how would you fix what the new rental of that apartment should be? You probably would rent it up to the 1st of October, would you not? Mr. FAIRFAX. That is usually our period for leasing apartments. Senator HOLLIS. What would be your basis of reckoning?

Mr. FAIRFAX. You mean taking an entirely new apartment? Senator HOLLIS. I am speaking about an apartment in an apartment house.

Mr. FAIRFAX. And it would become vacant at this time?
Senator HOLLIS. The 1st of April.

Mr. FAIRFAX. You ask on what basis I would rent that?

Senator HOLLIS. What would be your basis of reckoning what you would have to get out of it in order to get what you call a reasonable return?

Mr. FAIRFAX. I think the total rentals from any apartment should be between 15 and 20 per cent on the value of the property.

Senator HOLLIS. I was talking about an unfurnished apartment. Most of them are unfurnished.

Mr. FAIRFAX. Yes; I have in mind unfurnished apartments. I say that because, in the case of apartment houses around Washington offered for sale generally, no one asks a higher price than that the rental would show a full 15 per cent on the value, and they can not

sell them on that basis.

Senator HOLLIS. In doing this, as I understand you, you would have a certain amount of investment in the building that you would consider; you would consider the appreciation in the value of the land, if any, and you would make up your mind what portion of the whole investment this particular apartment represented, and then fix the new rental on a certain percentage of that?

Mr. FAIRFAX. When the building is first erected, you try to scale. the rents

Senator HOLLIS. No; I am talking about an ordinary apartment house.

Mr. FAIRFAX. I suppose you would be guided by what similar apartments in the building are being rented at. You would not have half a dozen scales of rental.

Senator HOLLIS. Mr. Fairfax, I have been asking you questions for five or ten minutes, and you have talked about investment, and fair return, and other apartments. You have not said a word about the increased cost of anything that you have had to put into it. Evidently that has not struck your mind in this connection, but it is the thing you talked about at the beginning.

Mr. FAIRFAX. We went back to normal times, Senator.

Senator HOLLIS. No; we were talking about the 1st of April of this year. Evidently the increased charges that you spoke of in the first place do not engage your mind when you come down to a specific case. You finally come down to talking about what other apartments are bringing. As a matter of fact, is it not the practice to get what you can when you have an apartment to rent, without any special reference to the investment or the cost?

Mr. FAIRFAX. The demand and the supply have helped to fix the price at the present time, and will, perhaps, for the future; but the owners of apartments as well as houses have not increased their rentals, particularly in the last fall, when there was some demand here, in spite of the fact that it costs more for maintenance.

Senator HOLLIS. I do not think I care to ask any further questions. Mr. B. H. WARNER, Jr. Mr. Chairman, may I interrupt just a moment? I got in late, and I do not know what has preceded; but I should like to inquire of the committee if they have made available the reports which unquestionably have been received by the committee from the Commissioners of the District of Columbia, the Army housing committee, and the committee on housing?

Senator POMERENE. We have just begun. If there is anything along that line we will have it later on, if it is desired to put it in the record.

Senator DILLINGHAM. Mr. Warner wanted to know if you had made public anything you had received.

Senator POMERENE. Oh, no; nothing at all.

Mr. WARNER. Has this bill been referred to the parties I speak of for their suggestions?

Senator POMERENE. It has not.

Mr. WARNER. Mr. Chairman, if it is proper, I should like very much to request the committee to be kind enough to do that. These three bodies are the controlling bodies, as I see it, in respect to the rental and housing facilities in the District, and it seems to me it would be very important to the general public if they were to be asked to give their views on the matter.

Senator DILLINGHAM. What three bodies are you speaking of? Mr. WARNER. The Commissioners of the District of Columbia; Maj. Z. L. Potter, who has charge of the housing of the employeesMr. JULIUS I. PEYSER. I am representing Maj. Potter here.

Mr. WARNER (continuing). And the Housing Committee of the District of Columbia, the chairman of which, I think, is Mr. Baldwin, assisted by Mr. E. S. Hagan. It seems to me it would be very valuaable for the committee to have that data.

Senator POMERENE. We will take up this matter in some order. Mr. Fairfax has had charge up to the present time, and we were going to hear next some other gentlemen who are here. The other matters will be taken up in due course.

STATEMENT OF BATES WARREN, ESQ.

Senator POMERENE. Please state your name.

Mr. WARREN. Bates Warren.

Senator PомMERENE. What is

your business?

Mr. WARREN. I am an attorney at law and real-estate owner.
Senator POMERENE. Are you an owner of real estate here?
Mr. WARREN. Yes, sir; I am.

Senator POMERENE. What is the nature of it?

Mr. WARREN. Apartment houses, mostly.

Senator POMERENE. Where are they located?

Mr. WARREN. In all parts of the city.

Senator POMERENE. Give the names of the properties and their locations.

Mr. WARREN. I own 2029 Connecticut Avenue; 1868 Columbia. Road; Beverly Court, at Columbia Road and Ontario; an interest in the Alabama, at Eleventh and N. Do you want me to give all of them?

Senator POMERENE. Yes; proceed.

Mr. WARREN. The Avalon; the Pasadena, at Adams Mill Road and Ontario; the Shelby; the Wesley, at Columbia Road and Fourteenth; an interest in the Wilmington and Warrington, at Eighteenth and Wyoming Avenue. That is about all I think of right now.

The Real Estate Brokers Association appear before you to-day as they appeared before the House District Committee, not to oppose or delay legislation to put a stop to profiteering in rents, but to aid in framing some workable law that will accomplish the desired object and at the same time work as little hardship as possible on the owners of real estate in the District of Columbia.

The real estate brokers and the real estate owners, who appear here through their committee, say to you that they have not for themselves or their clients increased rents as much as 1 per cent over the rentals of 1916. We represent owners and agents who are housing over 26,000 families. We represent nearly all the large apartments in the District of Columbia. Nearly every one of these 26,000 leases were made or renewed in September, 1917, nearly six months after the declaration of war, and at a time when the prices of nearly every commodity in the land were increased, and still increasing, at a time when everything that entered into the construction, repair, and operation of a building had been increased and was still increasing. Yet in spite of all this increase I say that did not increase their rents as a whole as much as 1 per cent. They come before you with clean hands and they have a right to ask for themselves just treatment.

We have heard of many cases of profiteering. There have been many cases of profiteering published in the newspapers, many pro-claimed from the floor of the House, many reported from person to person on the street corners, in the various offices and departments until a profiteering atmosphere has been created, until an impression has been created here and abroad that everybody in the District of Columbia is a profiteer. Yet when you sift it all down and count up I say without fear of contradiction that there are not as many as 2,000 tenants of all the houses and apartments in this city who have been charged exorbitant prices.

I have this data here from the various real estate agents, over their signatures, and if you want it I can read it to show just what they represent, the number of tenants they have, and the monthly payrolls that they have from these tenants; and it shows an increase of less than 1 per cent.

Right in this connection I want to say that the profiteering about which you have heard so much has not been perpetrated by the owners of real estate to any considerable extent. I have found very few instances of it; but I find many instances in which the tenants leasing property from these owners have profiteered to an unheard-of and unreasonable extent.

Senator SHERMAN. Can the owner of the property prevent that if he wants to?

Mr. WARREN. He can to some extent; but, as I stated before the House District Committee, this great increase of population of Washington came to us almost overnight. We did not realize to what extent it was coming. I do not suppose any apartment-house owner dreamed for a moment-I did not, I am sure that there would be such a demand for houses here; and we followed the practice that we

have heretofore followed as we would with you or any one else who had rented an apartment from us. When you came to us and said you had to leave the city, or for some reason that you would give which seemed to us a reasonable and just reason you desired to sublet your apartment, we would readily consent to the subletting, without even inquiring or thinking of what you were going to get out of it, just so you had a suitable person to take your place, a person that would not be objectionable in the house. In that way we, as owners of the apartments, have permitted numbers of them to be subletted without thinking of it. But as soon as

Senator POMERENE. Do the real-estate owners share in the increased rentals charged by the tenants?

Mr. WARREN. I do not think so. not think the agents do.

The landowners do not, and I do

Senator POMERENE. You have discovered, have you, in your properties, that some of these tenants have been overcharging? Mr. WARREN. I have; yes, sir.

Senator POMERENE. What have you done to prevent it?

Mr. WARREN. I have sent circular letters to the apartments saying that no more subletting would be permitted. I have put notices in the elevators that no more subletting will be permitted. I have steadfastly declined to permit it since I realized the extent to which it was going.

Senator POMERENE. What increase have you found to be made by

these tenants?

Mr. WARREN. I have found, in some instances, increases from 100 per cent up to 300 or 400 per cent.

Senator POMERENE. How many of those cases have you found? Mr. WARREN. They are very few in number. I do not suppose there are more than four or five.

Senator POMERENE. That is, in your own properties?

Mr. WARREN. That is what I am speaking of now.

Senator POMERENE. Those that you have referred to here, or described?

Mr. WARREN. Yes, sir; in some of those.

Senator POMERENE. Proceed.

Senator SHERMAN. Mr. Chairman, may I ask a question before Mr. Warren resumes his statement?

Senator POMERENE. Certainly.

Senator SHERMAN. In all of the leases I have seen, there is a subletting section.

Mr. WARREN. Almost every one of them has that clause.

Senator SHERMAN. I anticipate that that follows a regular form that is used here.

Mr. WARREN. Yes, sir.

Senator SHERMAN. That declares the lease void for the term if it should be violated.

Mr. WARREN. It gives the option to the owner. It does not declare it void.

Senator SHERMAN. It gives the option to the lessor or landlord to declare the lease void. There is nothing to hinder the landlord from taking advantage of that, is there?

Mr. WARREN. Not unless you consent. sublet it without the consent of the landlord.

It says that

you can not

Senator SHERMAN. Yes; but the right exists. Any of us who have a lease could have that lease terminated by the declaration of the landlord, if we sublet..

Mr. WARREN. That is right; you are liable to have it terminated. Senator SHERMAN. Whether it was at the same rate or a lower rate or an outrageous rate, it would not make any difference. The section in the lease is leveled against subletting at all.

Mr. WARREN. Against subletting; and it has been put in there heretofore, not to prevent getting higher rents, but to prevent the tenant from putting an objectionable tenant into the apartment.

Senator SHERMAN. You very largely do that in order to protect the character of the occupancy of the building?

Mr. WARREN. That is the idea, and that is all we have been observing heretofore.

Senator SHERMAN. Now, whatever the motive may be, if there be a forfeiture of the lease declared, it would be effective. It does not make any difference why you forfeit, whether it be for the one cause or the other?

Mr. WARREN. No.

Senator SHERMAN. So that if you found these cases where the rental charged by the tenant who sublets is exorbitant in character, you could declare the lease void, and oust or evict the tenant; could you not?

Mr. WARREN. Unless I had previously consented.

Senator SHERMAN. Well, that is a matter of discretion or choice with the lessor.

Mr. WARREN. That is a matter of discretion. In connection with this subletting that I referred to a moment ago, in every instance these people who sublet had very handsome furniture, so I am told, in the apartments, very expensive furniture; and in subletting, they let that all go with it-their linen, their silver, their pictures, their rugs, their high-class furniture, in some instances costing many thousands of dollars, so it is represented. I have since looked into it, and I have found that to be true-that many thousands of dollars is represented in that furniture, the finest kind of furniture.

Senator SHERMAN. There is nothing to hinder this furniture from being inventoried so that the value of the furniture can be separated from the value of the leasehold, is there?

Mr. WARREN. No; but it would be an interminable job for somebody.

Senator SHERMAN. What would you think about a case where the unfurnished apartment used to rent for $32.50 in 1916 and 1917, or, say, beginning in 1915 it rented for $32.50, and $125 is charged, or sought to be charged, when the furniture is worth about $300?

Mr. WARREN. I should think that is the very case we are here to help you stop.

Senator SHERMAN. Do you think the landlord would be justified in forfeiting the lease on a tenant who undertook to sublet in that way?

Mr. WARREN. I should think so; and they would do it to-day, in my opinion, most of them.

Senator SHERMAN. You think most of these severe cases of profiteering are by the tenants subleasing?

Mr. WARREN. I unquestionably do think so. I want to say in that connection, too, that I have instances here that I have discovered,