cities has brought about the rapid industrial expansion of the last fifty years, and has caused a tremendous speculation in urban lands, which is reflected in inflated prices. The studies made of the increase in land values in the new industrial cities of Gary and Lackawanna, and the history of certain tracts of land in New York City, illustrate, in a striking way, how great this increase is.

The introduction of the structural steel frame and the elevator, coupled with the development of high-speed transportation, are other factors which have contributed to the rise in the value of city land. They have immensely increased the possibility of deriving income from real estate, and have worked to raise the value of land, which depends on the income that can be obtained from it. As a result of this more intensive use of land, the buyer of a home site is apt to find that the future growth of the city has been heavily discounted, even in the prices of outlying land; and, to a certain degree, he must outbid the promoter who is seeking a location for a larger building. Zoning is offered as a solution of the problem presented by the rise in prices of city lands in anticipation of more intensive commercial uses: i. e., by forbidding business and industry to enter residence districts, their land values are kept down. This remedy, however, does not reach the important factor of the increased cost of public improvements.

Factor of public improvements

Even worse, the prospective home-builder discovers that the increased cost of municipal improvements of paving, sanitation and water supply, and of the public services, such as gas and electricity, which has been particularly large since the war, is also heavily reflected in the price of land, and in taxes and assessments. The experience of the United States Housing Corporation during the war is instructive. This and other cases lead the New York State Commission of Housing and Regional Planning to declare that the cost of public improvements is at least three times that of "raw"—or unimproved—land.

Factor of land utilization

Crude and wasteful methods of utilizing—or of sub-dividing land, as it is called—are a further heavy drain on the homeowner's resources, whether in the cost of procuring or of operating his home. This waste in land sub-division has received much attention in recent years from architects, who have pointed out that the customary methods of plotting home sites usually require an excessive proportion of space to be given over to streets (which are extremely expensive) as compared with that allotted to housing locations; and that, furthermore, the custom of laying out a street system long in advance of the buildings piles up heavy carrying charges on the costly municipal improvements and public services in the street, which lie idle, often for years. The overhead on this heavy waste in street construction and on the premature development of street systems increases the cost of taxes and assessments, as well as the rates for water, gas and electricity; and it also accumulates as carrying charges on the land.

The influence of these various factors which enter into the cost of land are now being subjected to scientific study. They are brought up to date in the 1925 report of the New York State Commission of Housing and Regional Planning in elaborate detail. The Committee on Community Planning of the American Institute of Architects, in their admirable 1925 report, also deals exhaustively with this huge economic waste, and concludes that it can only be stopped by sound community planning. The Committee's report offers a typical example of the waste in streets, showing how, in a tract of 580 acres, in which 190 acres, or 32.8%, are devoted to streets as laid out in the customary way, this high percentage could be reduced by proper design to 23⅓%, effecting thus a saving of 55 acres or nearly 10%, and, at the same time, providing a more efficient and attractive arrangement of home sites.

Construction costs

Coming now to construction costs, the higher wages at present paid in the building trades is a well-known fact and needs but little illustration here. In New York City, in 1913, carpenters received $4.50; bricklayers, $6.00; plumbers, $5.50; helpers and laborers, from $2.25 to $3.50 a day, while in 1923 the figures were $10.00, $12.00, $10.00, and from $6.00, to $8.00, respectively. This is to say nothing of the bonuses paid in some trades, reaching as high as $4.00 for masons, plasterers and tilesetters. Although existing rates of wages may be lower in the future, there is small chance of a return to the older relationships. The restriction of immigration has reduced the supply of labor and the competition caused by the steady, less dangerous employment at high wages which is now offered in the factories requires a higher level of reward if American youth are to be attracted into the building industry.

Building materials have not risen in price as much as has labor, but they are, nevertheless, in most cases from 50% to 100% or more above pre-war level. We are now doubtless on a permanently much higher price level than in 1913. At that time, because of disorganization and over-expansion, the materials industry was operating either with little profit or else at a loss. To-day, the higher wages paid for unskilled and semiskilled labor, together with the higher freight rates on railroad, ship and truck—all these factors more than offset any economies which may have been gained through the improvement in methods of mill-production of many important building materials such as steel, lumber, plaster and the metal products.

But the most important factor by far in the low cost of housing construction during the development period of the United States has been cheap lumber. It was cheap lumber, cut by low-priced labor from land of little or no value, and transported at small cost to the home site, which made possible the colossal production of wage-earners' homes in the nineteenth century. But now this tremendous advantage is passing, probably never to return. The cutting away of the forests, together with high wages, higher freight rates and the higher cost of depreciation of timber construction, are putting an end to the superior economy of wood over the other building materials.

Summarizing the result of the increase in building costs, it may be stated that a workingman's home costs nearly double to construct in 1925 as compared with 1913.

Cost of house furnishings

Incidentally, it should be pointed out that household furnishings are no small item in the cost of a home. Their price record in the eyes of the home-owner has little to commend it. They have risen in price much more than have building materials.

Finance is the heaviest cost

But important as are these well-known factors of land, municipal and site improvements, building construction and house furnishings, it is a striking fact that they do not influence housing costs to nearly the same extent as does the cost of finance. What makes a workingman's home almost prohibitive to-day is the price paid for the capital employed in building the house. More capital is required to-day than formerly, and is paid for at a higher rate. Since the capital is usually employed in a small-scale speculative venture, the investor naturally requires a high return on his money.

Whereas formerly the small home could be financed in the real estate market at an average rate of about six or seven per cent in New York City, to-day, according to the New York State Commission of Housing and Regional Planning, the capital used in tenements in New York State at present "costs on an average of from eight and one-half to ten per cent for interest without making allowance for the initial costs of securing a loan. In the case of small loans on single- family houses the percentage loaned on first mortage is rather lower, frequently as low as forty to forty-five per cent, and the average interest rate is consequently somewhat higher because of the increased proportion of junior mortgages." The "initial costs" referred to cover commissions, bonuses, discounts, legal fees and other charges on the various mortgages and building loans. In other parts of the United States even higher figures are reported. The effect of this increase is, roughly speaking, that the small home-owner needs at least double the capital to-day that he formerly required, and pays for the use of it at a rate about half as much again; that is, for every $100 capital for which formerly he paid $6 or $7 interest, he now requires $200 and pays $17 to $20 or more for it.

Rear view of a New York tenement

The effect of interest rates on rentals

To show what the effect of interest rates on rentals is, the cost of housing of sound, permanent construction as built by the speculator in the northeastern part of the United States to-day may be taken at $1200 a room. A reduction of one per cent on the interest rate on this housing equals exactly one dollar a room a month. The effect of interest rates on housing was shown in an exhaustive study of tenement house finance by Andrew J. Thomas, in a pamphlet, "Garden Apartments to Replace Slums" (1924). Similar figures are published in the 1925 report of the New York State Commission of Housing and Regional Planning.

Mechanical equipment and woman's labor

Another factor in the cost of producing housing is the effect of the gradual rise in the standard of living of the American people since the Civil War. The claim has been made, especially in real estate circles, that, if the wage-earner would be willing to return to the home of his forefathers, where he enjoyed plenty of space, but had less elaborate plumbing, heating and electric equipment and appliances—what are popularly known as "modern conveniences"—he could once again be economically housed. Some critics cite the fact that even to-day most American farm houses lack mechanical improvements. In other words (it is claimed) what makes wage-earners' housing expensive is the cost of luxuries, not of necessities.

There is just enough truth in this claim to make it plausible, but it will not stand analysis. If one separates the cost of mechanical services and of equipment into that part which lies outside the house and that which lies inside, he will have a clearer idea of the situation. As regards the cost of the various municipal improvements and public services outside the house itself, and the effect on the cost of land, their importance has already been pointed out. But these site utilities cannot possibly be eliminated. The biggest item is plumbing, which is no luxury but a sanitary essential, required in order to maintain health in crowded centers. We can hardly expect to return to the timehonored well, cistern and cesspool, even if we made a saving thereby, which is doubtful. In respect to the cost of gas, gas is replacing coal as being more economical. Electricity is too slight a factor in the cost of housing to be troublesome.

Inside the house, the question of modern conveniences resolves itself into the difference between the "cold-water" home and a home with well-equipped bathroom and kitchen; between a home heated by a number of stoves and fireplaces as compared with a single heater. As regards the expense of the additional plumbing, any plumber knows that the additional cost of a few feet of hot water lines and of a bathtub and lavatory will be hardly more than one per cent of the construction cost of the house; and the housewife will tell you that they will be cheaper than the cost of the washstands and china which would replace them. And, as far as heating is concerned, there is little economy in a multiplication of stoves, fireplaces and chimneys. It may be said further that the concentration of plumbing and heating appliances in the modern home saves floor space and building volume.

But the main point, of course, in the whole question of mechanical conveniences inside the house is that they, with good planning, save the woman's labor. They release much of her energy for the more responsible work of managing the home and of training and educating her family. In fact, this efficiency of the housewife's labor is the foundation of modern teaching in household economics; and housekeeping experts, in leading the revolt against the operating and mechanical side of the homes of our forefathers, have termed them "woman-killers."

Legal and structural requirements

Finally, as regards the first cost of the high standards of construction set by architects, this cannot be avoided in these days of mounting costs of maintenance, repairs and insurance. These charges can be met only by durable and by more fire-safe construction. Authorities place the "life" of the little frame speculators' houses which have been built by the mile since the war at hardly more than ten years. Surely, there is little economy in such temporary construction.

Another cause of heavy expense, however, comes in the unnecessary restrictions which are placed by building and sanitary laws on house construction. The fact is, that in many districts of the United States, these laws are unscientifically drawn—"Procrustean," the Committee on Community Planning of the American Institute of Architects terms them. They are deplorably lax in some respects, particularly in failing to enforce reasonable standards of planning, construction and firesafety; and they are needlessly severe in others, penalizing sound construction both technically and financially.

The Bayonne housing suffered from these legal abuses, and the construction of this first group was delayed several months until the Tenement House Law of New Jersey and the Bayonne Building Code could be amended in the spring of 1924. These changes in the laws effected a saving of at least five per cent on the cost of construction of the buildings. Incidentally, the Tenement House Act of New Jersey was strengthened in its provisions enforcing fire-safe stairways, the lack of which is the chief cause of the terrible loss of life in the frequent tenement house fires.

Cost of operating a home

All these factors relate chiefly to the cost of producing a home. Unfortunately, when the wage-earner assumes the cost of operation he has the same sad experience. Needless to say his carrying charges are heavier than a generation ago, reflecting the higher prices of land, utilities, construction and finance. Worse still, interest charges, which form about one-half of the current expenses, are far higher, as pointed out above. Depreciation, which involves repairs, is higher, because repairs are chiefly an item of skilled labor. Taxes, whether national, state, county, or municipal, are excessive. As an illustration of the importance of this tax factor in housing, in the "$9.00 a month a room" garden tenements of the Metropolitan Life Insurance Company in New York City, completed in 1924, the exemption from municipal taxation alone for a period of nine years is figured to be worth at least $1.50 a month a room on the rental; whereas in Bayonne, out of every $10.00 rental paid by the tenant, approximately $2.50 goes into taxes of every sort. Other items of operation cost are the mounting figures of depreciation on house furnishings, and the higher prices for fuel and supplies.

The wage-earner's income

The foregoing pages of this chapter on housing economics have had to do with the prices which the wage-earner pays for housing. But how about his income? Can the wage-earner's budget bear the charge for the normal items of housing expenditure?

In answering this question, the writer does not intend to lead the reader through the usual discussion of rentals versus wages which adorns housing literature. Already too many futile pages have been written on that factor. Nevertheless, it furnishes the key to the finances of any housing enterprise, and it should be understood.

The difficulty with the whole question of the place of housing expenditure in the family budget of a wage-earner is, that it deals with a complicated and endlessly varying set of factors, which are apt to defy generalization. Consequently, in a specific case, the practice of drawing conclusions as to wages, and as to the proportion of wages to be spent for rentals, is apt to lead to exaggeration or to error.

Particularly unfortunate is the practice of basing allowances for rentals on statistics of average factory wages. In a given case, this method may result in setting too low the amount of money in a wage-earner's family which is available for housing expenditure. Factory wages vary greatly in different occupations, and, from the angle of housing finance, the average in any occupation may be lowered because the statistics of factory wages include the large numbers of very youthful employees of both sexes who are not to be classed as home providers. Furthermore, outside the ranks of factory workers lie certain classes of very highly paid wage-earners, such as the mechanics in the building trades.

Looking at the other side of the picture—that of the lower paid workers—outside the factory classification are the clerical workers, the "white collar class," the government employees, such as policemen, postmen, firemen, street-cleaners, who are in many cases less well-paid than the semi-skilled, or even the unskilled.

Equally important is the fact of considerable variation in income between members of each wage group. After all, the family is the unit in housing, financially or otherwise, and the income of the family may be larger than the wages of the head. In these days when both sexes work, there are often more than one wage-earner in the family. Also, a family may enjoy additional income from savings, from investment in securities or real estate, from inheritance, or from the custom of taking boarders into the home. Clearly, the discrepancy between family income and the wages may be great, and may vary greatly as between families in the same wage group. For this reason it is family budget, not the wage, which is the true index in housing finance.

Equally misleading are those generalizations regarding "the percentage of his wages that a workingman may be expected to pay for rent." How about the prices of the other items in the family budget in a given locality? How about the number of children in a family, and the age of the children, and the expense of rearing and educating them?

All this on the income side. But equally treacherous may be the rent statistics when taken as indices of housing expenditure. As a single illustration, in the case of each individual family there is the question of who pays for the heat and hot water, the landlord or the tenant? Here are two items alone which may equal as much as $2 a room a month in the northern part of the United States, but which may or may not appear in the rental, according as to whether the home is in an individual or row house, a two-family house, a "cold-water flat,"

Vista through the block between buildings

or an apartment with "modern" conveniences. Clearly, the possible error in this item of heat and hot water, amounting to as much as twenty-five per cent in some cases, will invalidate most statistics of rentals. Incidentally, this error has operated to obscure in the minds of most housing experts the superior economy of the apartment house. They see the row house or twofamily house renting often as low as the apartment, but they forget that in one case the tenant pays the fuel item, while in the other the landlord pays it. Repairs are another item of housing expenditure which may or may not appear in rentals.

All these variations in family budget, in items of housing expenditure, and in the relation of housing expenditure to the family budget, demonstrate the pitfalls which occur in the usual generalizations as to rentals and wages. But they should not be allowed to obscure the truth. The one essential fact which stands out clearly in the situation is this, that the traditional methods of housing production have for several decades at least failed to house acceptably all but the more prosperous wage-earners' families in most industrial districts of the United States.

In deciding the housing policy for a specific locality or for a single housing enterprise in respect to rentals and to the number of rooms to be provided, there should be no great difficulty in steering between the variations in different wage groups and in individual families, which seem to conflict. The fact is, that for some time to come, it will be possible to care for the needs of only the more prosperous wage-earners. In almost any industrial district, new low-priced housing of the right kind will not go begging for occupants. And any local group of citizens, desiring to intrust themselves in housing the workers properly, can scarcely expect to do more in the beginning than to establish a local demonstration of sound housing, which will point the way to future progress, and thus set a standard for their district to follow. In accomplishing this necessary and most important task, the way may be opened to reach, little by little, the lower-paid ranks.

As one drops down the economic scale the present failure to properly house the wage-earner becomes more striking. For the family of the semi-skilled worker, for the factory worker's family whose income is hardly larger than average factory wage, for the lower-paid ranks of the "white collar" worker and of the government employee, decent housing in new construction is scarcely to be had to-day anywhere. And as for the housing problem of the unskilled worker, married and with a normalsized family, it may be a long time indeed before he can be provided for.

The wreck of the housing industry

With the recital of the high prices of nearly all the things which enter into the cost of a wage-earner's home, and of the overwhelming burden which is placed in consequence on the budget of the wage-earner, this painful summary of the high cost of a wage-earner's home ends. The account shows clearly how economic changes have gradually wiped out those differentials of low prices of land, of municipal and site utilities, of construction, finance, taxes and maintenance, which have enabled the traditional real estate system of producing industrial housing to function with some success in certain parts of the United States. Now, however, with the support of these differentials removed, the inherent weakness of the system—its small-scale, inefficient, speculative and loose organization—are causing it to break down.

The consequence of failure: slums

The effect of this breakdown was pictured in the beginning of this chapter, and perhaps the reader will now agree that it was not overdrawn. It is a picture of a reduced standard of living for the nation's workers, of present and future slums. It springs from the colossal economic waste in land, in municipal and private construction, the cost of which accumulates until it becomes a crushing burden on housing. This burden is further weighted with an excessive load of charges for speculative financing.

Deterioration in architecture

How can the wage-earner, even the fairly prosperous individual, be expected to carry this burden? Of course he cannot. He is helpless in the face of the relentless operation of factors which he, as an individual, cannot control. He finds it impossible to stop the process of deterioration in his home conditions which inevitably sets in. First, he sees sound architectural standards sabotaged. Then he discovers that the land which is required for daylight, out-door air and for garden and recreation space, is sacrificed to buildings. The buildings are then crowded too close together or are not separated at all. They are built higher. Courts and yards become so constricted that daylight scarcely penetrates his home. The home-owner finds that even that prime necessity of life, access to outdoor air, is denied him.

But this process of physical shrinkage continues. Next it attacks the human values. The standard six-room and fiveroom apartment shrinks to four rooms, then to three. Sanitary conveniences are next eliminated. The fire hazard becomes always graver. At the same time the costs are always mounting and, despite these sacrifices of daylight, comfort, sanitation and safety, the workingman's budget will not afford even the three room home of shoddy inflammable construction, ill-planned, insanitary, gloomy. So he "doubles up." Outsiders—relatives, friends, strangers, even another family—are brought in to share his home. He now lives in a perfect slum. And he pays for that slum about as much as he would for a home in the Bayonne garden apartments.

Be it understood that this picture is not exaggerated. It is a photograph of actual conditions as they are developing in New York City and other congested cities. The testimony on this fact is overwhelming, and is verified by many authorities. And what is happening in these crowded centers must surely take place in other industrial towns and cities in the next few years. In most districts, it is only the plentiful supply of old houses which maintains the rents at a manageable level. But sooner or later the rents in old construction will rise to the level of those in new construction, and, when that happens, the cycle of economic changes which New York City has experienced will be completed in other centers. They, too, will have their slums—square miles of them, in vast "blighted" districts.

The counsel of failure

One of the most unfortunate features in the whole situation in housing is the insidious undermining of human judgment which has taken place in the process. Housing is so complicated a subject, and so new is the technique which has been developed to deal with it, that responsible people do not understand what has happened. Few have visualized the slow change in economics conditions, and still fewer have pictured its effects. They do not perceive the economic and human waste in housing. As a result, some people have even come to regard as luxuries these necessities of daylight, garden and recreation space, sanitation and sound architecture. They preach, in one way or another, a reconcilement to slum conditions. But this is a gospel of despair.

Success found at Bayonne

This brings us squarely up before the question: what should be done? Obviously, the answer is: develop a sounder system of producing housing. This is the purpose of the experiment which the Bayonne Housing Corporation is now engaged in.

When expressed in economic terms, the ideal of the Bayonne Housing Corporation is the maximum business efficiency applied to raise the social and architectural standards of housing as high as possible. This ideal has been realized to the extent that the Bayonne Housing Corporation has provided housing at a much lower rental than is found in new construction in the ordinary real estate market. This rental is within the means of the better paid wage-earner, and, be it noted, includes steam heat and hot water. The stockholders have provided all necessary funds in return for common stock on which only 5% dividends are expected. The project does not carry the burden of either a mortgage or preferred stock. The Bayonne housing, moreover, is of a higher architectural standard than has hitherto been thought possible for the rentals, even if one considers the epoch-making achievement of the Metropolitan Life Insurance Company in its great project of model tenements housing 2,125 families, which was completed in 1924.

It should be emphasized that the experiment of this first group had, however, distinct limitations, in that a number of the biggest factors which enter into housing costs could not be controlled, except in the traditional manner. These were taxes, rates of labor, prices of materials, and the traditional system of land subdivision, which obtains in Bayonne as elsewhere. Only two of the biggest items were dealt with to the full in accordance with the principles of business efficiency. These were architecture and finance. The surprising success which was obtained from the proper control of these two factors, of housing costs alone, holds out promise of great future progress when the remaining cost factors in their turn are placed on a sound basis. When that occurs, it should be possible to house the American wage-earner better than ever before. The success of the Bayonne experiment renews the hope of providing good housing for the less prosperous families of the population. Then, of our two pictures, the one of slums and the other of ideal garden homes, only the ideal garden homes will remain.

The great center garden in wage-earners' homes at Bayonne