(Numerous newspaper advertisements submitted by Mr. Aarons were placed in the files for the information of the committee.) (The following was later received for the record :)

CONTINUING THE STATEMENT OF ROBERT H. AARONS BEFORE THE BANKING AND CURRENCY COMMITTEE, MAY 23, 1951

Mr. Chairman, and honorable members of the Committee on Banking and Currency, in accordance with your consent given me by your committee at the time of my appearance before you on May 23, 1951, I respectfully continue as follows:

The reports of the executive board of the United Property Owners (consisting of some 28 separate affiliate citizen organizations, the names of which I testified to before you previously, and which organizations have principal headquarters in the counties of Los Angeles, Riverside, Orange, and San Bernardino) cover the rental conditions in the major portions of southern California. They indicate, as the exhibits previously submitted by me as samples, that ample vacancies of varied price and types, ranges exist in all these areas. Reports from other parts of California and other sections of the country tend to establish the fact that no housing shortage prevails.

I have stated that it is very likely that fairly modern five- or six-room houses and apartments in well populated centers at a rental of some $25 per month may not be plentiful. But rental offerings at such prices would indicate depression conditions and who would want to go back to such a state of affairs.

It should be noted that there has been an increase in the number and percentages of people who own and live in their own homes, and likewise there has been a decrease in the average numbers of persons living in rented apartments or houses. These figures have been submitted to you and there would be no purpose in encumbering the record with a repetition thereof except this one reference. It has been well established that for the Nation there has been a population increase of 14 percent since 1940 and for a like period, an increase of 23.6 percent in housing units. There exists some 3.2 million vacancies as against 2 million in 1940. Surely, therefore, one may not properly maintain that an “acute shortage of housing, particularly rental housing, in many parts of the country" exists. (The word "many" should be underlined.)

Your attention is again respectfully called to the fact that under the so-called administration bill, the President or his appointee could "adjust" rents downward to the 1942 level. I believe that none of the members of this committee would desire such an occurence but the passage of this bill would surely make that possible. Previous experience with the Office of the Housing Expediter of individual owners of a few rental units leads to the conclusion that that event would be highly probable.

In all areas in which our associate members function (all self-decontrolled) there has been no great upset or upheaval. Average increases were about the same as that of other areas-about 11 percent. However, the greatest gain was that of the improvement of the relationship between landlord and tenant and improvement of both the appearance and utility of rental units.

May we respectfully call your attention to our proposed program set forth in the Congressional Record, pages A1217-1218 of March 5, 1951, reporting proceedings of January 29, 1951.

This proposal was made to the President, who chose not to reply and to the Economic Stabilizer who while expressing approval nevertheless gave it no aid. However, as a result of this program, it was learned that in the areas of our 28 affiliate organizations there were less than 50 complaints of alleged unfair rent increases.

We suggest that this indicates either self restraint and conscionable conduct on the part of landlords or an abundance of suitable and readily available rental accommodations, or both.

There has been an ever-increasing fear on the part of many people that with the passage of a new rent bill, rent control would become perpetual. This would mean controls for the sake of controls-a most undesirable prospect-not even openly advocated by the most ardent rent control supporters.

I believe that there does not exist in this country today a "widely" scarce condition, concerning rental property which justifies legislation on a national basis on this subject. The individual States have had ample opportunity to

83762-51-pt. 2-24

enact "enabling legislation" to permit cities within their boundries to establish controls where, when and if necessary.

If a few cities in the Nation find it expedient for one reason or another to impose rent controls (a proposition to which we cannot subscribe), the rest of the Nation ought not to be made to foot the bill or be burdened and fettered by restraints of a nature heretofore generally characterized as obnoxious and abhorrent to be enacted only as a matter of sheer necessity.

On behalf of the above-mentioned associations composed of reputable citizens, I respectfully request a negative report on this presently considered proposed rent legislation; and on their behalf and mine, I make this expression of ap preciation for patiently hearing and giving thought to my plea.

The CHAIRMAN. The next witness is Mr. Russell, of the National Apartment Owners Association.

Mr. Russell, will you come up?

Will you proceed in your own way, Mr. Russell? Do you wish your statement to be made a part of the record? Do you wish to highlight it for us?

STATEMENT OF WILLIAM W. RUSSELL, CHAIRMAN, LEGISLATIVE COMMITTEE; ACCOMPANIED BY PAUL C. BLAIR, ASSISTANT, NATIONAL APARTMENT OWNERS ASSOCIATION

Mr. RUSSELL. That is right.

The CHAIRMAN. Without objection, it will be made a part of the record, and you may proceed in your own way.

Mr. RUSSELL. I have here on my right Mr. Vanderslice, who will help on the hotel situation, as I am not too familiar with that. He is a member of our organization, representing the Residential Apartment Owners Association.

The CHAIRMAN. I just want to keep the record straight. He is not from the American Hotel Association?

Mr. RUSSELL. No; that is entirely different. Also Mr. Paul Blair is assisting me.

The CHAIRMAN. If there is anything you wish to highlight at any time, that is entirely agreeable.

Mr. RUSSELL. Thank you very much.

I think I will just go through the report and call your attention to specific things within the report.

On behalf of the National Apartment Owners Association, Inc., its affiliates and local associations, representing a large percentage of both small and large owners of rental residential property in this country, we wish to urge that title IV-A of the Defense Production Act be deleted therefrom in its entirety and that Congress abolish Federal rent control.

We believe without rent control that—

1. Actual housing needs in any community can be more readily ascertained and can be more readily met.

2. Tenant-owner relations are better.

3. Property is maintained better.

4. Tenants' homes and apartments are kept better.

5. Rents are slightly higher, but living conditions are correspondingly better.

6. More vacant apartments appear for rent.

7. Large units become available for large families.

8. Single houses are offered for rent, rather than offered for sale.

9. Private capital returns to the rental housing field and new rental units are constructed by private enterprise.

10. Cities will shelter more people without rent control.

Rent controls do not provide more homes or better homes. On the contrary, rent controls provide just the opposite on both counts.

The rent picture today: We can plainly see in the American of today how the mere presence of rent control during the past 5 years has suggested more and other controls, has influenced the thinking of our people and, in some instances, has already affected our economic structure. It is begining to interfere with many parts of our

economy.

For example, taxes. Where rents are frozen, the assessed value of such property is frozen. The cost of local government is rising and cities are hard-pressed for new revenue. Consequently, the home owner is overassessed to gain additional revenue. Thus, the tax load shifts. It is no longer fairly divided between the tenant family and the home-owning family. Rent control, wherever applied, is costing the home owner real money. Fifty-three percent of our people who own and live in their own homes are affected.

The CHAIRMAN. In other words, in Chicago, or wherever it is, they increase taxes to people who own their own homes, because the rental properties are frozen so they do not raise the assessment?

Mr. RUSSELL. That is true. Roughly, the assessors use a multiple times the gross income as assessed value. It does vary from that. In Boston they use five times the gross income. If the gross income is not increased, the five times is not increased, the assessed values are held down and the load is shifted to the home owner.

The CHAIRMAN. As far as I can remember, that is the first time that has been brought up before this committee. This is a serious situation with 53 percent of the people who own homes. If assessments are raised because they will not raise taxes on rental property, because rents are frozen under the rent ceiling. That is the first time that point has ever been brought up.

Have you got any figures on tax assessments-I do not question what you say, but I mean to substantiate that situation in Chicago? Mr. RUSSELL. Not in Chicago, but I have in Boston. In BostonI come from Boston-we have talked to the mayor, for instance, each year and explained to him that our rental incomes are frozen, and therefore we cannot have an increase in assessed value. He has agreed, and he has called the chairman of the assessors down and talked it over with him in our presence, and both have agreed that the assessed value should not be increased, so long as the rents are frozen.

The CHAIRMAN. In other words, any additional cost of government has got to be borne by home owners?

Mr. RUSSELL. It has got to be borne some other way. Our assessed values have not been raised, we have a lot of property in our own office, and I know the assessed values on those properties have not been raised.

The CHAIRMAN. They have raised assessed values on persons owning their own homes?

Mr. RUSSELL. The assessed value; yes, sir.

The CHAIRMAN. The assessed value is what taxes are based on, after all.

Mr. RUSSELL. That is what the rate is based on, that is right. I want to mention for a moment who owns these properties.

Of the 47 percent who rent their homes, 37 percent of these live in single-family dwellings and 39 percent live in 2- to 4-family units. The balance, 24 percent, live in structures containing five or more dwelling units. The ownership of all these properties represents approximately 10 million landlords made up of all types of people from all walks of life. These owners include such people as the members of your family, doctors, lawyers, statesmen, teachers, white-collar workers and laborers. As a matter of fact, in speaking before ownergroups, I have found that a very large percentage of union members have invested their savings in rental housing units, rather than other forms of investment, and are bitterly opposed to rent control in any form.

The thought has been expressed by the Expediter in these hearingsthat rents must be held down because the income of 28 percent of our people is $2,000 or less. Professor D. Gale Johnson, of the University of Chicago's Department of Economics, made an exhaustive study of this problem and has written a revealing article called Rent Control and the Distribution of Income. He came to the objective, unbiased conclusion that there is no difference in the economic position between tenants and landlords and that landlords do not occupy any preferred financial position over tenants, as sometimes intimated. Neither do tenants occupy a preferred position over landlords. There are just as many landlords with incomes of $2,000 and less as there are tenants. Consequently, there is no reason why one group should be forced by its government to subsidize the other.

The Census Bureau has completed its survey on housing and population for 1950 and the report shows that while the population has increased 14.5 percent since 1940, housing units have increased 23.6percent, with new construction and conversions accounting for 81⁄2 million new homes. Total number of dwelling units now stand at 45,875,000.

Back in 1940, we considered ourselves well-housed when there were 2.5 million vacancies to choose from. We now have a 3.2 million vacancies. We can, therefore, confidently assume that Americans are exceptionally well-housed today-better-housed than any other nation in the world, past or present, and better-housed than this country itself has ever been before. A detailed report of these conditions, based on the census figures, has been prepared and is attached as exhibit A. It shows population trends and housing units available by States, and by representative cities in each State. I think they have done it very fairly, and it shows in every case that the housing units have increased faster than the population, and the population is better off, housingwise, than at any other time in history; better, I should say, than in 1940, which we can assume is better than any time in our history.

Each year since the war, the administration has demanded that rent control be renewed, expanded, and strengthened. Among the reasons: advanced are the following:

1. A terrible housing shortage exists. We have just explained that. 2. Rents would double or triple if controls were removed. They have increased 11 percent on the average.

3. Landlords would be ruthless in evictions. We have studied court records, and we find the highest percent of eviction at any time

was while rent controls were on. That is brought about by the fact that people buy houses and evict the occupant in order to get a place to live in themselves. Landlords very rarely evict tenants.

4. It would add to the inflationary spiral.

Well, 10,000,000 of the units out of 16,000,000 that have been decontrolled has not added materially to the inflationary spiral. Rent is only a small part of the increased cost of living.

5. It would cause riot, chaos, and bloodshed.

We have never seen a case of that, and the experience of 7 States and nearly 1,000 cities completely decontrolled-and seven more States almost completely decontrolled-prove that these were scare stories designed to frighten the public into demanding a continuation of rent control, and were not based on facts.

The CHAIRMAN. Have you given any thought to what might be declared critical defense areas with the movement of workers in the late fall if we should have any rent control, because of the shortage of housing, because it has been testified here before the committee that the housing construction program is falling off materially. The mortgage bankers, for instance, yesterday said that, and I think the Bureau of Labor Statistics reports for May will show the same thing, and when fall comes there will be a lot of places declared critical defense areas. How will we take care of those?

Mr. RUSSELL. The Expediter used an example of moving a plant into an area bringing in 8,000 workers to a city with 4,000 population. Now, it is obvious that a city of 4,000 population could house only a mere handful of 8,000 new people coming in. It could house, possibly, some single people as roomers, so it is obvious to us that if you have a program where 8,000 people are going to be employed in a plant that you should locate the plant possibly near a large city where most of the help would come from that city and are already housed. The CHAIRMAN. Of course the reason for the Government trying to relocate some of these plants other than in the large, congested areas of America today is not only because of congestion in those areas, but also to aid in the decentralization of industry.

Mr. RUSSELL. In that case, we feel if you are going to build a plant for men to work in, the thing to do is build houses to live in. You must do that anyway. The little town will not help you; housingwise you are not going to get additional housing there.

Along with construction, very definite plans should be made to build houses if you are going to move families to that area.

The CHAIRMAN. That is what the Government did not want to do. Mr. RUSSELL. We want private enterprise to do it.

The CHAIRMAN. But private enterprise will not do it, either. Mr. RUSSELL. You cannot house 8,000 families in a city of 4,000. The CHAIRMAN. Now we are up against the situation, from what the mortgage bankers say. With Government bonds going down, portfolios are getting larger and larger. Only yesterday, a gentleman from New Jersey said that the East was the last section to feel it because they have better financing arrangements. We certainly do not want the Government to build another large project like the Manhattan project when it is so hard to get mortgages on housing. The Chairman of the Federal Reserve Board said he thought it would be extremely hard to get mortgages on what they expected to build. Mr. RUSSELL. Would it not be possible to release financing on these

areas?