Again for the record, in answer to Senator Benton, I want to point out that the statements filed were merely statements, and I don't think were backed by statistics.

With your permission, I would like to file for the record the allowances and the pay of the military.

The CHAIRMAN. Without objection, that will be placed in the record.

(The following was later submitted for the record in response to the above:)

COMMENTS ON RENT REPORTS FROM DEPARTMENT OF DEFENSE

I. GENERAL COMMENT

Existence and nature of reports indicate high-level order to Department of Defense to build case for rent control.

II. EXPLANATION OF REPORTS

(a) Many cases listed show little or no rent increase.

(b) Percentage rent increases shown misleading when based on isolated cases, and when not accompanied by dollar figures.

(c) Most dollar rates of increase are moderate, mostly $10 to $15 when based on averages of fair samples.

III. EXPLANATION OF CHANGED LOCAL SITUATIONS

Main point is that establishment of a military base near a small town in a rural area completely disrupts the economic life of the community. Slow tempo of a farm area shifts to the life of a city.

Such a sudden change justifies shift to new scale of values based on new conditions. For example:

On rents. Before the military moved in many houses were rented on the following bases:

(a) To farm hands below value as part of their pay.

(b) To relatives below value. In some small towns many residents related by blood or marriage.

(c) Establishment of military base in a rural area often causes many costs other than rent to rise. Local labor sometimes costs double or triple since base pays higher wages to attract labor. Material prices go up, too. So owners

need more rent to cover higher costs.

(d) If Federal coercion is used in such areas to slap rents back to unrealistic levels it is bound to cause withdrawal of rental units from the market and discourage building of new units. Military people would find more difficulty in being housed.

(e) Higher rents needed to compensate for increased wear and tear on rental property resulting from use by military personnel:

Greater turn-over.

To offset routine of base life military tend to entertain more.

Because occupancy is temporary, military tenants are less careful with property.

(f) Rents, even after increases, are not above urban rents to which many military personnel are accustomed.

Other prices in the community.-When a military base is established in a rural area prices of many things go up much more than rents. For example: (a) Farmers who formerly sold things like eggs, fruits, and vegetables at farm price level find they can get the higher retail prices:

(b) Labor in area usually reaps big benefits. Typically many formerly working on farms at low rates shift to much higher paying jobs.

Following figures

To permit prices of everything except rents to go up in an area when a military base is established is a little like the experience of a woman who lived in Florida: This woman had four daughters, of whom three were her own and the other was a stepchild. Last January she moved north to Michigan. She bought warm coats, socks, and mittens for her own three girls. For her stepdaughter she bought nothing. The stepdaughter had always gotten along without the extra clothes, so why give them to her now?

IV. ABILITY OF MILITARY TO PAY RENT

Cash quarters allowances, members of armed services entitled to quarters

Lowest 3 grades receive $45 where only 1 dependent. Enlisted men without dependents entitled to basic allowance of $45 per month.

Mrs. Bowman at the Department of the Army (LI56700 Branch 74992) reported on February 16, 1951 that data on current pay and allowances of some grades are as follows:

In addition to the above medical and dental services are furnished to servicemen and dependents. To a certain extent transportation of dependents and household goods is also provided.

Statements have been made that some owners charge as much rent as fuil quarters allowance. At the same time the quarters allowances are set by the Government at presumably fair rates.

V. CONCLUSIONS

A. Rents generally have not been shown to be out of line with in-lieu-of-quarters allowances of military personnel.

B. Unrealistic rents will make it more difficult for our service people to find housing they need.

C. Freezing rents or cutting them to zero will not provide more shelter.

D. Perhaps a few high rentals can be found in such a Nation-wide survey. Any resulting injustice is small, however, compared to injustice inflicted on millions of property owners by rent control.

Senator BENTON. Do you have any general judgment on what has happened to rents in areas that might be judged to be critical? I think it would be interesting to ask the Housing Expediter, or whoever in the Government would be most likely to have that material, to give us any evidence on what has happened to rents in Topeka, and this town we mentioned in South Carolina.

What has happened to rents in these critical areas, in such areas that have been decontrolled in contrast to areas that have been controlled? The CHAIRMAN. I think you would have to get a general statement as to the whole United States, all the way from the State of Washington to California these Army camps have opened.

Senator BENTON. Just a half dozen camps would interest me. The CHAIRMAN. The Army will send that down here for the record. We have asked them to supply it for the record when the military testify.

Mr. SUMMER. Mr. Chairman, I have the answer to a lot of these questions, if I may proceed.

If I may continue, I think I will answer most of the questions, if they may be reserved until I get through.

The CHAIRMAN. Go ahead, because we have to get out of here by

12:30.

Mr. SUMMER. When I am through, you may ask all the questions you want, and I will attempt to answer them.

Rent control has defeated itself. According to the United States census, in 1950 we had 523,000 fewer rental units than we had in 1940, in spite of the fact that during that 10-year period 3 million units were constructed, which indicates that 3.5 million rental units were taken off the market, and we all know what happened.

People who normally would have rented their homes, because of the unrealistic rent freeze and occupancy freeze, decided to sell, and people who wanted to rent were forced to buy.

I think we real-estate brokers are very foolish to oppose rent control, because we made a lot of commissions out of rent control, but we do oppose it because of what we have seen happen in France and other countries. It eventually wiped out the commodity we handle, private ownership of real estate.

I think Senator Ellender, of Louisiana, who was a great advocate of rent control, upon his return from France published articles in the papers that he is against further extension of rent control. He saw what happened in Europe, where rent control was carried too long, and he has issued statements, of which I have clippings, opposing further extensions.

Now, rent control will not prevent another round of wage increases, no matter what spokesmen for labor say. That has been proven during the last 10 years when rents were frozen, and nine rounds of wage increases took place while rents were frozen, or increased only slightly, as can be evidenced by the chart.

Dr. Griffin of the University of Michigan says:

It is my impression that organized labor is likely to carry the demand as far as possible, with or without this stimulus, and therefore that the actual effect can easily be exaggerated.

Senator BENTON. Mr. Summer, I am sorry to leave the hearing, but I will read your answers in the record. You are a very eloquent witness, I might say.

I ask to be excused.

Mr. SUMMER. Rent control is the one-two punch with public housing. If you have rent control long enough, as proven in every country in Europe, you then get a demand for public housing. In the one country in Europe where there has been free movement of real estate, Belgium, the housing supply has exceeded the prewar figures.

Now, the census reports that we have the best housing in our history, and thank God for the United States census, for this reason. Griffin says, talking about decontrol:

Dr.

Any moment for making such a change is always thought to be the wrong one, and we may expect it will be so at the moment, now or in the future.

83762-51-pt. 2- -37

In other words, we never reach a point where we can say this is the moment to lift rents, but the charts have shown where rents have been decontrolled-they go up for a short time, and then level off. The Housing Expediter himself testified that where they were decontrolled the over-all average was 19 percent.

Business is good; the prospects of business are better; the prospect of wages staying up are good. When will we ever have decontrolwhen there is a depression and people are out of jobs? You will never have it then. If we don't get decontrol now, we will have control forever, and when you get it forever, individual freedom in this country is lost.

I will say again that reducing rents to zero won't add one housing unit. The only way you add to housing units is to decontrol. It ultimately benefits the economy, and ultimately reduces rents. The OPA and Housing Expediter's office have cried wolf once too often.

The Bureau of Labor Statistics, in nine major cities which were decontrolled, said that instead of riots and mass evictions, there was an increase of 19.8 percent.

Now, let's remember this. This Congress, in 1948, in spite of the terrific and strenuous opposition of the OPA and the administration, lifted rent control on new construction. As of 1947, our families were doubled and trebled, and this country was in a critical situation on rental housing.

From the day that controls were lifted on new construction, the greatest production in the history of this country took place. Senator CAPEHART. Would you yield for a moment?

What is the total amount of money spent each year for rent, do you know?

Mr. SUMMER. I don't know the average, I don't know the total, but I know it is less than is spent for alcoholic beverages.

Mr. SNYDER. Seven billion dollars is the figure the Federal Reserve Board reports.

Senator CAPEHART. And how much for alcoholic beverages?

Mr. SNYDER. About nine billion.

The CHAIRMAN. Does that include the tax on it?

Mr. SNYDER. I do not know, sir. That is expenditures.

The CHAIRMAN. Then it probably includes the tax.

Senator CAPEHART. We spend more on alcoholic beverages than we do on rent, yet we control rent, and have not been controlling alcoholic beverages, at least not until the last few months.

The CHAIRMAN. Of course, there is a little higher tax on alcohol than there is on housing.

Mr. SUMMER. Between 1947, when controls were lifted, and 1950, 4.2 million dwellings were added, for rent and for sale, and with an average of 3 persons per family, that provides for 12. 6 million people.

I want to read very quickly a statement by the Economic Cooperation Administration, a branch of the Government, in announcing its findings in Europe-Only a free real estate economy can produce enough housing.

Private capital has been discouraged from entering the rental housing field in countries like France, Italy, and Austria, because returns have been so low that they often fail to cover the bare cost of maintenance. This is due chiefly to the fact that stringent rent controls have been in force for many years, while prices of most other goods and services have risen sharply.