(The draft of a proposed substitute bill referred to by Mr. Warren was then read, in part. The entire bill is as follows:)

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That by reason of the existence of a state of war it is essential to the national security and defense and for the successful prosecution of the war to establish governmental control and assure adequate regulation of rents of real estate in the District of Columbia during the war. For such purpose the instrumentalities, means, methods, powers, authorities, duties, obligations, and prohibitions hereinafter set forth are created, established, conferred, and prescribed. The President is authorized to make such regulations and to issue such orders as are essential effectively to carry out the provisions of this act.

SEC. 2. That in the interpretation and construction of this act the following rules shall be observed, namely:

First. The term "real estate" as herein used shall be construed to include lands, buildings, parts of buildings, houses, dwellings, apartments, rooms, suite of rooms, and every improvement and structure whatsoever, and every portion and part thereof, situated and being in the District of Columbia, and any and all estates and rights therein or thereto.

Second. The word "party" or "person" shall include individuals, legal representatives of individuals, partnerships, joint-stock companies, associations, corporations, bodies corporate, and all representatives, agencies, bodies, and instrumentalities acting for or in behalf of or employed or used by any and all foreign Governments not at war with the United States, unless such construction would be unreasonable, and the reference to any officer shall include any person authorized by law, or by any regulation made in accordance with this act, to perform the duties of his office.

Third. Words importing the singular number shall be held to include the plural, and vice versa, except where such construction would be unreasonable.

Fourth. Words importing the masculine gender shall be held to include all genders, except where such construction would be unreasonable.

Fifth. The term "rent" or "rent from real estate" shall include any and all amounts received for the daily, weekly, monthly, yearly, or other periodical or term use or occupancy of real estate, or any part or multiple of any such periods of time. SEC. 3. That the President is hereby authorized to appoint a Rent Administrator, who shall be a citizen of the United States and resident of the District of Columbia, who shall have full power and authority, under the direction of the President, to revise and change and to fix, upon request of any party or person in interest, the amount of rent which can be lawfully charged and received for the use and occupation of any real estate in the District of Columbia, which may hereafter be rented, leased, subleased, transferred by assignments of lease or rental contract, or of which a tenancy may be created by any new contracts, or which may be used or occupied by any party or persons; and any and all orders of the Rent Administrator revising and changing rents shall take effect as of the date of the application to the Rent Administrator: Provided, That any party in interest may prosecute an appeal from any order of the Rent Administrator to the Board of Rent Appeals created by this Act, under and in accordance with such rules and regulations as may be made respecting appeals; and until such appeal shall be decided by the Board of Rent Appeals the order of the Rent Administrator shall be superseded by the appeal.

SEC. 4. That from and after the date of promulgation of any order of the Rent Administrator fixing an amount of rent in any case, it shall be unlawful and be a violation of this Act for any person to contract for or receive a greater rent than the amount so fixed; subject, however, to the right of appeal hereinbefore created: Provided, however, That in any case in which an appeal is taken to the Board of Rent Appeals, it shall be unlawful and a violation of this Act for any person to contract for or receive any greater rent only after the order of the Board of Rent Appeals fixing the amount of the rent.

SEC. 5. That the Rent Administrator is authorized, under the direction of the President, to make and promulgate rules and regulations not inconsistent with this Act for carrying out the provisions hereof.

SEC. 6. That the President is hereby authorized to appoint a Board of Rent Appeals consisting of three persons, who shall be citizens of the United States and at least two of whom shall be residents of the District of Columbia. Said Board of Rent Appeals shall have the power to hear and determine any appeal from any order of the Rent Administrator authorized under section three of this Act, and said Board of Rent Appeals shall have the power, upon consideration of such appeal by its order, to affirm or reverse the order of the Rent Administrator, and in case of reversal thereof to increase or diminish the amount of rent fixed in the order of the Rent Administrator,

and the amount so fixed in the order of the Board of Rent Appeals shall be the amount of rent which can be lawfully charged and received for the use and occupation of the real estate affected thereby until the same shall be upon new facts or other conditions again changed and fixed by order of the Rent Administrator or the Board of Rent Appeals, as the case may be, provided that no such further change shall be made within six months.

SEC. 7. That nothing in this Act shall be construed to hereafter prevent the renting of real estate by the party or person entitled thereto at such price or prices and for such period of time and on such terms as the parties to the contract or agreement of renting shall agree upon: Provided, however, That the amount of rent agreed upon in any and all such leases, contracts, and agreements shall be subject to revision and change by the Rent Administrator, from time to time, upon the application of any party in in

terest.

SEC. 8. That the Rent Administrator and such agents as he may appoint for that purpose shall have power to summon witnesses and require the production of books and documents, and may administer oaths and affirmations to witnesses so summoned and take testimony respecting the matters covered by this Act.

SEC. 9. That any person violating any of the provisions of this Act shall be deemed guilty of a misdemeanor and shall be punished by a fine of not exceeding $1,000 for each offense.

SEC. 10. That if any clause, sentence, paragraph, or part of this Act, shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

SEC. 11. That this Act shall remain in full force and effect until a treaty of peace between the Imperial German Government and the United States shall have been concluded and proclamation thereof shall have been made by the President of the United States.

Amend the title so as to read: “An Act to provide further for the national security and defense by controlling and regulating rents of real estate in the District of Columbia."

Mr. WARREN. We have no objections to appointing three persons, if you want to do that, and doing away with the board of appeals. Any fair way that will create a rule that can be adjusted as times change will suit us, because if we once have a law passed, we never can get it changed. We would not have time to do it.

You will find that the mere passage of a law of this kind will stop this profiteering. Why, the mere introduction of this bill practically stopped the profiteering. It made every owner of real estate in this District a kind of an administrator. No one would think now of attempting to sublet an apartment that I own without coming to me and discussing it with me; and I immediately take this course. if I contemplate permitting such a thing to be done-and in many cases it ought to be permitted. For instance, I have Army officers as tenants in some of my apartments who are ordered out of the city. It would be a hardship on them not to let them sublet their apartments. Certainly it would not do, and it would be most unpatriotic, to close their place and let it stay closed when everybody is desiring space to live in as much as they are. Therefore, I immediately have an appraisement made of the furniture, or we try to get at the value as best we can, and fix on some fair return. It does not satisfy the tenant every time, by any means; but finally we get together, and all hands are satisfied, and there is no profiteering, and in that way the space is provided that otherwise would not be provided.

If the tenant were held down to a 10 per cent increase for his furniture, he would never sublet the apartment. He would close it and go, or he would say: "Here, I will store my furniture, and you can rerent your apartment," which could be done, of course; but it would work a hardship on the people that are sent away, and there

are many of them that are sent away. They are changing homes here; and I say the very passage of this act would bring about such a good influence all over the city that we would have no more trouble, and I dare say you would never hear of it any more.

Senator POMERENE.-Let me make a suggestion in regard to this bill, as you have read it here. I am not committing myself either to the general plan or to the details of it. You are submitting to this administrator absolute control of the fixing of the prices. You are laying down no general rule, no landmarks by which to guide him at all, and I think that in that respect, assuming that it was all right in other respects, it is very seriously defective.

Mr. WARREN. I agree with you.

Senator POMERENE. It would depend entirely upon the ipse dixit of the administrator himself. You have referred here to one Congressman who increased his rent 300 per cent. Suppose a man of that type, who had some inflated idea as to the profit that the real estate men ought to enjoy, were selected as administrator, he would raise these rents skyward. Suppose, on the other hand, it was some man who may be perfectly sincere, but he has some peculiar sort of a viewpoint he may be a single taxer, who does not believe in anything like increased values in the nature of unearned increments or something of that kind-and he would reduce it to a minimum. It seems to me there ought to be some general rule prescribed here which will control him.

Mr. WARREN. A maximum and a minimum?

Senator POMERENE. I do not say that. I am simply trying to point out some of the defects in the bill.

To bring to your mind another illustration, in the investigation of the coal question we ascertained that the coal operators in Ohio said that prior to two years ago they would have been very glad to contract their entire output at a net profit of 10 cents per ton. When some of these operators appeared before our committee, one of them expressed the view that the coal operators generally ought to be entitled to a net profit of at least $1 per ton at the mouth of the mine. Now, those are perhaps extremes; but you can see the difficulty which would appear to us as legislators here.

Mr. WARREN. I think that criticism is a just criticism. It is a thing that has given us more than a little trouble in shaping this bill. Some suggested that we ought to fix a minimum and a maximum, so that he could not go below it or above it, but would have to take the middle ground, as the property return would justify. I say that is a serious problem in connection with submitting your property to the control of either class that you have just mentioned-serious on the one hand for the owner, serious on the other hand for the tenant.

Senator DILLINGHAM. Mr. Warren, there is another class of property that you have not referred to, and that is the real estate that is occupied for mercantile and manufacturing purposes.

Mr. WARREN. Business property; yes.

Senator DILLINGHAM. Business property.

Mr. WARREN. I see no reason on earth for putting it in the bill, because there is no profiteering suggested as to that at all. I see no reason on earth for putting business property in here, but it is classed in.

Now here is what we had to say:

While we suggest a rental administrator, we fully realize the seriousness of such a step, and the precedent set thereby, as well as the almost unlimited abuses to which it could lead. Therefore, unless his powers are carefully limited and prescribed along the lines suggested above, the entire committee feel that the appointment of an administrator would have a more drastic and injurious effect than is commensurate with the good to be done.

Mr. MYRON M. PARKER. What were the "lines suggested above' that you refer to there?

Mr. WARREN. There is something on that line here. You see, he can not interfere with any contract now made under this bill, nor will he interfere except where complaints are made; and we think that the number of complaints will be so small-at least, we believe that will be the case-that he would not have very much to do. But in dealing with a man we ought to be able to have some check on him, and I must say I am not sufficiently familiar with drafting laws for rent administrators to say just what is the best way to do it. It seems to me it is much freer from objection than this other bill is.

Senator HOLLIS. Mr. Warren, as a result of your experience-take it in normal times-will not a furnished apartment rent for approximately twice as much as the same apartment unfurnished?

Mr. WARREN. Oh, yes; easily, and from that up.

Senator HOLLIS. From that up?

Mr. WARREN. Yes. I do not think in any case it would rent for less than that, where they continue to rent in order to get an income. Lots of people just simply lease their apartment for whatever the new tenant will pay, you know. They go away for the summer, and lease it to friends or acquaintances; but where they lease it for the purpose of getting some fair return on their investment, double the rent, or more, is usually charged. As I say, I have a number of instances that occurred away back in 1915 where they increased the rent from 2 to 3 times.

I thank you very much for the hearing.

STATEMENT OF RANDALL H. HAGNER, ESQ.

Mr. HAGNER. Mr. Chairman, may I say a word in regard to the question of the rent administrator?

I think it is a mistake for people who come up here to ask for something not to have one concrete idea for all; but what you said has brought up a question which, in a way, I have argued from the beginning, and about which I think some of the others have felt the same way, namely: If you have a rent administrator, you are giving some man, not knowing what type of man he might be, a terrible amount of authority, and an opportunity to work a hardship against one side or the other.

My theory straight through has been that it is a difficult thing to regulate rentals of furnished property. I think in the case of unfurnished property it is comparatively simple.

I think to go back to the time which Mr. Johnson named is putting it at a very low basis of rentals in the District, because at that time rentals were low and the city was claimed by many to be overbuilt, and generally things were more or less depressed. I think that if you commence, say, on the 1st of last October, as Mr. Warren says, up

to that time there has been no profiteering. I think he said that there had been practically none. I think you could almost make it no profiteering, because prior to that time there had been practically no unusual demand. From that time, in the case of unfurnished rentals, it seems to me a simple thing to control. Everything has increased. Elevator boys that used to get $20 you have to pay $45 and $50 a month now. Coal and everything else has increased, and supplies of all kinds. To hit or agree on a proper basis of increase in unfurnished rentals, I think, is very simple.

My business is very largely renting furnished houses and apartments, and in many cases those of the better class; but personally I do not see how you can put in a flat basis of rental for furnished apartments or houses without detracting and taking away from the present supply, which is inadequate. I mean that you can take one man's house, and it might bring, we will say, $3,000. Another man's house exactly like it, because he has put in electric light, or his furniture is of an entirely different type-he has an expensive piano, and he has Oriental rugs, as compared with cheap carpets-would rent more readily for $4,500 or $5,000; but they have both got the same number of rooms.

To my mind, it is a question that is hard to solve; but in my own business so many people have said to me: "Hagner, withdraw my house, because if we are going to get mixed up in legislation, there is not enough in it to bother about.'

To my mind, legislation is easy with the unfurnished houses-say an allowance of 20 per cent, or whatever the proper basis of increased charges might be; but I do not believe that you can legislate in regard to furnished houses and not take them off the market, judging from the instructions which we have gotten from people, I mean, who do not figure from the profiteering basis, who are not that type of people. Senator POMERENE. Would you limit the legislation to unfurnished property?

Mr. HAGNER. Well, that would apply to me, for instance. I own an apartment house where I rent unfurnished apartments. I am perfectly willing to have that regulated, but I do not know any basis upon which you can regulate furnished houses and not have them taken off the market.

Senator POMERENE. If we were to legislate for unfurnished houses, and they wanted to evade that law, of course all houses would be furnished.

Mr. HAGNER. Well, that may be possible.

Senator POMERENE. So that your business, which is almost exclusively furnished properties, etc., would not be regulated?

Mr. HAGNER. Mine is not almost exclusively furnished houses. Of course, we rent a great many more unfurnished houses and apartments than we do furnished ones; but, I mean, we do rent a great many furnished ones. But would it be feasible to have an administrator to whom appeals could be made in the event that the tenant thought he was being charged an exorbitant rental, but where the administrator would only be called upon in the event of an appeal being made? It is a question, I know, in regard to which it is hard to arrive at something; but we are seeing the result of the proposed legislation already.

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