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SENATE COMMITTEE ON BANKING AND CURRENCY

BURNET R. MAYBANK, South Carolina, Chairman J. W. FULBRIGHT, Arkansas

HOMER E. CAPEHART, Indiana A. WILLIS ROBERTSON, Virginia

JOHN W. BRICKER, Ohio JOHN SPARKMAN, Alabama

IRVING M. IVES, New York J. ALLEN FREAR, JR., Delaware

ANDREW F. SCHOEPPEL, Kansas PAUL H. DOUGLAS, INinois

EVERETT M. DIRKSEN, Illinois
WILLIAM BENTON, Connecticut
BLAIR MOODY, Michigan

4. LEE PARSONS, Clerk
Jos. P. McMURRAY, Staff Director

CONTENTS

Statement of

Page

Du Lawrence, Henry, Jr., National Apartment Owners Association,

Inc., accompanied by R. L. Vanderslice, executive director, Chicago

Residential Hotel Association...

1693

Fitzgerald, Harry, J., accompanied by Calvin K. Snyder, National
Association of Real Estate Boards

1712

Schmidt, William, president, Property Owners Association of America;

president Property Owners League.

1681

Williamson, John, counsel, National Association of Real Estate

Boards

1734

Woods, Tighe E., Director, Office of Rent Stabilization, accompanied
by E. D. Dupree, Jr., General Counsel.--

1803
Letters, statements, exhibits, etc., submitted for the record by-
American Home Owners, Inc., Henry A. Werking, president: State-
ment.

1692
Apartment, Hotel, and Motel Association of California: Statement.. 1778.
Association of Furnished and Unfurnished Units, Inc., Janet I. Myers,
secretary-treasurer: Letter to committee...

1781
California State Apartment Conference:
Telegram to Senator Maybank.

1782
Letter to Senator Maybank.

1782
Statement, William A. Walters, president.

1783
Capehart, Homer E., a United States Senator from the State of
Indiana:
Minutes of Detroit meeting---

1813
Newspaper articles on CIÒ rent survey in Chicago.

1821
Delegation of powers of rent office to people and groups outside
office itself.

1823
Examples of inequitable handling of property owners' petitions by
ORS, Property Owners Association of America, Inc.:
Cases from Philadelphia area.

1828
Cases from Maryland area.

1834

Chicago Residential Hotel Association, R. L. Vanderslice, executive

director:

Summary of statement..

1707

Statement..

1708

Discussion of fair net operating formula

1711

Graham, Thomas B., attorney, New York, N. Y.: Letter to Senator
Lodge

1788
Home and Property Owners' Alliance, Inc., Jack Pinkston: Statement- 1789
Minneapolis Rental Property Owners Association, M. A. Rasmussen,
president: Statement-

1791

National Association of Real Estate Boards:

Statement, Harry J. Fitzgerald..--

1713

Memorandum, Roy Wenzlick, As I See-Ten Years of Rent

Control.--

1714

Legislative history of 20-percent automatic rent increase.

1723

Brief in support of statement on noncompliance by ORS with

20-percent increase provision.

1725

Article, Minneapolis Sunday Tribune, classified ads hint easing of

housing lack

1741

Statement, Calvin K, Snyder...

1748

Norfolk Property Owners Association: Statement and exhibits.. 1793

Office of Rent Stabilization:

Statement on S. 2594...

1799

Statement on 2645..

1799

Form-Application for percentage rent increase.

1804

Statement of —Continued
Office of Rent Stabilization--Continued

Appointment of rent advisory board members in Indiana -

Minutes of Detroit meeting -

Court disposition of rent cases July 25, 1951, through January

25, 1952

Memorandum on position of ORS with reference to CIO survey

in Chicago

Memorandum of Philadelphia County Rent Advisory Board on

Property Owners Association of Philadelphia

Budget, ORS, fiscal year 1952.-

Actual and estimated employment, January 1, 1952_

Amount allocated for travel, fiscal year 1952

Employees who travel on blanket or specific trip authorizations

List of defense-rental areas under control, March 26, 1952

Memorandum on Dallas meeting --

Analysis of rent control provisions of Public Law 96.

Rent advisory board members in selected cities.

Memorandum on situation in Norfolk and ('olorado Springs

Fifty-four defense areas recontrolled or controlled for first time

Twenty-four areas under limited control on July 31, 1951, which

have since been enlarged by "critical area” designations

Decontrol summary -

Criticisms and replies to previous testimony on administration

of act.

Interest and amortization under fair net operating income for-

mula

Reply to proposal to limit rent control to “critical defense housing

areas”.

Defense-rental areas or portions of areas decontrolled:

January 2-March 31, 1952

May 2, 1951 through January 1, 1952.

November 28, 1950 through May 1, 1951

January 16 through November 27, 1950.

Area decontrol summary January 15, 1950.-

Defense-rental areas or portions of areas decontrolled as of

January 15, 1950.

Scripts for radio programs in Chicago area.
Property Owners Association of America, Inc.: Examples of inequita-
ble handling of property owners' petitions by ORS:

Cases from Philadelphia area

Cases from Maryland area
Schorm, Nicholas J., Detroit, Mich.: Statement

1895

1932

1828
1834
1796

DEFENSE PRODUCTION ACT AMENDMENTS OF 1952

WEDNESDAY, MARCH 19, 1952

COMMITTEE ON BANKING AND Chansey D. C.

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

, The committee met, pursuant to recess, at 10:30 a. m., in room 301, Senate Office Building, Senator Burnet R. Maybank (chairman) presiding

Present: Senators Maybank, Fulbright, Robertson, Sparkman, Frear, Douglas, Benton, Moody, Capehart, Bricker, Ives, Schoeppel, and Dirksen.

Also present: Senator Lehman.
The CHAIRMAN. The hearing will be in order.

Our first witness will be Mr. William Schmidt, of the Property Owners Association of America.

STATEMENT OF WILLIAM SCHMIDT, PRESIDENT PROPERTY

OWNERS ASSOCIATION OF AMERICA, PRESIDENT, PROPERTY OWNERS LEAGUE

Mr. SCHMIDT. Mr. Chairman, I am making this statement also on behalf of the American Conference of Small Businessmen.

Mr. Chairman and members of the committee, my name is William Schmidt. I am president of the Property Owners Association of America. I have appeared before you on quite a few previous occasions and I thank you for the opportunity of being heard again.

I am somewhat at a loss as to what to tell you because when I think of the enormous amount of testimony that has been given you in previous years, and much of it would be convincing enough to show the fallacy of rent control. I think I would like to suggest to you today that we compare the conditions prevailing after World War I, when we did not have rent control, with the conditions since World War II, where we have enjoyed the so-called blessings of rent control. Let us look at the record.

During the period of 1920–30 rents were appreciably higher than prior to that period, but wages and salaries were in keeping with it, and most of the American people were able to find a suitable shelter by spending approximately 25 percent of their monthly income for rent. That had been a tradition for many years and had worked out pretty well all around. Between 1920 and 1930 there were constructed in the city of Chicago, for instance, a total of 300,000 new modern rental units. All of these were built with private capital without any government guaranties whatsoever.

Now, what happened after World War II, from say 1945 to 1951? The record shows that we only built a total of 15,000 new units in Chicago, that is new rental units, compared with an average of 25,000 units in a single year for a decade. True enough, the average rental today, at least the official rental, is somewhat lower. It is only $44 a month, while the average wage is $60 a week or better. On the other hand, the people of Chicago have been suffering all kinds of inconveniences and have not been able to get the housing accommodations that they would like to have.

Would it not have been far better that we had had po rent control and that we would not have discouraged all private capital from going into this industry?

The CHAIRMAN. Why did not Chicago take off rent control?

Mr. SCHMIDT. Do not blame me. I tried my darndest to have them take it off.

The CHAIRMAN. Why tell this committee that? The city of Charleston took it off.

Mr. Schmidt. The point I am trying to illustrate is what happens under rent control and what happened previously.

The Chairman. Why do you not take that to the city of Chicago?

Mr. Schmidt. I am working on that and trying to get the city of Chicago to take it up.

The CHAIRMAN. I am just giving you a suggestion on how to solve that. I do not know what the committee feels about it.

Go ahead, sir.

Mr. Schmidt. Supposing the average rental were $65 a month today and about equal to the average weekly wage, what would have happened?

Well, I, for one, am certain that we would have at least 100,000 to 150,000 new rental units occupied in the city of Chicago. Instead of that, we have seen only 15,000 of these new rental units created and we have seen an awful lot of miserable, sneak conversions, plasterboard partitions, living quarters being created in violation of the building ordinances, the health ordinances, and in violation of common sense and good business judgment. All of this has been brought about by rent control.

Gentlemen, do you not think it would be about time that you give the American people a little freedom again and let them take care of their problems the same as they have done for 150 years before we got this craze of controls on controls? We have had nothing but hardships and annoyances since we entered upon this path.

Price controls and rent controls are really a fake remedy and they never work. Probably you believe that rent control has been effective. Well, let us look at the record. Last year you put a 20-percent increase in the law. That meant that every unit was entitled to an increase in rent, even those that had previously received a so-called voluntary increase for 15 percent were entitled to an additional 5 percent.

Now, it is strange to notice that in the city of Chicago where we have at least 800,000 rental units under the jurisdiction of the Office of Price Stabilization, there are to date only about 230,000 applications received, and somewhat less than 200,000 of these have been processed. Well, what is the explanation for that phenomenon?

I, for one, can only come to the conclusion that if the owners of approximately 600,000 units do not take advantage of the fact that they can make an application for an increase of at least 5 percent,

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