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it is fair to say that while the Government has recognized that the innkeeper was subject to peculiar and special legislation, they have always recognized that a man's house and property were peculiarly his castle. In other words, you have two extremes there. I do not want to dodge that question, but we would be here a week if we went into the question of the innkeeper's statute.
Senator COPELAND. That is his home of course. Mr. Mac CHESNEY. The hotel or inn is not a home. Senator COPELAND. The house is his castle. Mr. Mac CHESNEY. But not the hotel. Senator COPELAND. No. Mr. Mac CHESNEY. That is a public business. Senator COPELAND. You can help us most, if you will permit me to say it, by addressing yourself particularly to section 20 of our bill.
Mr. MacCHESNEY. The bill not only regulates the services, but it exempts the hotel exclusively for transient guests. If the Senator is correct, if there is no parallel between a hotel and buildings, then the statute violates that suggestion because it assumes to distinguish, and while it attempts to take care of the man who lives in Washington six months, it leaves the man who comes here occasionally wholly subject to whatever the hotels may ask. It certainly is class legislation so far as that is concerned as between the owner of the apartment renting by the month and the owner of the hotel renting by the week or by the day. The only possible reason for it would seem to be a desire to favor hotel keepers as against other real estate owners.
Section 5 provides thatNo commissioner shall be appointed who is directly or indirectly engaged in, or in any manner interested in or connected with, the real estate or renting business in the District of Columbia.
I have not any severe criticism to make of section 5 except to say that it is pretty broad in its terms. While you might bar a man who was engaged in the renting business, it would seem to go pretty far to attempt to bar any man from the commission who had any interest in real estate. According to that provision he could not even own his own home. It would seem to me that you ought to draw for membership on a commission of that kind men who have a sufficient interest in Washington to at least own their own homes.
Coming down now to section 13, I want to call your attention to it. That is one of the most drastic pieces of legislation I have ever seen anywhere attempted. In that section it is provided that the commission shall prescribe standard forms of leases and other contracts for the use or occupancy or any rental property or apartment and shall require their use by the owner thereof.
Representative HAMMER. I do not think anybody is insisting on that provision.
Mr. MacCHESNEY. It simply deprives a man of the right of contract and all control of his property,
Mr. WHITEFORD. It was in the old statute.
Mr. MacCHESNEY. But I understand it has never been attempted to be enforced and certainly on a permanent basis it is extraordiDarily vicious.
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Senator COPELAND. Do we not have uniform insurance forms!
Mr. MacCHESNEY. Yes, but let me point out the difference. In section 33 the right is limited under which a man may get rid of a tenant to the following: For actual use, for the erection of a building, or if the tenant commits waste, nuisance, breach of the peace, or is otherwise disorderly upon the premises. We had a case once with reference to that in which there were women of notorious character living alongside families of reputable association and good character. I venture to assert that the scarlet women of Washington could live in an apartment house with the best women and children of this town and under the provisions of your bill you could not get rid of them unless they plied their trade on the premises. I can show you some such cases as that.
Representative HAMMER. Have you examined the provisions of the bill that permit the tenants to go before the Rent Commission with all sorts of grievances and the Rent Commission determines the matter?
Mr. Mac CHESNEY. But this particular provision limits it to improper conduct on the premises.
Representative HAMMER. If you will suggest some way in order to keep from putting it within the power of the landlord to determine himself who are objectionable tenants and who are not, we would be glad to have you do so. That is one of the troublesome things with which we have to deal.
Mr. MacCHESNEY. So far as the bill is concerned along that line, section 33 covering that matter, you should not limit the power of the commission to determine about putting them out because of conduct on the premises. Personally, I think the owner ought to have the right to say who could rent, and even though you fix the rent there are people who might rent the property who would have a deteriorating effect upon the property, as they would have a deteriorating effect on the neighborhood, yet they may be willing to pay more rent than other people.
I do not like to go into the racial question, but suppose by some hook or crook a negro family got into an apartment. Under this provision there would be no way for the owner to get rid of them, and yet it might absolutely destroy the value of that property. You do not guarantee the owner a return. You limit him to a given return, but you guarantee no rentals and the property might become worthless. I am merely pointing out the defects, you understand.
Representative BLANTON. May I suggest that section 13 was drawn and put in the bill by the chairman of the Rent Commission who is to administer the law, and it gives an idea of whether or not his mind is prejudiced one way or another.
Mr. MacCHESNEY. I am not assuming to pass upon any public official in Washington.
Representative HAMMER. We would like to have from you suggestions as to what would be the correct language. You admit that it would not do for the landlord to have absolute power to dispossess a tenant who had been there for years. In the old days, under the old English law, in many instances you could not dispossess them for six months. That was considered then a reasonable time. I think now it is unreasonable.
Mr. McCHESNEY. I do not admit that the owner ought not to have the right to get rid of a tenant who in his judgment is undesirable. You are not in a position of a railroad. A railroad has a widespread business that equalizes against losses, but if you compel an owner to keep an undesirable tenant or put the burden upon him to show that the tenant is undesirable, you may be ruining the property and he will have no redress. It seems to me, assuming you are going to have any rent control at all, which I think is economically unsound, that you could accomplish all you have in mind and go the whole limit when you attempt to say that a given rental is unreasonable, leaving the right of contract between the tenant and the owner with a wide variation as to what rent he shall pay, not attempting to fix the rent, and then compel the service that it is agreed shall be furnished, light, heat, etc. You do not need to go further than that to meet any emergency, if there be an emergency. But when you get to the point where you attempt to say who shall occupy the building you have practically deprived the owner of all rights.
Some reference has been made to the question of tenants on agricultural land in England, which was a wholly different thing. In the old days, before that rule was developed, after a man had plowed and furrowed and sowed and worked all his land, he could be thrown off before he reaped the crop.
Representative HAMMER. I am not talking about croppers. I am talking about tenants.
Mr. MacCHESNEY. We have a stay in Illinois under certain conditions of rental, and we have all through the country something of the same nature, to enable people to find housing elsewhere, but it is a very different thing from taking the control of a house. After all, this takes into consideration only the question of rental, practically.
The CHAIRMAN. How are we going to decide what is a fair rental unless we have some commission to fix it? What would prevent your organization of real-estate men fixing a certain rent that would be unreasonable? For instance, it is reported now to the committee that in one apartment house which has recently changed hands there has been an increase of from $15 to $30, and on some apartments more than $30, but an increase on every apartment. The manager gives it out publicly that the increase was made because he was compelled to do it by an organization of real-estate people in Washington.
Mr. WHITEFORD. Is there anything in the record to that effect?
The CHAIRMAN. I do not know anything about the correctness of that report. Somebody has told me that.
Mr. WHITEFORD. Have you had any testimony of that nature before the committee?
Representative BLAXTON. I have not heard any such testimony. The CHAIRMAX. It is not in the record yet.
Mr. WHITEFORD. I think what somebody whispers to a Senator ought to be stated in the open where it can be answered.
The CHAIRMAN. I understand that the first day we have a hearing, where the renters are to be heard, it will be brought out.
Mr. WHITEFORD. May we have the name of the man who makes that statement to you?
Representative HAMMER. Certainly you shall have it.
Representative BLANTON. I call the chair's attention to the fact that he has put this in the record in the face of his objections to my reading a letter in the record.
The CHAIRMAN. It is a question of evidence, and the evidence will come out later or it will not come out at all.
Mr. WHITEFORD. But you have put it in the record as stating a fact, and that is what I object to.
The CHAIRMAN. If it is proven that the real-estate men do control the rents here, keeping them up to the level of rents charged during eht time following the war, when everybody admits there was profiteering here, then should there not be some power to fix a reasonable rent? Should there not be some such power if that condition is proven to the committee, if proof and evidence is offered the committee that that condition exists?
Mr. Mac CHESNEY. As I said, so far as I know, relative to residential property, no such agreement or attempt has ever been made in this country. I do know of cases where owners of warehouses and business property have gotten together with an agreement of that kind, but this committee might very well by legislation not interfere with the law of supply and demand which will defeat its own purposes under the bill and prevent construction which might meet the emergency. They might very well enact drastic legislation which would constitute an agreement of that kind a crime. It might be that is all you need to do. I do not believe that it exists from all that I know about the matter.
Representative BLANTON. I am about to propose a bill that will cover that
feature. Mr. MacCHESNEY. That is easily met by simply applying the principle against conspiracy. The Sherman anti-trust law could be applied. I do not think it would apply now.
Turning now to section 19, I find a provision that No officer or employee of the commission shall, unless authorized by the commission or by a court of competent jurisdiction, make public any information obtained by the commission.
That puts it wholly in the power of the commission, however, to give out all the private and confidential data with reference to the construction of buildings and the income of particular buildings. Do you gentlemen realize how difficult it might be to finance an enterprise under those conditions? I doubt very much if that is a wise provision. It seems to me it might well make it so difficult to finance a building or structure that it would seriously interfere with what you really want to accomplish.
We go now to section 20, in which are provided certain things in reference to the rent and that
In fixing and determining fair and reasonable rents for any rental property or apartment the commission shall in all cases take into consideration the character and condition of the property.
Is that all that constitutes value? Are there not other elements? I do not know Washington well enough to be quite sure of my location, but I have an impression that it would be fair, say, to charge more for a building of exactly the same character up toward Rock Creek Park than it would 'in Southeast Washington, for instance.
Senator COPECAND. But if you had two houses up there, one in good repair and one in poor repair, would that make a difference?
Mr. MacCHESNEY. Yes; but this provision only says “They shall take into consideration the character and condition of the property. There is the rule of law. When you state what shall be taken into consideration by a commission, have you not excluded the other factors?
Senator COPELAND. I agree with you fully that if that is the case it should be modified.
Mr. Mac CHESNEY. It should include location and the elements of social prestige, which are fair elements of value. There is also the element of value which we argued in the Supreme Court of the United States with reference to the hotel case in Minneapolis, the question of obsolescence. There are certain types of dwellings which are subject to greater depreciation than others. In other words, a dwelling which appeals to a fashionable clientele loses more rapidly in its value than one which appeals to a nonfashionable clientele, because the question of obsolescence applies to the former to a very much greater degree. In other words, I venture to assert without fear of successful contradiction, that the bill is not drawn or has not been considered or has not been produced in the spirit of a man familiar with the fundamental economic and financial conditions entering into the construction of real estate, and therefore it is a dangerous bill from the standpoint of the tenants themselves, because it is going to interfere with construction, and construction would remedy the situation.
The bill goes on to provide in section 22 “that in any suit in any court of the United States or the District of Columbia involving any question arising out of the relation of landlord and tenant with respect to any rental property or apartment, except on appeal from the commission's determination as provided in this act, such court shall determine the rights and duties of the parties in accordance with the determination and regulations of the commission relevant thereto."
Then over in section 30 it is provided that, No determination of the commission shall be affirmed, set aside, modified, or otherwise reviewed, or its enforcement in any way stayed, except upon appeal from such determination as provided by this act.
In other words, this language takes out from under the operations of your general statutes all questions with reference to real estate and bases them solely upon the determinations of the commission. Furthermore, it deprives the real estate owner of the right which is given to other businesses regulated by the Congress of the United States, namely, the right to enjoin that action when it becomes confiscatory in character.
In my judgment, so far as it attempts to do that, it is unconstitutional, though I would not pretend to say what the court might do. However, in my judgment, when you attempt by statute to deprive the courts of the right to stay an order when it reaches the point of confiscation, not only have you deprived the real estate owner of the right which you give to every other regulated industry, but you have gone beyond the limits of constitutional action.
Representative BLANTON. Suppose there were no emergency and yet the Congress should, just by its strong arm, declare that there is an emergency?