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December 1, 1934
Mr. Harry L. Hopkins
This fourth report to you on the survey of New York and New Jersey covers a portion of New York's works division, business men, the mill strike area around Paterson, N. J., and relief in Jersey generally. Relief rolls have reached a new high for the state, and Lewis Compton, the state administrator, sees a very serious relief problem by spring. There were 144,000 cases in October, an increase of 14,000 for one month and a further large increase for November. Business shows a small increase in November over October, with earnings and payrolls up slightly. Business is better than it was a year ago at this time, but Compton says, "I don't feel that we are yet ready for a big upturn. We have had these little upturns before." The manufacturing area in metropolitan New Jersey, particularly in Newark, is worse by considerable. Some industries are dead. The Christmas holiday spurt had its mark, but that passed quickly and affected only the holiday trade. The garment industry's season work was less. Tax collections for the state are 53%, with some improvement noted in certain communities. As for the unexpected increase of 14,000 cases in one month, various explanations were given. Mr. Compton believes there is nothing in the industrial picture that would justify this increase, and the only way he can-account for it is that people are rushing onto the relief rolls in the expectancy of getting jobs. The first 60,000 CWA jobs last winter were taken from relief rolls, hence persons believe they will get a preferential position for jobs this winter by getting on relief. Another explanation given by a relief official was that seasonal work was less this year, strikes pushed a large number onto the rolls, and seashore closings added their share. My own observation would be the expectancy of jobs through relief registration and less seasonal work. But whatever the cause, this heavy rise is causing no little concern in the state, and indicates a much heavier load before the winter is over. There is no trend of any consequence back to private jobs. "As fast as people are going back to jobs, we are getting more on the rolls through the back door," as Compton expressed it. However, he believes the country is on the upward trend toward recovery, although only-a start has been made. The chief worry in New Jersey is where the money is going to come from to shoulder the relief burden. There is a difference of opinion as to how restless the clients are. Certainly there was more vocal discontent in July and August when the CWA program was finally tapered off. There was much reluctance to turn from jobs paying a fairly good sum to the new work relief at much less pay, and Compton admits that he stored up trouble for himself by not stopping CWA abruptly in April. This tapering off was the start of agitation which had not been experienced previously. All agree that the relief client in Jersey is more demanding than heretofore; he expects relief as his right. Furthermore, there is every expectation that jobs are going to be given soon, and trouble is expected if these jobs are not forthcoming. This is particularly true among the middle class groups of the state, exclusive of the more placid foreign groups who can get along on a dole and who are more reluctant to work. "A very marked degree of the unemployed, both on and off the relief rolls, are demoralized. They are shell-shocked." Jobs would make most of these snap out of their mental states without psychiatric work. One official believes the relief clients are definitely in a state of unrest. She believes they are organized, even though loosely, in such a way to represent a pressure group of some magnitude, and would become powerful in the event that essentials of relief were curtailed. "The whole pressure is for jobs with living wages," said, and what the clients might do depends entirely on leadership. The director of service work projects reported a distinct trend to the left among white collar professional and working groups, a willingness to organize to obtain security and assurance of food, clothing and shelter. "You'd be surprised how ready the better people are to swing themselves in any direction to get security," she said. "Professional groups are willing to listen for the first time. There must be something besides bare relief and the standards must come with force from Washington. If the works program is thrown over, there will be a violent reaction. The industrial areas would follow a leader, but not the suburban communities. Outside of the relief organization and clients, there is a terrific degree of restlessness, uncertainty and fear. Left-wing agitation by Unemployed Councils and Communists amounts to little. It's the same story of newspaper headlines and no strength behind a few professional trouble makers. Jersey treats these agitators more toughly than in New York. If they have gained it is in Paterson where both mill pay and relief is low. But there is no problem to speak of. Communists have been kicked out of some Unemployed Councils by the clients themselves. If there is any trouble ahead, it will come from organized groups of the relief clients exclusive of Communists. Health is pretty good in New Jersey. No one thought it was worse than five or six years ago. Hospitalization, prescription and medical costs, however, have gone up greatly, and this is a situation that may need investigating. One county official told me the whole medical set-up is a racket with the doctors coining money. Some time ago the state ERA made arrangements with the state medical society to have all relief clients cared for by private doctors at a set rate, $1 for office visit, $2 for home. No hospitals or clinics were expected to assume a greater load than they carried in 1929. The result is that hospitals and clinics are actually refusing relief clients. In Paterson two city doctors have nothing to do. Everything is done on a private basis with the state footing a bill of a million dollars this past year. Some doctors, according to this official were making $300 and $400 a month. All the client has to do is to go to his private doctor and the bill goes to the relief organization. From two sources I heard stories of this racket and unless it is checked, it may smell pretty bad in the public prints some day. Apparently the county administrators are helpless; everything was arranged by the state, but the counties suffer by having their food budgets cut. I would certainly suggest a careful and thorough investigation of medical administration in New Jersey. I had little time to look into it, but two glimpses were enough to indicate that something is bad. I even heard about it in New York, so it's not much of a secret. One relief worker in New Jersey reported household equipment to be in "a deplorable, frightful condition," with great need for mattresses, bedding and cooking utensils. Clothing represents no great problem, in contrast to New York City, for Jersey has been spending large sums for this item. Every relief child was reported to be in school. An increase of 800 transients in October was reported, bringing the total of 3400 for the state. One very nasty situation at the camp at Haledon, N.J., was cleaned up last week, following some shady financial work on the part of the former director, an alliance with a low-brow resort 500 yards from the camp, drunken revelries in the camp itself, a stinking kitchen and the burning of one tent. Bink Baker, Princeton All-American, is now in charge and has taken hold in great style. But this mess gave the transient camp a black eye in the community. Baker is a man of tremendous ability in handling transients and could be used to great advantage later on in the national transient program. Another shady feature of New Jersey's relief is the handling of transients by private agencies, such as Salvation Army, where there are no camps. One county director said some of these agencies are sticking the state for a heavy lodging and boarding bill and no checks are made. Single relief in this manner is costing heavily. Several features of New Jersey relief impressed me. One is the financial research department which is making common-sense analyses of relief clients from all angles. The state is dividing up its clients into chronics, employables, unemployables, etc., and a study of 10,000 cases is being made which ought to throw a lot of light on relief that hasn't been known before. Another feature is the system of county planning boards. The state has $52,000,000 in projects lined up and could put every employable in the state at work in 30 days if funds were available. Last winter, the CWA program put 100,000 to work with half that sum of money. The main trouble, of course, is that these planning boards consist of engineers, and all the work is construction and the like. Little attention is paid to non-laboring groups. One county board had three engineers and one stenographer. Asked about who planned for relief women, the board replied, the stenographer. There seems to be little question but that many new applicants on the rolls are after these jobs that have been planned. They have read announcements in newspapers. The state estimates that 80% of its load are employables willing and desirous of working. Compton and his aides also want to start factories going by purchasing from them and having them use relief labor. This was tried with a canning factory with marked success. A shoe-factory about to close up was revived in this way, and the relief rolls of the community were eliminated because of this new business. A technical ruling in Washington is holding back a development of this plan. There are 8,000 bales of short-fibre cotton hand and the state can't give it to a factory to make into mattresses because of this ruling. Consequently the mattresses made in old-fashioned ways are pretty terrible. "The equipment and technical brains are there," Compton said, and "all we need to is to help them out. We have many small factories in New Jersey that are dependent on us. If we start our own factories, we have people coming out of existing plants onto our relief rolls. We need to get people working at their own trades and buying through regular factories would do this. All we stipulate is that they use our labor." The FHA has had some effect in New Jersey. Camden has $1,210,000 in pledges and the state $6,854 000 in pledges. These figures are bank loans, which must be multiplied by six to get actual business. But the drive is very spotty, with no great showing among the suburban areas near New York. A summary of New Jersey would be: Heavily increased relief rolls with no sign of letting up and serious problem expected by spring; manufacturing areas generally considerably worse despite a slight rise in earnings and payrolls; a definite expectancy of jobs on the part of relief clients and a lessening of the stigma attached to registering for relief; a distinct restlessness of the people of the state exclusive of clients; health and clothing good among clients; a demand for a real works program directed by Washington but administered locally; a demand for decentralization of relief to county units with county control of budgets, a minimum of trouble from Communists; a growing pressure from clients for Jobs and living wages. As for the dye strike in Passaic County, the town of Paterson was very black when I was there. The strike was settled yesterday, but the county was experiencing a greatly increased relief load. Even exclusive of the strike, the case load was twice as high as it had ever been, rising 10% a month for the last ten months. Citizens complained that the county relief agency was supporting the strike, but the lay chairman and the paid secretary followed orders from Washington FERA and gave relief to those that needed it. A union secretary told me relief was bad in Passaic County but was better since FERA stepped in. A mill owner was bitter about radical influence in the unions and increased taxation from relief. The lay relief chairman for the county said "People are more in the attitude of accepting relief as a fixed part of governmental functions and are more demanding than formerly. People are applying now who would have been offended at the thought of it two years ago. The trouble is going to come when we have to tighten up." The county administrator said "we are making our worst slums profitable investments by our rent policy," and said landlords were organizing to force a raising of relief rent budgets from the present $10 to $15. "We are going to have to pay higher rents whether we like it or not." This administrator said he was resigning in January; said $2500 was not enough to pay county directors and that relief should be administered more efficiently. This couldn't be done with $2500 men he said. One difficulty in Paterson is in keeping relief budgets lower than mill wages, for already there are many on relief who are content to stay there. They have more security than before. Unions say the average wage for Passaic County is $12; the mill owners say $17-$18. The relief director said $13-$15. The outlook for Paterson is pretty hopeless anyway and mill workers are on pretty low level of living. There is still competition between family units and mills, with family units undercutting in prices. The mills say they could run 60% of capacity with strike over. This will help the relief situation a lot, but even so the case load has gone up phenomenally. The feeling of some officials in New York that the city is nearing a peak of relief is hardly born out by the figures. The trend for the last five months is:
The November figures will show a proportionate increase. August had 21,000 over July, a very sizeable jump. Miss Alice Hill, chief statistician and comptroller of the relief set-up, said very frankly, "There doesn't seem to be an end in sight. I'm not at all optimistic. I can see very few rays of sunshine." On the other hand, persons like Louis Resnick, publicity chief, are definitely of the opinion that things are leveling out. In my own visits to bureaus, I got no such feeling. As the stigma of relief passes, and as jobs are created solely through relief, more and more are coming on the rolls as a matter of course. Miss Hill's chief complaint is about giving appropriations by months and not by spending days. She points out that August has 23 spending days, November 22, and December has 21. Clients are taken care of on a weekly basis, and some correlation between spending days and monthly appropriations ought to be made, she thinks. She also ridicules the "academic statisticians" in the FERA in Washington and thinks they ought to spend time in the field to find out about local statistical problems. Announcements from Washington are often misleading, she said, because the statisticians there are not conscious of local differences. She reports a very large increase in single cases in the city--18,000 men and 15,000 women, more than double, almost triple, the case load last year. She believes the administration's word isn't worth anything to the business man because it changes its mind so much, thus leading to uncertainties and lack of assurance in the future. From the Merchant's Association of New York came a deluge of reactionary criticism. "There ought not to be permanent relief. We have the feeling that many are getting relief that shouldn't get it, but we have no specific proof. We feel there is a lot of improper spending of funds, but whether this is justified or not, we have no knowledge. If it does exist, however, the public ought to know the facts and it ought to be eliminated. We do know that the state administration of relief has been held down." Asked whether the association favored Borah's inquiry, the secretary gave no answer. (They're all afraid of being pinned down to produce evidence which they haven't got). "Some lines have picked up in New York. Others are worse. We do not anticipate any big pick-up. Taxes are serious, and this has a big effect on improvement of business. Taxes are on gross receipts regardless of whether the business is in red or black. The financial district is very very black. The securities act has not barred the crook but it has thrown a wet blanket on the financial district. "The government must not decrease its contribution to relief. If it did, the city budget would be upset. Relief costs should be reduced if possible, but not below the needy level. I don't like the idea of public works as a means of relief. It means building up the public debts and they are the worst problems now. I advocate a government extension of help to business, letting the government assume part of the risk to get private business started. One beneficial thing would be to stop paying union wages on public works. We get frequent complaints of kick-backs. The public pays full wages to these men, but only part of it gets to them." Asked if he thought relief budgets were adequate to provide purchasing power, the secretary said they were sufficient "in bulk to effect retail business. There is a universal feeling against government competition in business. How can you get private business going if the government goes into business? The government should come out flatly and say it is not going to go into business and into housing. "Home relief is the only thing. If you want to prime the pump, do it along the lines of mortgage guarantee and take some of the risk off private business (!).... We can go on for another year or two before we reach the greenback stage. We are in the early stages of inflation now and unless it is checked, it is sure to come. Inflation can't be stopped once it really gets going. One of the most disturbing things is the rolling up of public indebtedness. The capital structure will be cracked wide open if these public debts are repudiated." Other chatter from the merchants association dealt with a protest against high taxes, especially inheritance taxes, the old idea that Mellon got more revenues from reduced taxes, and the thought that many people prefer the dole. One instance was cited where a building operator couldn't get janitors because janitors preferred relief. The FHA, they said, has had no effect at all in New York. Only two private building operations are going on--Radio City and the Hillside housing development in the Bronx. All other building in town is public. The Merchants Association recently sent a questionnaire to its members. Out of some 1100 answers, 619 said the recovery program had retarded business activity in the member's own line. 772 said it had decreased profits, 344 said it had increased profits. 1040 said the government's labor policy discriminated against the employer, 89 said it discriminated against the employees. In a special question on harmful and beneficial policies of the government, 87 mentioned mal-administration (politics, misapplication of relief funds), as harmful, and 31 mentioned relief of unemployed by the dole as harmful. On the beneficial side, 108 thought creation of jobs through public works was okay. Further questioning of the secretary of the association, Mr. Mead, I evinced no solution whatever for the relief problem except to cut costs and keep them on home relief as inexpensively as possible. The big enigma in New York is works relief. I found that I was being consciously steered away from the office of Miss Gossling, director of service white collar projects, but did nothing about it at the time. From various sources I have heard enough gossip to indicate that this phase of New York works division stinks to high heaven and that some of it is finding its way to the newspapers. This was true recently of the drama department. My own visit to the music department was nauseating. I shall call on Miss Gossling this week, but it is clear enough that word is getting around the city that things are not running right in the service project division. I have heard from trustworthy sources that personal favoritism of the rankest sort is practiced, that the service projects have fallen down in many ways, that the morale of workers in these projects is bad because of farcical supervision. Furthermore, the works division is not taking care of the employables on home relief; many are taken on by the works division who are not registered on home relief at All. Some art projects have been bad flops because of bad management. A day spent in visiting construction projects in the city revealed a very high type of efficiency, with able engineers of experience on the job. But here again most of the home relief workers were kicked back to home relief and unemployed skilled workers were taken on even though they had not been on home relief. As far as efficiency goes, the construction jobs are excellent, but it is being handled from an efficiency basis rather than on the basis of putting relief clients to work. It is obvious that construction jobs need skilled workers and skilled supervision, but there is virtually no program in the city that hits the heart of the unemployed problem. One thing I found true in talking with workers and foremen on construction jobs. They all believe private jobs are coming back within a year or so. They all want to work. Loafers, slackers and those who refuse to accept strict discipline are quickly kicked off works construction jobs. Negroes, Puerto Ricans and some Italians, have been reluctant to work at hard labor. Foremen told me that many of their men would not take home relief under any circumstance. The spirit and morale of the construction division of works relief has improved ten thousand per cent. "A tight engineering control is of paramount importance," and there is no question but what an efficient job is being done. Not one person that I talked with wanted to stay on works relief. They all treated it as an emergency and preferred to be in private Jobs; but these men, most of them, are not typical relief clients. They would not be on the relief rolls if it were not for the works program. I will have a complete report on the works division next week, but it is easy to see that home relief is far better managed and run for the job it has to do than works relief. One suggestion made by an able observer who has a high post in relief (a former newspaperman) was that work relief began at the wrong end. The Federal government, he said, should have supplied the materials and local communities should have supplied the labor. Politics is found mostly in materials and FERA could get around a lot of this by sending materials from the top. "We will never get anywhere until this is turned around. We should never have said, 'You supply the materials and we will supply the men.' Work relief should be so closely allied with home relief that every man has a crack at work." This is obviously not done now in New York with the result that there's going to be a lot of mental deterioration to make up for later on. The whole thing is clogged up with red tape and lack of recognition of what the program is designed to do. If the idea is that socially useful work should be given all those on relief, somebody ought to be told so; the jobs today are not going to those who went on relief. Insurance companies are doing a terrific business in New York. They have taken on many more employees, are rushed to the hilt. People who have any money at all are buying annuities. Large sums are going into insurance--it's the only large-scale business that breathes optimism. But the money isn't going into purchasing power. The insurance department of home relief directed by Noel Baker has recovered $4,000,000 through adjustments in the past year, at the rate of one-fourteenth of home relief expenditures per month. This is a sizeable figure, and if this insurance adjustment plan could be set up for the whole country, one-fourteenth savings would be considerable. Baker began operating his insurance department a year ago, over skeptical comments of his superiors. It has had phenomenal success. The face value of policies has been reduced only 8%, while the weekly costs to clients have been reduced 68%. About 60% of all insurance conversion being done in the country is in New York, where three leading companies, John Hancock, Prudential and Metropolitan Life, are cooperating. This 60% includes also New York State, Chicago is doing 20% and the rest of the country 20%. If spread to the rest of the country on a definite scale, relief expenditures could be cut, considerably without destroying the life insurance of relief clients. Endowment policies are the main things converted. "This service is of value to the client by keeping his insurance in force, releasing cash assets to him that are tied up, and reducing the weekly payments," Baker said. "It is of value to the relief bureau because in case of deaths, the life insurance is still in force and pays funeral costs. It also reduces the client's payment and thusly doesn't cut in on the relief budget. And it also takes people off relief for periods of a few months to a year by releasing cash. We are releasing a half million dollars a month in New York for clients who swore they had no assets at all." Baker, a former newspaperman, is interested in unemployment insurance and has ideas on it. Wants to get into Washington with the new insurance program. Is an able administrator. Incidental comments from relief officials for this week: "We have made the rank and file of our investigators scared to death of the client. The Unemployed Councils dominate the relief bureaus and tie up efficiency in a way that makes the client supreme. This is not true in other states. It was all right at the start when the client was ashamed to take relief money, but it isn't true now. The temper of the client in New York is such that it would take machine guns to cut off relief. If you make relief a community problem, your relief rolls will stop mounting. For myself, I see two contradictory things: (l) the impossibility of keeping on at the present scale and (2) the impossibility of stopping relief. We have protected the feelings of clients and now it comes right back into our laps. Indiscriminate relief is going to have to go out like prohibition."
Very truly yours (signed)
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