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III. HOUSING AND OWNERSHIP OF HOMES.
The development of industry in recent times has led to the concentration of population in cities with resulting overcrowding of dwellings and insanitary conditions, which frequently endanger the health of the entire community. The problem of securing sanitary homes for workingmen of small means has become acute in some of our larger cities. Various private and public agencies have interested themselves in this problem. Thus we find local, state, and national housing commissions, societies to promote the erection of workmen's dwellings, city and town planning commissions, and various organizations and commissions dealing with housing problems. The United States government found it necessary to embark upon large projects for the construction of houses to meet the needs of communities which increased rapidly in population because of war manufactures.
Constitutional authority now seems ample for the regulation of safety and sanitation in privately constructed houses although there may be some question as to the validity of zoning statutes which seek to preserve districts for purely residential purposes. The subject of zoning is discussed in Bulletin No. 7 on eminent domain and excess condemnation. The subject discussed in this chapter is that of direct governmental aid to improve housing conditions, through the construction of houses or through loans to individuals seeking to acquire homes.
Demonstration or experimental work in providing low cost homes. An appropriation of state funds to aid workers in acquiring homes was approved in Massachusetts in 1917. This appropriation was the result of an agitation begun as far back as 1908 for state aid in obtaining homes. A special commission was appointed to consider the matter and a number of laws bearing on the subject were enacted by the legislature. These various activities finally resulted in the formulation of a constitutional amendment which authorizes the condemnation of land to relieve congestion of population. The amendment was adopted in 1915 and reads as follows:
"The general court shall have power to authorize the commonwealth to take land and to hold, improve, sub-divide, build upon and sell the same, for the purpose of relieving congestion of population and providing homes for citizens: provided, however, that this amendment shall not be deemed to authorize the sale of such land or build
ings at less than the cost thereof." (Forty-third Article of Amendments.)
Legislation enacted in 1917 (chap. 310) and amended in 1918 (Chap, 204) gives the following powers to a homestead commission:
"Sec. 1. The homestead commission is hereby authorized, with the consent of the governor and council, to take or purchase in behalf of and in the name of the commonwealth, a tract or tracts of land for the purpose of relieving congestion of population and providing homesteads, or small houses or plots of ground, for mechanics, laborers, wage earners of any kind, or others, citizens of this commonwealth; and may hold, improve, subdivide, build upon, sell, repurchase, manage and care for such land and the buildings constructed thereon, in accordance with such terms and conditions as may be determined upon by the commission.
"Sec. 2. The commission may sell land acquired hereunder, or any part thereof, with or without buildings thereon, for cash, or upon such installments, terms and contracts, and subject to such restrictions and conditions as may be determined upon by the commission, and the commission may take mortgages upon said land with or without buildings thereon for such portion of the purchase price and upon such terms as it shall deem advisable, but no tract of land shall be sold for less than its cost, including the cost of any buildings thereon. All proceeds from the sale of land and buildings or other sources shall be paid into the treasury of the commonwealth."
The terms of the constitutional amendment and the statutes enacted for carrying its provisions into effect expressly discard any theory of charity or of absorption of excessive land values in home building.
The report of the homestead commission in 1917 urged that there were not enough wholesome low cost dwellings; that there was no prospect that present methods would ever supply enough, unless the state encouraged their construction; and that, therefore, the state should experiment to learn whether it is possible to build wholesome homes within the means of low paid workers.
In its recommendations the homestead commission asked for an appropriation sufficiently large to allow an experiment or demonstration to be made in providing low cost homesteads in the suburbs of cities and towns. In the language of the report: "The Commission repeats that it is not recommending that the Commonwealth enter the real estate business for the purpose of supplying wholesome homes. for low-paid workers, no matter how great the social or individual need may be. It only recommends an appropriation for a single experiment or demonstration, to learn whether it is financially possible to supply such homes for workers, what are the principles and policies upon which such an undertaking should proceed, what are the dangers and what should be the limitations."
Government aid to home owning in foreign countries. The methods of regulation differ greatly in detail in the different foreign
countries. A recent study by the United States bureau of labor statistics (bulletin whole no. 158) has grouped the different systems of government aid under the following classification: (1) Building directly for rental or sale, for government's own employees or for working people generally; (2) Making loans of public funds, including also government guaranty of loans to local authorities, non-commercial building associations, to savings banks whose deposits are guaranteed, or to employers or individuals; (3) Granting exemptions from, or concessions, in taxes or fees or granting some other form of subsidy to building associations or others.
Under these various methods different foreign countries have expended large sums of public funds to aid in the erection of low cost dwellings for wage earners.
State loans for purchase of homes. Under the Constitution of North Dakota, as recently amended, this state may engage in substantially any industrial enterprise. North Dakota legislation of 1919 declares that "for the purpose of promoting home building and ownership the state of North Dakota shall engage in the enterprise of providing homes for residents of the state," and creates a Home Building Association for the purpose of conducting this business. An Appropriation of $100,000 was made for the work of this association, and further provision was made for the accumulation of funds out of the earnings of the association.
No home is to be built or purchased and sold at a price exceeding $5,000, except in the case of farm homes, in which case the selling price may not exceed $10,000. Home Buyers' Leagues are to be organized. Whenever a member of a league has deposited with the association a sum equal to twenty per cent of the total selling price of a home or farm house, the association is required upon his application to purchase or build such home and to convey it to him upon a cash payment of twenty per cent, the balance to be secured by a mortgage, and further payments to be made on an amortization plan so as to extinguish the debt within a period of not less than ten nor more than twenty years. In case of accident, crop failure or other event which reduces the buyers' reasonable income by one-half, all payments under such contract may be extended from time to time for a period of one year.
In the commonwealth of Australia the separate states have gradually developed legislation under which workers have been enabled to borrow government funds for the purpose of acquiring homes. All of the six states of the commonwealth lend money to farmers for buying homesteads in the country, and five of the states lend their funds to workers in general, for the purchase of city or surburban homes.
The money advanced is loaned directly by a government administrative board or bank to the individual borrower. In addition to making loans direct to individuals, Western Australia and New South Wales also buy private land or use crown land for the erection of dwellings to
be sold or rented to workingmen of limited means; in such cases long. term leases have been the rule. The administration of the system in the different Australian states is delegated to a special board usually within the treasury department. The funds are raised either by annual appropriation or by the issue of bonds. A prospective borrower must show that he is a wage earner, as determined by his income. The maximum amount loaned to an individual varies in the different states. The terms of loans range from 15 to 42 years with the privilege of anticipating repayments at any time.
Legislation in force in Australian states. The following legislation providing for the use of government funds in the purchase of homes for workers has been enacted in Australia:
New South Wales:
Savings Bank Amendment Act, 1913.
Queenland: Advances for Homes Act, 1909; amended 1911, 1912.
Victoria: Savings Bank Act, 1890; amended 1896, 1900, 1901, 1903, 1910, 1912.
Western Australia: Workers' Homes Act, 1911; amended 1912. In New Zealand, government aid to housing is granted under two different systems embodied in two acts: The Workers' dwelling act, 1910; and the State advances act, 1913. The official year book of New Zealand for 1913 gives a full account of these two systems. Under the State advances act money may be loaned for the purpose of purchasing or erecting a dwelling on a land allotment. The loan may not exceed $2,200, and in no case may it exceed the value of the house to be erected. Application for the loan may be made to the postoffice or to any representative of the valuation department. To be entitled to a loan a worker must show that he is engaged in manual or clerical work, and that his income is not over $973 per annum. A first mortgage is required as security. Interest is charged at a rate of five per cent and is reducible to four and one-half per cent upon prompt payment. Payments are made in equal annual or semi-annual instalments. At the time of taking a loan a deposit of about $50.00 is required, together with a small valuation fee of about $2.00. The main purpose of the Workers' dwellings act is to set apart crown lands or to acquire private lands for the erection of homes for workers. The purchase of a dwelling is effected by a deposit of about $50.00 and the payment of equal annual instalments distributed over a period of 251⁄2 years. Under this system workers may secure their homes by the payment of amounts about equal to ordinary rent. The houses are arranged in convenient groups to suit the requirements of the workers concerned. The act defines a worker as one whose earnings do not
exceed $850 per annum, and who is landless. In his annual report for 1911 the superintendent of workers' dwellings thus summed up the benefits from the act: "Except for the deposit of ten pounds ($48.67) no capital is required; the land is cheap, the government being able to secure convenient blocks at a lower price than is ordinarily paid for single sections; the cost of erection is reduced to a minimum. there are practically no legal charges, and every facility will be given to purchasers to pay any extra sums off the principal owing whenever they may be able to do so." (1911 Report, p. 2.)
Government guaranty of bonds of building companies. The province of Ontario, Canada, has developed a method of combining government aid and private initiative through the guaranty of bonds. of incorporated companies which devote themselves to the improvement of housing accommodations. A recent report of the Bureau of Labor of the province gives the following account of the plan:
"An important act was passed (May 6, 1913) to encourage housing accommodation in cities and towns. This law enables city or town councils to guarantee the bonds of an incorporated company with a share capital, whose main purposes are the acquisition of lands in or near a city or town in Ontario, and the building thereon of moderate sized dwellings to be rented at moderate rents, if the council is satisfied that additional housing accommodation is urgently needed, and provided that the main purpose of the company is to help in supplying need and not to make profits. The by-law guaranteeing the bonds must be approved either by the ratepayers or by the provincial board of health. Before the guaranty is given the location of the lands selected and the general plans for the houses shall be approved by the council, or a committee thereof. The total amount of the securities to be guaranteed shall not in the first instance exceed 85 per cent of the value of the lands and improvements. A council which guarantees the bonds of such a company may be represented on the board of directors by one member of the board. The company may not declare a dividend exceeding 6 per cent per annum, but if the dividends in any year do not amount to 6 per cent, the deficiency with interest may be made up in any subsequent year or years. Any profits remaining after paying a 6 per cent dividend, making up any deficiencies, and providing a reasonable contingent fund, shall be expended in acquiring more lands, improving the housing accommodation, or redeeming the capital stock. The shares so redeemed shall not become extinct, but shall be held by a board of trustees."1
Under this act and very shortly after its passage, the city council of Toronto voted to guarantee bonds to the amount of $850,000 in
1 Fourteenth Report of the Bureau of Labor of the Province of Ontario, 1913. Toronto, 1914, p. 308.