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Mr. FAIRFAX. Yes; in section 3, page 6, beginning on line 4:

The tax and penalties which are assessed, levied, and made payable by any of the provisions of this act are hereby made a superior lien on the property, both real and personal, from the use or occupancy of which the taxable income has been derived.

Senator SHERMAN. That is the intention of that.

Mr. FAIRFAX. Now, there is a clause, if you will follow me, in line 8:

Provided, however, That the said entire personal property, without any exemption whatever, shall be exhausted before the real estate is proceeded against for either taxes or penalties.

There is no provision in this bill here to assess furniture or furnishings of the house. While that bill says that the personal property without any exemption shall be exhausted, you can not touch the furniture because there is no provision here to assess the furniture. Therefore it all goes back to the real estate and it will fasten the charge of excessive profit entirely on the owner. The furniture man escapes

under this Johnson bill. That is the feature that has not been touched on, but I thought it was fair to bring it out

Senator SHERMAN. You have no distress for rent in this District? Mr. FAIRFAX. No.

Senator SHERMAN. A landlord can not levy a distress warrant? Mr. FAIRFAX. There is a $300 exemption, but the framer of this bill evidently intended to say that the assessor of taxes could proceed to realize as much as he could from the personal property before undertaking to file a lien for the balance against the real estate; but the language of the bill would not permit him to do it, if I read it. correctly, and therefore it goes back entirely to real estate.

On page 2, section 2, line 7-or we will take the whole section 2that reads:

SEC. 2. That, in addition to other taxes imposed by law, there is hereby levied and shall be assessed, collected, and paid to the District of Columbia an annual tax of one hundred per centum upon so much of the income from real estate of every person, whether resident or nonresident of said District, received from and after April first, nineteen hundred and eighteen, as exceeds the deductions herein allowed.

There is nothing here to say that there shall be anything assessed on furniture or personal property, and therefore I say that this bill as it is written would throw the entire lien on the ownership of real property and the owner of the personal property would escape.

There has been something said about a certain case of profiteering which perhaps has existed in numerous instances, and if such cases come before the attention of this committee we certainly hope that you will investigate those instances thoroughly. I would like to be permitted to suggest that you invite both parties to the transactions that come to your attention in public or private hearing so that you will get down to the facts and understand the facts thoroughly.

This is a serious situation for the property owners of the District of Columbia. They recognize the importance of it. They want some legislation that will deal with the matter on a fair and equitable basis. We are not here to try and create any great boom in real estate, we want things to remain here on a sound basis, a sounder basis after the war than what we had prior to the war. We are very earnest about it, and we hope you will cooperate with us.

Of course you will find in your investigation that some of these cases of profiteering, and when you begin to analyze them you will find it is simply awkwardness on the part of the agent or landlord in trying to regain possession of his property. So many of these things have come to my attention as president of the organization that I have made it my business to investigate, and in many instances it is the owner's effort to get possession. I will tell you how many of them occur. Well, the owner or the agent, who is not skilled in his profession, will want possession, and he does not go to the tenant and say, "I want possession," as he should do, but he first starts out and says, "I will double your rent," or he says he will advance it, so as to scare the tenant out; and the tenant gets mad, and you can not blame him. Then the tenant goes to the agent or the landlord and says, "I won't pay that; it is too great." Then the agent or the landlord says, "I will give you a 30-day notice," and serves him with such a notice. That makes the tenant mad the second time. Then the tenant investigates the conditions in the city, goes around and looks elsewhere, and then probably comes back and says, "What you ask is too high, but I will pay it." And the landlord or the agent says, "Well, what I really want is possession of the property, I don't want anybody in there for fear that this Johnson bill will become a law and it will become a lien on my property."

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Senator SHERMAN. Is that the case cited in the press reports of Gen. Black, of the Board of Engineers, down on I Street, some place, owned by some person named McGee?

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Mr. FAIRFAX. Yes: I am glad you touched on that.

Mr. WARREN. No. 1730 I Street...

Mr. FAIRFAX. Yes. That was a case of the awkwardness of the owner in trying to regain possession of the property, to offer it for sale. It had been on the market for sale. He had been trying to sell it a year or two back and had not been able to do so, and there is a better market for property now, naturally, and he undertook to put his property in a shape where he could dispose of it, and he unfortunately made a demand upon the tenant for a great advance in the rent. In that notice, which I read, it stipulated that he would not be given a lease at that price because they wanted to sell it, and they would let him remain as a monthly tenant. In the same letter they said the property was for sale and they would be glad to sell it to Mrs. Black. Now, to demonstrate that the owner was really reaching out to get possession in this case, five days after that notice was sent out that property was sold to a person who had not seen it within three days after the notice was sent, and the notice was not sent for the purpose of getting possession for the final buyer.

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Senator SHERMAN. So the rent raising was merely a subterfuge? Mr. FAIRFAX. That is all.'

That is why I suggest you invite the parties to these transactions to come before you and hear them, and get to the bottom of the facts. You will find that there is more smoke than fire.

Senator DILLINGHAM. Do you know whether Mrs. Black had contemplated moving or whether she had made any arrangements for moving before that notice was given?

Mr. FAIRFAX. No; I could not answer that.

Senator DILLINGHAM. I heard a rumor to that effect and wanted to know whether it was well founded.

Senator SHERMAN. Do you think it is practical to recognize in any law this so-called equitable right of a good tenant that has been in a long time, or is that simply a matter of good business and fair treatment?

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Mr. FAIRFAX. I think the landlords of Washington naturally expect to retain ownership of properties either by legal title or by lien

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Senator SHERMAN. What I am getting at is, Do you think we can recognize that by any law, so that a tenant that has been in for a year or more will be recognized as having legal rights to renew the lease as against the world?...

Mr. FAIRFAX. No, sir; you could not in this or any other community. I think that would be a very dangerous precedent, and a very bad step to take in any community. It would absolutely take away from the owner of the property his right to ownership, and there would be no inducement for a tenant to own a piece of property. It would destroy the ambition of a tenant to become the owner, or he may be living in a more expensive place and he may want to take possession of a cheaper house that he owns, and perhaps rent his larger house to a person better able to support that establishment than he is.

Senator SHERMAN. Then those so-called equitable rights, whatever they are, can not be regulated by law; that is a matter of business?

Mr. FAIRFAX. That is absolutely a matter of business.
Senator SHERMAN. And a voluntary agreement?
Mr. FAIRFAX. Yes.

STATEMENT OF MR. J. L. CARR.

Senator HOLLIS. Where do you live?

Mr. CARR. I am president of the Petworth Citizens' Association. I want to call your attention. Senators, to the paragraph which refers to property which has never been rented before, particularly to houses and rooms.

In the first place, the bill is to take effect on the 1st of April. There is nothing definite in the bill as to the value of furniture in the house. Consequently, any one that is now renting rooms or renting furnished houses does not know how much to charge. For instance, take furniture. If you pay $1,000 for it. in a little while it may be worth $600. Sometimes they value furniture at its selling value.

The bill goes into effect April 1, so that any time after April 1 they may or may not be subjected to the penalties of the bill. That is only a few days ahead of us-April 1-and thousands of people have roomers and do not know whether they are to become subject to the penalties of the bill or not. Another thing is discrimination. against property that has been rented before as compared to property that is rented for the first time. Take a room, for instance. Before the date of this bill I think $15 a month was not an exorbitant price for a room, but as we have figured this bill out among ourselves we do not see how we could ask over $9 or $10 for one room;

that would be the limit. But if you rented one before for $15 you could rent it for $15 plus 10 per cent. So you see there is a discrimination in favor of one who has made a business of renting houses as against a person who has not rented rooms before this time. Of course the same applies to houses.

There is another thing I want to call attention to. At page 4 it seems that when the bill went through the House they added something in regard to food. I have read that over half a dozen times, and it seems to me there is an attempt there to say that you shall only charge the actual cost of the food in the case of giving board to a roomer. I don't know whether you look upon it that way or not, but it seems to be it is at least ambiguous.

(Reading from the bill at page 4:)

In cases where a charge is made for the use of real estate furnished or unfurnished and for food, meals, or board, it should be the duty of the assessor of the District of Columbia to ascertain what proportion of the total increase in the charge for the combined accommodations furnished to any person is due to the increased cost of materials and labor utilized in furnishing such accommodations, and the remainder of the increase in the charge made to any person for the combined accommodations furnished him shall be regarded for the purposes of this act as increase in the income from the real estate used by such person.

I have not yet been able to ascertain just what that means, but it might be construed to mean that you could only charge the actual cost of food you furnished.

Reverting once more to the value of the property, it would seem to me that it would be very unfair to make a penalty fall due prior to the special assessment which the bill provides for; in other words, a man does not know what to charge, or a woman that is renting rooms, until the assessment is made, and the bill provides for a special assessment.

STATEMENT OF MR. BATES WARREN.

Mr. WARREN. I know that Mr. Fairfax may differ with me, but I think he made a mistake when he said that there is no lien on personal property. We want to be sure to make no statements that are not correct in regard to this bill. There is a lien on personal property. The point is that there is no tax levied on any income from personal property or furniture. I was speaking to him about it the other day and I suppose he got that idea from what I said, but my idea was not that there was no lien levied upon personal property, but the tax from real estate or the income from real estate is levied upon both real estate and personal property.

Let me read the language of the bill. In section 2:

In addition to other taxes imposed by law there is hereby levied and shall be assessed, collected, and paid to the District of Columbia an annual tax of 100 per cent upon so much of the income from real estate

That is the only place in the whole bill it says a tax is levied; and it just says from real estate. Therefore it leaves it in the air as to whether you are creating a tax there on the excessive income that you receive from your personal property. In other words, I say that the only tax levied is that on the excess income from real estate and not on any personal property.

Senator HOLLIS. I think that would be fairly construed to include the furniture if it was all mentioned together. I think furniture of that kind would go with the real estate. I am not sure of that, but that would be my guess on it. That ought to be made clear.

Mr. WARREN. Another thing I want to call attention to. In all I have said during the hearing I have been laying a great deal of stress on the unfairness of this bill toward property completed and rented to September 30, 1916; and while Mr. Wardman is here I want to say this: That on every building he now rents in the District of Columbia which was completed and rented since September 30, 1916, he will have to reduce his rent at least 15 per cent to come within this law. Am I right or wrong? You will have to voluntarily reduce them because there is that difference. Rents on a building that cost him $300,000, I dare say, amount to $45.000. He will have to reduce them to $30,000 under this bill. So you will see how unjust that is.

That is the suggestion I make. If you undertake to perfect the Johnson bill at all, it should refer to rent up to the time when all these new buildings were completed, and I think either October 1, 1917, or the 1st of January, 1918, would be much fairer and would eliminate a great deal of injustice.

Mr. BALDWIN. One bit of information which may be of interest to the committee is this. The question was asked as to what had been done in England. I have not the information as to the provisions in regard to the rent of houses, but there was a billeting act, so called, passed on the 24th of May, 1917, of which the general provisions are that where employees need accommodations and it applies to industrial workers more, but it applies in the same general way to the Government employees coming in here, with whom we are concerned the minister of munitions shall appoint a separate billeting board, and any department that needs accommodation can apply to them, and they have a right to constitute a local billeting board, using some other local agency or some agency that they themselves set up, and then it goes on to say that they shall have the right to pick out accommodations and provide for fixing the prices at which these people shall be billeted, and all that. It seems to be fairly drawn. It has to be carried out by moneys appropriated by Parliament. But what I want to call your attention to is that they do not fix the prices based on what the prices were in the past, but they put it into the hands of a body with discretion and judgment, that shall regulate it, and so far as this situation here is concerned, it would seem much more equitable and legal and produce better results to trust it to some body, some man or body of men, appointed by the President, who would have the power to consider all the circumstances, and fix it right, than to fix it by an ironclad rule that nobody could depart from based on something in the past that might or might not be right. This bill seems to put a good many powers into the hands of the assessor of the District of Columbia. It would be his duty to determine the cost and what the increased cost is, and in fact, he would have an enormous amount of work, and it is the same kind of work that would be done by an administrator.

I thought you might like to know what they did in England; that they did not fix it there upon any ironclad basis of the past, but put it

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