I would presume that that might be considered broad enough to cover that.

Senator DILLINGHAM. No; I do not think there is any direct declaration to that effect. There is in the substitute bill.

Mr. BROWNE. I will say, it should be in the preamble, and be made just as strong as possible. There is no particular hardship to the landlord or to any particular interests to have an occupying tenant. given preferential continuation in the occupation of the property. It is much to the public interest that he should have the right; otherwise, you are going to have a terrific confusion on the expiration of leases, with people being shifted around from place to place, and with loss of time and serious injury to the welfare and the health of Government employees.

Let me call your attention to the fact that the last census bulletin-although there is some dispute about that says the death rate in the District of Columbia is to-day the highest of any important city in the United States; and that notwithstanding the fact that his now incoming populaion in Washington is adult, which should have a tendency to lower the death rate.

Senator DILLINGHAM. Has not that been disputed by the health officer here?

Mr. BROWNE. Yes; it has been disputed, but there is a high death rate in the District of Columbia. For a city situated as it is, it has a much higher death rate than it should have. The figures are not entirely sound, but they are approximately correct.

Now, since the increase in the rented value of property in the District of Columbia is not due to the exertion of the owner, but to the increase in population due to the war needs and to the general increase of prices, those increases can be legitimately taken possession of in the form of a tax. Mr. Johnson's bill emphasizes and drives home the fact that he is penalizing the owner of the property. One is continually impressed with that thought, that he is penalizing by fine rather than with the thought that there is an increase which the Government has a right to receive in the form of a tax.

Senator DILLINGHAM. He thinks it is based on the fact that the power to tax carries with it the power to destroy, and he thinks that the present situation of the Government justifies it in destroying.

Mr. BROWNE. I would not say destroying, but going to extreme measures to prevent the raising of rents. He imposes a penalty of 100 per cent on a raise in rent, in order to check it.

The British Government, under the famous Lloyd George budget, provided for a tax of 20 per cent on unearned increments in Great Britain. It was the first time in centuries that Great Britain has shown a disposition to claim in the form of rents the fee to land which rests in the Sovereign.

The German Government in 1911 also sought to take a share of the unearned increment.

The great increase in the value of property in the District of Columbia is going to be in business property. The Government could very well modify Mr. Johnson's suggestion, if they did not care to go that far, to take in the form of taxation business rental profits, a large element of which is shown to be in the increase in the value of land. I think that the Government could do it justly. It is following the modern advanced idea as applied to taxation. The

present weakness of the Johnson bill is that it provides no means of checking the secret agreements between the lessor and the lessee, the landlord and the renter, to charge an excessive amount. The exposes every person who occupies a piece of property to the subterranean agencies that are entirely outside his control; and that, unless put down, is going to create a most dangerous situation. If A can go and bid for B's quarters, B has got to go and bid for some one else's quarters and get him out, and you are going to have a terrible condition from leaving that loophole unchecked. These are simply suggestions.

I have a note on the British moratorium, but you are going to get that in official form.

In France I fail to find that they have done anything except to give a delay of 90 days on rentals, on scales running from 1,000 francs rental in Paris down to 100 francs in some of the rural communities. I have not learned whether in France they have placed a check on the raising of rents as they have in England. In England they passed a drastic law preventing the raising of rents over the date of August, 1914. There is no increase permitted except where there have been improvements to property, and they all have to go through certain rules and regulations that have been prepared by the chancellor to determine what the increase should be. It is much more drastice a provision than we have offered here.

Senator HOLLIS. Has that resulted in an actual decrease of the return to the renter, because fuel and other things cost more to-day? Mr. BROWNE. Yes; in England they got an actual decrease of net rentals, and I know of no reason under the circumstances why the American landlord should be an exception and profit heavily on the Government's needs.

One more point, and I have finished. The unimproved areas, either of the District of Columbia or of the United States, pay not 1 cent toward the support of the Federal Government in its straits. There are over 100,000,000 acres of coal lands in the United States, of which a very small portion only are opened and developed. Those coal areas would yield, if the present Mexican mining laws were applied, by the Federal Government, over $400,000,000 a year. We can not do that under our Constitution. We can not have a direct taxation; but I wish to direct your minds to the fact that here is an extraordinary condition which we have in this country, of these great unimproved areas, these great idle holdings, which rest as a dead hand, and which, in any increase in value of land, absorb it all and pay not one red cent for the support of the Government.

Over one-half of the privately owned area of the District of Columbia is unimproved. It pays à tax into the District treasury which is practically equal, half and half, with an appropriation from the Federal Government. The invested capital in that unimproved area pays no taxes at all except so far as the property has increased in value and the assessment has been increased. In that case the holder has benefited; but the actual invested capital never pays a tax, because the owner buys the property subject to the tax which was current when he bought it and by which the price was affected. In the down-town areas-not in the suburbs, at present-there is every indication of an extraordinary advance in the selling value and the

rental value of business property, an extraordinary advance, right now. Leases that fall in are being renewed at great advances; and that is true of short-time leases as well as of long-time leases. Simply because of the great inrush of population, it is possible for the users of the property to be mulcted of that much rent; and that all comes back on the consuming public. Somewhere the Government is entitled to the last vestige of protection that it wants. You might just as well put your Army in the field without providing the soldiers with food and clothing as to put an army of employees into the Government departments here in Washington without seeing to it that their health is protected, that they are given a proper opportunity for housing and for food, and that the little incomes which they get here, which may seem large when we get back to our home towns, are adequate for their needs, instead of being pulled away from them by local conditions as fast as the Government can pay the money to them and as fast as or faster than the Government can increase their salaries.

I thank you for your kindness.

Senator DILLINGHAM. One thing before you close: I do not think I understood what you said in answer to the chairman's inquiry at the opening, regarding your employment by the District of Columbia Committee of the House of Representatives.

Mr. BROWNE. I was employed as an expert on assessment and taxation.

Senator DILLINGHAM. When was that?

Mr. BROWNE. In 1912; I think that was the period of that employment, and the results were embodied largely in the House hearings, in what is commonly known as the George report.

Senator DILLINGHAM. What I wanted to get at was whether you had been recently employed.

Mr. BROWNE. No; not for years.

Senator DILLINGHAM. I was conversant with the investigation that was made at that time.

Mr. BROWNE. That was one of the rare occasions on which I have taken pay for Government service.

Senator HOLLIS (in the chair). You have put in the record the fact that during certain periods antedating the war, I think, or at least antedating our entrance into the war, the net return, after charging off all expenses and depreciation, was approximately 4 per cent on rentals.

Mr. BROWNE. Those were the figures put into the record by Mr. Bradley in the half-and-half investigation.

Senator HOLLIS. Those are the figures that prevail throughout the East. That has been my observation. Now, of course, that represents a good many years with a good deal of leanness. What do you say would be a fair net return on invested capital after paying all charges and depreciation and taxes and everything of the sort?

Mr. BROWNE. Every element charged off and the net return. Now, let me make one statement, Senator, and then I can answer your question more to your own satisfaction, and it will certainly be clearer to myself.

Assuming that you have charged off a properly included depreciation in improvements or, in certain areas, depreciation in the value

of the ground, 5 per cent is an adequate return under normal conditions. One per cent above the return on a Government loan is always an adequate return on such an investment.

Senator HOLLIS. Now, if we proceed to do something effective, it will be justified for the same reasons that justify us in interfering with capital invested in railroads; that is, to protect the consumer, we will limit rentals in the District of Columbia just as we limit the charges of a shipper on railroads. We have been trying for years to get a physical valuation of railroads, so as to have a basis, and we have got a very small part of it done.

In the existing war-revenue act we have undertaken to find the capital invested. It is a big task. It may be we shall have to try to find that in this District. If we should find the capital invested and, considering everything, allow a certain rate of net return-5 or 6 or 7 or 8 per cent-then whoever administered this law must. investigate the increased expense, repairs, janitor service, fuel, and so on, and allow that in full in order to find what rental will produce a standard return that might be allowed.

Mr. BROWNE. On that class of property.

Senator HOLLIS. Do you see any other satisfactory way to do this job?

Mr. BROWNE. That is the first thing which has to be done. There are certain other things which ought to be done. Here as an evil which has arisen in the District of Columbia which is, like every other economic evil, the result of prior evils. I would in lieu, and largely as a substitute, for any increase allowed in rent abolish the taxation on improvements in the District of Columbia. That would be immediately a return to the owners of that property proportioned on the value of their improvements. Let me show you exactly what that leads to. Let us take the small type of house. Intrisically the improvements are worth four times the value of the ground. The moment you get into the business area the improvements are almost negligible in value and the ground carries all the value.

Now, you have removed one of the main obstacles to building in the District of Columbia, which has killed the building business here it is at a standstill; it is needless to say that they have got a lot of plans depending on the action of Congress to-day, and they have got a lot of material to-day, but they could not build to any extent if they wanted to; building is dead as a door nail; but the moment the thing opens up, and whether the war goes on or not, you are going to be able to get building material, and then money will go into building.

What is the next thing needed? Increase your taxation on your land values sufficiently to stop the mere idle speculative holding or purchasing of land. In New York they have a $2 rate on a pretty full assessment, and in New York I am informed by entirely competent authorities that the speculative purchasing of land is dead as a door nail; and it ought to be so here in the District of Columbia. Congress ought not to permit speculation in land here. It is a blackmailing of the future. We all have to live on land, and the final utility of land is its use, and the man who stands between its use and the public is simply blackmailing the future. He proposes to take and hold it. If he had not existed, the land would have been

there. Franklin and Jefferson saw that. The whole Russian situation swung on the land situation. The whole European conflict, fundamentally, is on the land question, and we are confronted with it right here in the District of Columbia.

Senator HOLLIS. This is entering upon too broad a subject.

Mr. BROWNE. I had not any intention of going so far, Mr. Chair

man.

STATEMENT OF MR. F. S. HIGHT, REPRESENTING THE WASHINGTON HOTEL MEN'S ASSOCIATION.

Senator HOLLIS. You are connected with the Willard Hotel?
Mr. HIGHT. Yes.

Senator HOLLIS. In what connection?

Mr. HIGHT. I am president of the company.

Senator HOLLIS. And manager?

Mr. HIGHT. Yes; and representing here the Washington Hotel Men's Association.

Senator HOLLIS. Now, will you proceed in your own way?

Mr. HIGHT. We respectfully submit that in our opinion it is manifestly unfair to include hotels in this bill.

The proposition in the first place was intended to regulate the rental price of a bare dwelling house, and between the rental price of an empty building and the rental price of a hotel room with its necessary service, there can be no comparison.

In the old inn-keeping days it was customary to make a charge for a room and then to make charges for various extras such as lights, fires, and innumerable other items, making a bill a yard long. In more recent days, the rental price of a room has been made to include not only the use of the room but all of the service which goes with it, viz, care of the room by chambermaids, hall-boy service, telephone service, stationery, ice water, electric fans in warm weather, a large office force to handle mail, telegrams, packages, and cards for callers, maintenance of music, public parlors and writing rooms, weekly and monthly magazines in reading rooms, palms, ferns, etc.

Complete service of this nature is not a matter of choice with us but must be maintained to meet the demands of a discriminating public who expect to find everything of this nature provided in hotels which they patronize in the National Capital as well as in other cities of the country.

What the reason may be for the increase in the rental price of an empty building it is not for me to say, but the reason for the increase in price of rooms and service in a hotel are plainly apparent, in view of the common knowledge as to the increase in the cost of all materials and labors making up this service. For instance, coal is costing 100 per cent more than it formerly did. A recent quotation on bath towels, which are made of cotton produced in this country, is $18 per dozen for towels which formerly cost $7.50. Not desiring to weary the committee with a mass of figures, I mention these two items which come first to my mind, but can produce innumerable more if desired.

Labor is increasing continually, as you well know, and owing to the demand for employees for Government work, in offices, construc