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Rent, according to the Bureau of Labor Statistics, increased from 104.3 to 140.5, or an increase of 36.2.

Fuel, electricity, and refrigeration have increased from 99 to 145.3, an increase of 46.3.

Household furnishings have increased from 101.3 to 207.6, or an increase of 105.3.

Miscellaneous items have increased from 100.7 to 170.7, an increase

of 70.

Did you use the figure of 25 percent?

Mr. DULAURANCE. Yes, Congressman Wolcott.

Mr. WOLCOTT. I think that can be adjusted readily to the Bureau of Labor Statistics record of an increase of 36.2, by taking into consideration that in January of 1951, the Office of Rent Control arbitrarily changed the method of computing rents, according to the economic indicators, and the Bureau of Labor Statistics, in January or February of 1950, showed an arbitrary increase of 8 percent.

Now deducting that 8 percent which they increased, arbitrarily, a year ago, from this 36.3, would give approximately the figure which you have used. I assume you are using the base which they formerly used in computing rent increases.

Mr. DULAURANCE. Yes, Congressman.

Mr. WOLCOTT. That was very obviously done in an attempt to narrow the differential between increases in rents and increases in these other items which I mentioned, and it did not fool anyone.

Mr. DULAURANCE. Congressman, they have two sets of figures, one called the new series and one the old series.

I used the old series set, because of the fact that that has to do with old property, with which we are dealing today.

They computed the old series set for quite a while, and did not use any new construction rentals, any new rentals. Then they decided to use the new construction rentals, which of course are much higher, so that actually their old series goes from 104 to 132, which is an increase of about 25 percent, whereas their new series, on my figures, goes to 139.8, but apparently you have more recent ones which go higher. But the new series includes the new rentals, the higher rentals, which of course weights the index.

Mr. WOLCOTT. It is interesting to note that in the economie. indicators of, I think either January or February 1951, the printer apparently was not taken into the confidence of those who were compiling these figures, so he did not go back to this new base, and he adjusted them so the line on the charts shows this precipitous 8percent increase in 1 month, which was impossible.

Mr. DULAURANCE. Yes, sir.

Mr. WOLCOTT. That is all.

Mr. BROWN (presiding). Does any other member desire to interrogate the witness?

Mr. COLE. Nothing, except that I want to comment on this wage increase of 186 percent, as compared to the rise in the rentals. I think that certainly points up the injustice involved in the situation.

Mr. DULAURANCE. Yes; the wage increase used here, Congressman Cole, was based on wages for the building industry, which are of course the wages we use.

Mr. COLE. I see.

Mr. DULAURANCE. Because all labor that we use is connected with the building industry.

Mr. COLE. That is in connection with your costs, rather than the over-all increase in wages.

Mr. DULAURANCE. That is right. That is why we also used the figure of 162 percent for building materials, because in effect, in the operation of a building, at some time or other you use practically every item that is in that index, outside of perhaps digging the founda

tion.

Mr. COLE. They do not give the rental industry a Capehart amendment, or a Herlong amendment, or even an industry earnings standard; do they?

Mr. DULAURANCE. No, sir; they do. not.

Mr. NICHOLSON. Mr. Chairman.

Mr. BROWN. Mr. Nicholson.

Mr. NICHOLSON. Do I understand that in computing rent, the interest on your investment is not taken into consideration?

Mr. DULAURANCE. No, sir; it is not, Congressman Nicholson. Mr. NICHOLSON. Have you any idea why they deny anybody the right to take out the interest that has to be paid to the bank?

Mr. DULAURANCE. The argument used by the Housing Expediter is that it would be unfair to have two pieces of property, one which has a mortgage on it and one which does not have a mortgage on it, to increase the rent on the one that has a mortgage on it.

But it begs the question, because of the fact that when the fair net operating income formula was established, I am sure that Congress intended that the income should be sufficient to be able to carry a fair mortgage.

Mr. COLE. If I may interrupt, Mr. Nicholson, that is again the policy of the Price Control Administrators, not only on rent control but on price control. They look almost primarily at peak prices, and their job as they envision it is to eliminate or curtail the peak, statistically speaking. They are not concerned very much, shall I say and frankly I doubt if they are concerned at all to speak of-with the fairness or justness or equity concerning the people who produce the commodity-the rental property or the commodity which is to be produced. They are interested in showing us statistically that the chart is kept down.

Mr. DULAURANCE. That is quite right.

Mr. COLE. That is their approach to it, and not whether the producer receives a fair return, or any return, as far as that is concerned. I am speaking a little bit bluntly on that.

Mr. WIDNALL. Do you have any figures at all as to the actual number of units that went out of the rental market into the sales market as a result of rent control?

Mr. DULAURANCE. What I can give you is that approximately 3 million units went from the rental market into private ownership. Mr. WIDNALL. Thus creating a much tighter squeeze than existed before?

Mr. DULAURANCE. That is right, Congressman.

Mr. WIDNALL. I think one of the things that you have brought out that is most interesting to us is the fact that in the decontrolled cities. they have had a tremendous increase in population, and in the rentcontrolled cities there has been a much smaller increase, and in the

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decontrolled cities housing is better and more available than in the controlled cities.

Mr. DULAURANCE. Yes, sir.

Mr. WIDNALL. That is a very pertinent thing for the record.

Mr. DULAURANCE. Well, I think it is especially so of the cities that actually lost population during the 10-year period, and gained net dwellings. That carries out the same argument.

There are 23 of the 231 larger cities in the country which lost population. They had a vacancy ratio at the time. They gained new dwellings, and yet they are still under control.

Mr. BROWN. If there are no further questions, you may stand aside. We are very glad to have your testimony.

Mr. DULAURANCE. Thank you very much, sir.

Mr. BROWN. Call the next witness, Mr. Clerk.

The CLERK. The next witness is Mr. William Schmidt.

STATEMENT OF WILLIAM SCHMIDT, PRESIDENT, PROPERTY QWNERS ASSOCIATION OF AMERICA

Mr. SCHMIDT. Mr. Chairman and members of the committee, my name is William Schmidt. I am president of the Property Owners Association of America. I thank you for the opportunity of being heard again although I have always hoped on all previous occasions that it would be the last time that it would be necessary to speak against this law. It seems that it is a law for which Congress has always been apologizing-it has always been passed for just a short time and supposedly to take care of an emergency.

Now, it has been continuously on the statute books for a matter of 10 years. During those 10 years our population increased 14.5 percent while our occupied dwellings increased 23 percent.

Over half of the units that used to be under control have freed themselves by the local option route. In every case it has been shown that there is a surplus of housing as soon as controls are removed. Not in a single case has the prediction of bloodshed and riots, or 300 percent and 400 percent rent increases been verified. It seems strange that any intelligent statesmen should ever have made such predictions. Over 200 communities have freed themselves from rent controls, ranging in size from the city of Los Angeles to a little village of a few thousand people and nowhere is there any trouble-nobody ever asks to have the city become recontrolled. Any recontrol that has taken place has been by the capricious action of Government authorities who are mainly interested in perpetuating the life of their bureaus. Last year I included in my testimony, and in the record, a pamphlet published by John and Richard Usher and entitled "Rent Control in War and Peace." In addition to giving a very excellent explanation of the appearance of the so-called housing shortage and the deceptiveness of this shortage, this pamphlet gives an enormous amount of information on the population increase and the dwelling increases during the years from 1940 to 1950 in about 231 cities. These figures have been obtained from the United States Census Bureau and are absolutely correct. At that time I made the statement, and I repeat it now, that on the basis of the evidence presented here the American people have enjoyed an increasing supply of housing accommodations everywhere during the last 12 years. Rent control has benefited nobody

and has just added to the burdens of the taxpayers. Over $300 million have been spent to date for the enforcement of rent control only and the enforcement is very ineffective.

You will always find that if there is no real agreement in the consciousness of the people between the law on the statute books and their own conscience it simply will not work. We found that out during prohibition and we are finding it out every time any attempt is made to control prices or wages.

Furthermore, at all times it has been possible for most any of the tenants to purchase their own home and become independent of the landlord.

Nothing is easier than to escape the clutches of the landlord. The bargaining condition of all of the tenants involved would be greatly increased even if only 2 or 3 percent of the tenants were to decide that the rents are too high and they will purchase a home of their own.

Now, many statesmen have said that the building industry has priced itself out of the low income market. That is just one of those statements that people make on the basis of snap judgment and without rhyme or reason. For your benefit, I include in the records herewith an article copied from our official publication, Free Enterprise. This article shows that the average man had to spend about 221 weeks of his salary in 1940 in order to buy the average home-mind you, not to buy the cheapest home possible, but the average home as it was actually purchased at that time. During the war when we put restrictions on housing and would not permit any house to be constructed, except for $6,000 or less, the cost of the average home to the average wage worker went down below 100 weeks' pay. then, the cost computed in terms of so many weekly pay envelopes has increased again and in 1951 it stands at 179 weeks' pay. These figures are for the Chicago area and they are typical; and the source of the information is clearly given in the accompanying article, which is entirely self-explanatory.

Since

I think that the accompanying article and the figures therein prove one point conclusively-namely, that any American citizen, regardless of his economic status, who wishes to take upon himself the responsibility of a home can do so.

I am not going to read the article, but I hope it will be included in the record.

Mr. BROWN. That may be done.

(The information referred to is as follows:)

Average cost of homes in the Chicago metropolitan area in terms of average weekly pay

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Source of information: The information for the cost of homes has been obtained from the Bell Savings and Loan Association. This company underwrites a very large prcentage of the mortgages being made and maintains a statistical department.

The information for the average weekly wages is obtained from the Industry Report of Hours and Earnings by the United States Department of Labor. These figures represent the national average while the average cost of homes is for the Chicago metropolitan region. Probably in the Chicago metropolitan area the average wage may be slightly higher.

The number of weeks' pay required to purchase home column is obtained by dividing the cost of the average home by the average weekly pay. The cost in weeks' pay is extraordinarily low in the years 1942 to 1945 because of the fact that there were Government restrictions in those year that made it impossible to build a high-priced home. For several years materials were only furnished for homes costing $6,000 or less. In the other years before and after this period, the average cost has been affected by the relative number of well-to-do people or poor people that decide to build a home. It is, of course, obvious that the people can affect the average cost by their free choice of having a home more or less frugal or more or less luxurious, as the case may be.

We believe that the above calculations show conclusively that the average man can hold his on in a competitive market and that he is better able to provide a home for himself than ever before in the history of the Nation.

Mr. SCHMIDT. Furthermore, the American citizens have availed themselves of that opportunity and in view of the fact that the Government has not controlled the cost of new buildings except the latest attempt to meddle with the credit regulations on the production and sale of housing accommodations. We have had an excellent increase in the construction of individual housing. If we had had enough judgment to treat the apartment industry with the same amount of neglect-that is, if we had not interfered in any way with. the operation of rental housing we would be in a position to look back upon a splendid record of apartment house construction. I think I can easily prove this point by presenting for your consideration a comparison of the amount of apartment house construction in the city of Chicago during the period from 1920 to 1930 as compared with the amount of construction that has taken place in the same city from 1945 to date. During 1920-30 there were constructed in the city of Chicago 300,000 new modern rental units-all of these were built with private capital without any Government guarantees whatsoever. Now, during the period from 1945 to 1951 the records show that we built only a total of 15,000 new units in Chicago, that is new rental units, compared with an average of 25,000 units in a single year for a decade. Furthermore, these 15,000 units have only been built because the Government guaranteed 90 percent of the total value of the project as a loan.

The average rental in Chicago is only $44 per month, while the average wage is $60 per week or better. If we had not had any rent control the American people would not be paying any more than the usual percentage of their monthly income for rents and you would

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