Representative JOHNSON. I would say 75 per cent.

Senator POMERENE. Seventy-five per cent. What increase has there been in the cost of coal?

Representative JOHNSON. The increase in the cost of anthracitecoal has been something like 20 to 25 per cent, and in the cost of soft coal I would say it has been about 50 per cent, although there have been times-and when I say times I mean days or weeks-when it would go to 100 per cent. Now, then, remember that the bill provides that the tenant is to pay the landlord the actual cost of those things in addition to the 10 per cent increase.

Mr. BATES WARREN. Oh, no; that only refers to property that came into the market after September, 1916-the expenses. It does not refer to the increase.

Representative JOHNSON. These bills are printed in such fine type in the record of the hearings, Senator, that I have to look closely for their provisions.

Senator DILLINGHAM. Give us the section.

Representative JOHNSON (examining original print of bill). It is on page 3 of the bill.

Senator DILLINGHAM. What is the section?

Representative JOHNSON. It is section 2, on page 3, beginning at line 3. It reads as follows:

If no such income was charged

That refers to the entire income

If no such income was charged or received during said period of twelve months, then the deduction from such gross income of each taxable year shall be an amount equal to ten per centum of the value of the property, including furniture, if any, producing the income as determined by the assessor of the District of Columbia for the purposes of this act, and at the same rate for any greater or less period of time: Provided, however, That in cases of such lastnamed property where the landlord furnishes heat, light, or elevator service, an additional deduction of an amount equal to the actual cost to the landlord of the heat, light, and elevator service so furnished shall be allowed.

Senator POMERENE. No; but that only applies to properties which were not rented, and from which there was no income.

Representative JOHNSON. No; the very beginning of the sentence contradicts that view, Senator. The very beginning of that paragraph says:

If no such income was charged or received during said period of 12 months.. Senator POMERENE. That is right. In the earlier part of the section you are providing for those properties from which there was a rental or income.

Representative JOHNSON. Yes. Let me interrupt you to say that in that rental the charge for service was made, because when they rented an apartment

Senator POMERENE. Yes: I understand that. That charge for service was made.

Representative JOHNSON. Yes.

Senator POMERENE. But you are only allowing an increase of 10 per cent on the gross rental?

Representative JOHNSON. Yes.

Senator POMERENE. You have said that wages have increased from: 60 to 70 per cent.

Representative JOHNSON. That is my guess at it.

Senator POMERENE. And that materials have increased probably 70 per cent.

Representative JOHNSON. That is my guess.

Senator POMERENE. And anthracite coal 25 per cent, and soft coal from 50 per cent to even 100 per cent in certain instances. Representative JOHNSON. Yes.

Senator POMERENE. You do not take those into consideration, and the only provision you have got in that bill to take care of those increased charges would be that extra 10 per cent.

Representative JOHNSON. Purposely there is in the bill no provision to take care of the increased charges for the items which you have mentioned, where the property was rented prior to October 1, 1916.

Senator POMERENE. Yes.

Representative JOHNSON. Because in the original leases they charged for that service, and the bill allows them an increase of 10 per cent on the original rental charge, including the charge made for services. But I believe, in fixing a per cent increase, that an amount sufficient to cover the increased cost of material and labor should be made.

Now, to go a little further, it is a well-established rule, I think, throughout the entire United States, that 10 per cent on the value of old property covers insurance, taxes, repairs, and a return on the money varying between 4 and 6 per cent. The properties here are not the kind that are subjected to much repair, or of the kind that are subject to a high rate of insurance. Until recently you had a very low rate of insurance. In the last year or two it has been raised, but still it is claimed to be low in comparison to the rate in some other places. The buildings here that are now bringing the rents, many of them, are fireproof buildings, and they do not require much repair or insurance.

Senator POMERENE. I do not know. What you say is true as to part of these properties, but not true as to all of them.

Representative JOHNSON. No point we make is true as to all of

them.

Senator POMERENE. No. Now, it seems to me that, assuming you have the right plan here, you do not have it flexible enough to take care of all these diversified situations.

Representative JOHNSON. I hope you will be able to write a plan that will take care of all of them.

Senator PоMERENE. I do not know whether I will or not.
Representative JOHNSON. I hope you will be.

Senator POMERENE. I say I do not know whether I will be.

Representative JOHNSON. I do not know, either, but I am expressing the hope.

Senator POMERENE. I think this matter has been giving me about as much trouble as any other.

Representative JOHNSON. It is trouble enough.

Senator POMERENE. But here is the situation: I agree with you that there is profiteering here, and I would like to see it remedied; but there ought to be some remedy which will not defeat the main

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purpose here, which is to get housing here for the people who must come here, at reasonable rentals.

Representative JOHNSON. I agree with you as long as you use the words "reasonable rentals."

Senator POMERENE. Let us see what this situation is. You adopt here as the basis certain properties which were rented in the year 1916-for the year ending September 30, 1916. I think it may be fairly said that from 50 per cent to two-thirds of the properties in the city were rented at that time, during that period. They were rented at given rates; they may have been reasonable or may have been unreasonable. Since that time we seem to agree that there has been an increase in wages of from 60 to 70 per cent, in materials for repairs an increase of 70 to 75 per cent, and an increase in fuel of from 25 per cent to 100 per cent. Now, with this you only allow an increase of 10 per cent upon these properties, whether that rental has been reasonable or unreasonable, and then out of that 10 per cent of increase in the gross rentals the landlord is expected to pay an increase in wage of 60 to 70 per cent, an increase in cost of materials for repairs of from 70 to 75 per cent, and an increase in fuel charges, as has been indicated, of from 25 to 100 per cent. I would like your judgment as to how much of a margin there is going to be with all those increased charges.

Representative JOHNSON. In my judgment, if you will take the average apartment house or hotel and apply the increased wages and material to it, you will find it not so important as at first glance it seems to be; or, in other words, it will not bear the proportion to the total gross income that your question implies it would bear.

You must bear in mind another thing, Senator, that in 1916 the very houses to which this rule is made applicable and to which you have just referred, were only one-half or two-thirds full. Now they are three-thirds full, and the janitor service and that kind of service applies to houses three-thirds full instead of to the same house when it is two-thirds full. The manager of the Powhatan Hotal stated that they had to hire the same help for their hotel when it was half full as when it was all full.

I wish to be clearly understood about the per cent. I am not tied down to any particular per cent. I am as open to reason and to argument upon that subject as you are. But some per cent to start with, in my judgment, has to be named, and it has been named, and it is that per cent that passed the House by 121 majority. Therefore it has at least the right to be considered as being somewhere near the proper per cent. If it is not, I will join you in ascertaining the correct per cent and then writing it into a bill and helping you pass it. Senator POMERENE. I would like to have some specific information, if you can give it, upon this point.

Representative JOHNSON. I occupy the same attitude, Senator, that you do. You are acting in a legislative capacity, and so am I. I have already said that I have no personal grievance; that I am here just simply for the public good; and you have no more right to ask me to furnish you conclusive proof than I have to ask you. Senator POMERENE. I am not demanding it of you if you have not got it.

Representative JOHNSON. I understand; you are not demanding it, but you put the question to me that way.

Senator POMERENE. Just exactly the way I would put the question to anybody who would testify on that subject, because we are expected here

Representative JOHNSON. I was asked to testify.
Senator PоMERENE. How is that?

Representative JOHNSON. I was asked to testify.

Senator POMERENE. I do not care anything about that. It is perfectly proper that you should do so, and we are glad to have the benefit of your views, and I think I have profited by them in certain particulars, but this is a serious problem to me.

Representative JOHNSON. It is a very serious one to everybody. Senator POMERENE. And I confess that my indignation has been aroused by some of these stories which have been told about profiteering, and I have not any doubt that there is a vast deal of truth in them. But now, on the other hand, if we are going to get to the point, if we leave a margin here that is too narrow——

Representative JOHNSON. Then I will help you to correct it. We are both acting from the same standpoint, namely, a legislative standpoint.

Senator POMERENE. Well, that is exactly true; but without knowing specifically about the portion of these gross rents which is eaten up by wage and material costs and maintenance and depreciation and things of that sort, I do not know, I am afraid this limitation that you have placed on here is too extreme. That is the way it appears to me now.

Representative JOHNSON. I believe when you come to satisfy yourself that it is not big enough, you can use upon my mind the same arguments that you use upon yours and convince me, and if so, I will be glad indeed to cooperate with you.

Senator POMERENE. That is all.

Mr. WARDMAN. Mr. Chairman, could I ask Mr. Johnson a question?

Senator POMERENE. Just a moment, here. have you any questions?

Senator Saulsbury,

Senator SAULSBURY. I have nothing further. I have no questions. Mr. MYRON M. PARKER. Mr. Chairman, would it be in order for me to occupy a moment's time in presenting a case that Mr. Johnson is more or less familiar with?

Senator HOLLIS. I do not want to go on any longer, Mr. Chairman. I think we have gone on long enough to-day. That is the way I feel about it.

Senator DILLINGHAM. What you want to say will take only a moment?

Mr. PARKER. Yes.

Senator DILLINGHAM. I had it in mind to ask Mr. Johnson about that case Col. Parker refers to. It already appears in the evidence, and I would like to have Mr. Johnson's view as to the operation of the proposed law on that case. Col. Parker spoke about the case in his testimony. It is the Atlantic Building property. I presume you read that testimony?

Representative JOHNSON. Yes; and I have a communication from the gentleman. Upon seeing Col. Parker now I remember that I have met him before.

I received a communication from him relative to a piece of office property, and I also received a communication from a woman relative to another piece of Col. Parker's property. Now, which is it he desires to ask me about?

Senator DILLINGHAM. I assume that it is the Atlantic Building that he testified about when before the committee.

Mr. PARKER. Yes; it is the Atlantic Building. Without going into the details of that letter, since the Senator is familiar with it, also Mr. Johnson, I will state in a word that the operation of the lease that we unfortunately entered into with the Department of Agriculture for the use of the building by the Bureau of Forestry reduced the income in 1902 from $37,500 to $18,000. Three years ago the Government lease expired, and at that time everything was absolutely flat in Washington. The Department of Agriculture, taking advantage of that, served notice on me as president of the Atlantic Building Co. that unless the rental was reduced to $18,000 they would move out. There was nothing else to do except to make that lease or to have an empty building at that time. Under the operation of that lease, for these three years we have been able to pay less than 1 per cent, not counting out depreciation, and this last year we will lose $2,000 cash. The shareholders are the heirs of an estate, and they are dependent on the income from that building, and it struck me they were entitled to as much consideration as a clerk that might come here and get $1,200 or more a year. Under the House bill we could add only 10 per cent, which would deprive all the shareholders of the Atlantic Building Co. of any income, and not only deprive them of all income but compel them to make an assessment upon themselves every year so long as the war lasted, be it 1 or 10 years. Representative JOHNSON. I do not know that piece of property, Senator Dillingham

Mr. PARKER. It is where the Bureau of Forestry is.

Representative JOHNSON (continuing). But I have been told that it was an old piece of property, and that the people who were in it abandoned it and went to newer office buildings, and that the rental of it decreased because of that.

Mr. PARKER. The information that the Member has got is absolutely false. The condition that we made with the Department of Agriculture was-and it was very foolishly made that we should give them further space as required. At the time they came there they occupied only three or four rooms in the Department of Agriculture Building, and they did not have 50 clerks.

Senator POMERENE. Let me suggest that we had your statement about this, and I accept your statement of facts about it, so far as I am personally concerned, and we understand that rumors can be afloat, etc.

What we are interested in here is the formulation of some rule which will enable us to treat all landlords and tenants equitably, and I do not know that we are interested in the specific dollars and cents that any particular property may bring. I do not know that that is going to help us very much. Unless it is desired to present some statement along this line, that is all. For one member of the committee, I would like to have a statement by some of these property holders here showing what their rentals were during 1916, and