We appreciate, of course, that the present defense effort has resulted in the controls over prices, wages, and credits. However, many of those are being dropped through the wise insistence and intervention of Congress. We ask that Congress set up new standards for proper decontrol. We believe that at very least it should be mandatory upon the Rent Stabilizer to decontrol any city where there have been more housing units made available in the last 10 years than increase in population, using the Census Bureau figures.

However, we believe the orderly decontrol of rental accommodations can best be effected by continuing Federal rent controls only over those areas properly found and certified to be critical defense areas. This would free from controls areas not found to be critical defense areas, and would give full effect to the desires of Congress to eliminate unneeded controls not directly required by the national defense effort. Thus, Federal rent controls would be continued only in areas designated as critical defense areas as such areas are now defined in the Housing and Rent Act and only on a finding, after due notice and public hearing, that there has been an actual and substantial in-migration of labor and that excessive rents have actually and in fact occurred.

Perhaps the outstanding characteristic of the rent law is its callous, almost subversive, maladministration. I should like to give you a brief outline of some of the most damaging inequities and injustices of the rent control as it is now being administered and give a more detailed explanation of these points later on in the testimony.

1. Rent control as administered promotes the deterioration of rental housing.

2. Improvement of property is discouraged because of failure to give adequate and realistic rental increases.

3. Many adjustments by the rent office have been completely unrealistic when you consider the increased cost of operation.

4. Entire areas of substandard rents are permitted to exist because of lack of mandatory provisions to increase those rents to proper economic levels.

5. The lack of a sound economic approach by the rent office on fair rents does not solve the housing problem but merely promotes it.

6. Rent control has resulted in the removal of millions of units from the rental market by sale or otherwise.

7. The law is being unequally enforced throughout the country depending a great deal on the whims and prejudices of the rent control directors and their advisory boards.

8. Rent offices require that applications for rent increases be made. out strictly according to their rules and regulations and failure to do so generally results in a denial regardless of the equities.

9. The rent control law does not provide any effective judicial review from the decisions of the rent office.

10. No provision is made for the change of advisory board personnel nor are the property owners permitted to make a choice of their representatives.

11. In many cases, local advisory boards are not truly representative in their make-up.

12. The property owner is denied effective control over the tenant although in most States he has a legal liability for the tenant's action.

Entire areas of substandard rents are permitted to exist because of a lack of mandatory provisions to increase those rents to realistic levels. Many such districts were frozen at depression levels. Increases are not permitted on grounds of comparability because all the rents in the district are low. In many of these low rent areas of $15 to $25 rents, the 20 percent granted by the 1951 law is completely inadequate. For example, the median rent in the country today is $35 (housing census). There is thus 8,500,000 housing units renting for less than $35. With the purchasing power of wages now at 162 percent of the 1921-38 index (the Real Estate Analyst, St. Louis, Mo.), and the purchasing power of rents at 64.1 percent of the same index, it is readily apparent that rental property owners have not been able adequately to maintain, let alone improve, their properties under rent control.

There are many such districts throughout the country caught between depression rents and present high costs of operation. It should be mandatory upon the ORS to consider comparability on a city wide and increased cost basis rather than a neighborhood basis in order to establish fair and realistic rentals when it is obvious that the rents for certain districts are substandard.

Rents are actually at or below their 1931 levels-yet these properties must be maintained at 1952 prices. The case of Chicago is a good case in point. Statistics show that the median monthly rental for 1930 was $49.75 whereas the present median monthly rental is $44.25, a decline of 11 percent (source: BLS Statistics). Now compare present costs of operation with the depression years. Steam coal is up 125 percent. Real estate taxes are up 54 percent. Wages are up 186 percent. Building material prices are up 162 percent. But rents are up only 25 percent. How can property do otherwise but deteriorate. We vote hundreds of millions to eliminate slums and substandard housing and yet rent control undoubtedly causes more such slums and deterioration every year than we could eliminate in 5 years of public housing at Government expense.

The present act gives almost uncontrolled discretion to the Office. of Rent Stabilization to grant or deny rent increases. It is based not on the provisions of the law but on political expediency and for the perpetuation of their jobs. Let me quote from Tighe Woods' orders:

This meeting reaffirmed the belief that rent control must be administered in each area on a basis that will receive public acceptance. What will work in Wisconsin may not work in Massachusetts. They ran us out of Wisconsin because we were too tight, and out of New York because we were too liberal. The tenants in Boston and Newark were highly organized and they object to liberal increases. If this policy is followed, the State of Massachusetts will throw out Federal rent control and enact State rent control.

I want to comment that increases are granted, not on equity, not on increased costs, not on comparability, not on hardship, but on the basis that will receive public acceptance.

This order proves two things:

1. That Mr. Woods is not carrying out the intention of Congress. Congress welcomed the determination of rent control on the local level but Mr. Woods is trying to continue and perpetuate Federal rent control.

2. That Mr. Woods' denial that he administers the law to suit his office is a sham and a delusion.

But let me quote further from Mr. Woods' instructions to his administrators and advisory boards. This is on the subject of "damages."

4. Treble damages should be assessed against large or professional landlords. 5. Small landlords (especially women) who do not follow an order may be assessed one and a half or double damages (the area rent director should use discretion on a case basis).

It certainly was not the intent of Congress to have one law for the big owner, one law for the little owner, and one law for women.

As a matter of fact, Mr. Woods has gone even further than that. Without any power or provision in the rent law he has delegated certain powers and duties of a Federal agency to civilian groups. With the acquiescence and agreement of his Washington representative and the Chicago director, the Chicago Rent Advisory Board delegated the powers and duties of checking rents to the CIO. The CIO was authorized to carry out this work on behalf of the rent office. When asked in the Senate Banking and Currency Committee hearing

Senator CAPEHART. Did you approve their doing this?

Mr. DULAURANCE. We welcomed their assistance. Yes, sir. And Mr. Woods still tells Congress that he is carrying out the intent of Congress.

Mr. Woods testified that property owners' net operating income increased between the years 1939 and 1950. You will notice that this survey was made by his agency. But there are several things wrong with this survey:

1. This was a comparatively limited survey which could well include especially well situated buildings to make the findings look good for his agency.

2. Mr. Woods very shrewdly went back to 1939 for his comparable figures. In 1938 and 1939, a great many buildings were still getting depression rents and, consequently, this made the survey look good.

3. That he neglected to use the readily available BLS figures to show the entire national picture both for rent increases and increased costs of wages and building materials and real estate taxes. On the basis of BLS figures it is impossible to substantiate such findings. The 1951 Housing and Rent Act contained a provision requiring the granting of a 20 percent increase over rents in effect on June 30, 1947. Although this provision permitted an increase of 20 percent, the increase for a large number of owners who entered into 15 percent leases in 1947 amounted to only 5 percent. Since June, 1947, costs of operation increased approximately 35 percent (source: Wenzlick).

1. Congress specifically stated that the 20-percent increase should be applied against the rent in effect on June 30, 1947, plus increases allowed or allowable for major capital improvements and increased services. This language is clear and unequivocal yet many of the areas now refuse to grant any increases for such major capital improvements and increased services applied for on the theory that the 20percent increase covers all such adjustments.

Mr. Woods argues the number of rent adjustments granted under the law. But he fails to mention how much and which way those rents were adjusted. In the Senate Banking and Currency Committee hearing several examples of 27-, 30-, and 50-cent rent increases and many examples of decrease adjustments were offered as evidence.

These so-called adjustments were granted or denied after expensive improvements and repairs had been made. Mr. Woods did not deny them nor did he ever explain them. He couldn't.

Mr. Woods was very pleased when he stated that "since October 1950 rent adjustments were ordered because of major capital improvements or additions of services, furnishings and equipment for approximately 500,000 dwelling units." (This is for only about 10 percent of the frozen units.) And why shouldn't he grant them? Every normal individual expects to pay more if he buys more or better services. The only question is how much-and was it enough? Was it fair? What about those 27-, 30-, and 50-cent adjustments?

2. The Office of Rent Stabilization has construed the 20-percent increase provision of the 1951 Extension Act as prohibiting an adjustment of the June 30, 1947, rentals for improvements other than what that agency defines as major capital improvements. Thus, if an owner had made noncapital improvements resulting in a rent adjustment of more than 5 percent (plus a 15-percent lease), the Office of Rent Stabilization will deny the owner the benefit of the 20-percent adjustment. However, if the owner had not filed for an increase for any such improvements prior to filing for the 20-percent increase, he would obtain his 20-percent increase. He would then be entitled to a further increase based on noncapital improvements. This inequitable and discriminatory treatment accorded to an owner who had previously filed and obtained an increase for noncapital improvements prior to filing for his 20-percent adjustment, should be eliminated. The Housing Stabilizer did not deny these charges made in the Senate Banking and Currency Committee hearing.

3. The Housing and Rent Act has always specifically provided that the Stabilizer shall grant rent adjustments "to correct inequities." The Stabilizer has, until recently, made comparability adjustments in rents of rental units "to correct inequities" in conformity with the law. However, where units in a building have obtained a 20-percent increase by virtue of the 1951 Act, the Stabilizer now refuses to grant any petition whatsoever for a rental adjustment "to correct inequities." The Housing Stabilizer did not deny these charges made in the Senate Banking and Currency Committee hearing.

4. The Stabilizer has employed another device in his effort to deny the 20-percent rent relief to owners of rental properties. If an owner obtained a rental adjustment for a unit to bring it up to the rental of other exactly comparable units, the Stabilizer has ruled that the owner may not obtain the 20-percent increase on that unit.

The Stabilizer has thus denied the right of the owner to obtain a 20-percent increase on the under priced unit contrary to the plain language of the act. The inequity originally corrected by raising the one unit up to a comparable unit has again been recreated, and the Stabilizer refuses to "correct this inequity" although required to do so by the act. The Housing Stabilizer did not deny these charges made in the Senate Banking and Currency Committee hearing.

5. The Office of Rent Stabilization has on various occasions assumed the power to amend the regulations, manuals and policies, retroactively. These procedures impose needless confusion and severe hardship on owners. The Rent Office has for several years granted adjustments in rent based on increased costs of performing major repairs, such as tuck pointing, exterior painting, new roofing, and other

items of repair and replacement. Owners, knowing of these adjustments, proceeded to expend large sums of money to rehabilitate their buildings, not only for their own purposes, but also to provide more attractive housing for their tenants.

In October of 1951, the Office of Rent Stabilization changed its policy and started denying petitions based on these factors and continued denying them until in one city alone well over 1,500 petitions were rejected. This change in policy was made retroactive, not only to petitions on file, but also to improvements contracted for or in the process of completion.

In January of 1952, the policy was reversed and the factors mentioned above were again permitted as a basis for an adjustment of rent. However, no apparent follow-up was carried out notifying the owners whose petitions had been denied that they might refile. The above is not an isolated case. We earnestly believe that the Office of Rent Stabilization, in amending or making changes in the regulations, its manual or its interoffice policies, should be barred from giving retroactive effect to any such changes. The House Stabilizer did not deny these charges made in the Senate Banking and Currency Committee hearing.

Third, provisions should be made for judicial review of orders of the Office of Rent Stabilization.

The Emergency Price Control Act in effect from 1942 to 1947 created the Emergency Court of Appeals, and vested that court with exclusive jurisdiction to hear and determine all challenges to the validity of both price and rent control orders and regulations. However, the Housing and Rent Act of July 1, 1947, as amended, contained no provision at all with respect to judicial review of rent regulations and rent orders. There is thus no effective court review of any kind available to permit either the landlord or the tenant to test the validity of the basic rent regulations, or the orders issued by the Office of Rent Stabilization. The Stabilizer is subject only to a common-law suit in the District Court for the District of Columbia where he resides and has his office.

The Office of Rent Stabilization may thus issue orders and regulations secure in the fact that normally neither the aggrieved landlord nor the aggrieved tenant, as the case may be, will be able to subject such orders or regulations to judicial scrutiny and review. The Office of Rent Stabilization thus prosecutes, hears evidence and judges the rights of landlord and tenant, without fear of any review of its decisions.

Mr. MCDONOUGH. Do you mean the Emergency Court of Appeals up here in Washington?

Mr. DULAURENCE. No.

Mr. MCDONOUGH. Set up in the areas?

Mr. DULAURENCE. Yes, in the areas.

Mr. WOLCOTT. There is no area emergency court of appeals.

Mr. MCDONOUGH. Just a minute. You did not get the remark of Mr. Wolcott.

Mr. WOLCOTT. I do not think you understood his question. There are no area emergency courts of appeals.

Mr. DULAURENCE. No, there are not.

We believe that Congress never intended that such finality should attach to orders and regulations issued by the Office of Rent Sta