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up or down?
Mr. PETTY. Absolutely not. Representative BLANTON. As to building material, will the men who are in the business of furnishing the builders' materials be willing to make advances to contractors with such a law on the statute books!
Mr. PETTY. I would say not, in my opinion.
Representative BLANTON. If building conditions are stopped and construction is stopped, what effect will that have, first, on property values here? Will it cause them to remain at a standstill or to go
Mr. PETTY. My belief is that they would go up.
Mr. Petty. My belief is that they would go up if construction stopped.
Representative BLANTON. With regard to the rental law on the statute books, what effect will that have on property values in the District, in your judgment?
Mr. PETTY. The rental law?
Representative BLANTON. Yes. If we pass a permanent rental law, what effect will that have?
Mr. Petry. In my judgment it would seriously affect the values.
Representative BĽANTON. To what extent would it affect them and how would it affect them? Would it cause them to go up or down, and to what extent?
Mr. PETTY. I would not like to answer that offhand. I would want to give it consideration.
Representative BLANTON. If construction is stopped here, how will it effect the men who are dependent upon construction for their livelihood in the way of labor?
Mr. PETTY. It will put them out of work.
Representative BLANTON. To what extent would that affect the population of the District in your judgment?
Mr. PETTY. I would not be able to answer that question.
Senator Jones of Washington. I have to leave the hearing now. I understand we do not have another meeting after this morning until next Monday. I want to suggest to these gentlemen that in the meantime they try to frame some constructive suggestion in 8 legislative way to meet the situation in lieu of this bill we have before us if they do not favor it.
Mr. PETTY. If you could wait just a minute, Senator, I might answer you in this
way: We as practical business men do not believe there is any legislation that can correct conditions which we do not believe exist.
Senator Jones of Washington. Then if you take that position, all right.
Representative BLANTON. I am going to introduce in the House to-day a bill which I think covers the situation. I am going to present it to the committee when I have an opportunity as a substitute for this rent bill, covering the suggestions made by the chairman as to the pyramiding of trusts and the evils that come from that as well as the other evils that exist. I hope a little later to get that matter properly submitted here as the substitute for the permanent rent bill.
The CHAIRMAN. So far as the chairman is concerned, the committee will welcome-yes, more than welcome-any proposition in
the form of legislation that will correct conditions without going to the extreme of a permanent rent law. I am sure that every member of the committee feels the same way, that they want to correct conditions and do not want to do anything that is going to interfere with the future development of this city. We want a fair and just bill to present to Congress. I am not wedded to any particular bill. I have never indorsed this bill. I have never said whether I could support it or could not support it. I have stated frequently to several members of the committee that personally I was opposed to a continuation of the rent act if the conditions could be corrected in any other way, and that is my position to-day.
Representative BLANton. May I ask Mr. Petty this question? If Congress should give your real estate board the power to annul a license of a realtor and keep him out of business-I am not asking this question with any intent of reflection on the board, but just by reason of the kind of testimony that we get here—are there enough honest men in your board to keep the crooks out by annulling their licenses?
Representative HAMMER. There are no crooks in the board.
The CHAIRMAN. I want to state this further before that question is answered. I believe some legislation is necessary. Therefore I think you gentlemen ought to help us in preparing that legislation since you know that we feel there are conditions here that you do not admit, but that we feel ought to be corrected.
Mr. BRANDENBURG. We have analyzed and studied the situation.
Representative BLANTON. I want Mr. Petty to answer my question. If we give your board the right to annul licenses and a certain element should be in control of your board, they could put out all of the good men from your board and keep only the crooks?
Representative HAMMER. But there are no crooks in the board.
Mr. Petty. Our membership is 100 per cent honorable and ethical, and we can prove it.
Representative BLANTON. I am glad to hear it.
Mr. Petty. We have never asked this of Congress, but the model license law contemplates a new proposition. We say let the President create a real estate commissioner." He is not a real estate board, but an individual officer of the Government appointed by the President. Our proposition does not constitute the real estate board to take that over.
Representative BLANTON. In other words, the physicians have a board that controls licenses and the architects have a similar board.
Mr. Petty. Yes. We would be very glad to assist that man in supervising the issuance of licenses.
Representative BLANTON. I mean to give you a real estate board with the power to annul a man's license.
Mr. Petty. If they gave us the opportunity of doing that, we would remove 99 per cent of the crooks in the real estate business in less than one year's time.
Representative BLANTON. And keep the good man?
Mr. EDWARD B. DOYLE, of the real estate board, New York. Mr. Chairman, we have a model license law in New York that Mr. Petty says his board wants. Our counsel of the real estate board, with the ssistance of the State tax commissioner, whenever any charges are made against any realtor in the State, helps to prosecute them. We send our counsel to cooperate with the State tax commissioner in order that we may get rid of the dishonest realtors. That is the object of the model license law which Mr. Petty says his board favors. We have it in the State of New York.
Representative HAMMER. You have a rent law, too, so that you have both the propositions that are suggested here?
Mr. Doyle. "Our rent law is based on an emergency and when the emergency ceases the rent law ceases.
Mr. PETTY. The criticism which comes to your committee is not against the legitimate real estate brokers. It is against individual property owners or outside financial institutions and people of that sort. The record does not disclose that the individual real estate broker is charged with these crimes.
Representative HAMMER. Before the war you had a rule in your real estate board that agents and firms could not buy from their clients any property?
Mr. Petty. Oh, yes; and we have that rule in our board now. We can not buy property from a client without letting the client know we are buying it.
Representative HAMMER. Do they not do that a great many times! Mr. PETTY. No, sir; the members of our board do not.
If they did, we would have them before the arbitration committee.
Representative IIAMMER. It is the custom of a great many people to do it.
Mr. PETTY. I would not admit that, Mr. Hammer. That would be obviated by the license law.
The CHAIRMAN. That is obviated or gotten around by employees connected with the firm buying the property and the firm becoming their surety? Mr. PETTY. That would not make any difference.
. The CHAIRMAN. Our investigation proved clearly that one of your big operators had about 12 subsidiary companies and that transfers were made to and through those subsidiaries. Our friend Mr. Lake, who is now in trouble, I think was the go-between in those transfers.
Senator COPELAND. Mr. Chairman, I notice that some of my constituents from New York are here. I assume they came over to assist the committee in formulating a model rent lav It seems too bad to have them come so far and not be heard, if they care to speak.
Mr. Petty. I shall be glad to yield to the gentlemen from New York.
Senator COPELAND. Thank you. (Witness excused.) Senator COPELAND. I am delighted to introduce to the committee Mr. Edward P. Doyle, of the real estate board of New York City
STATEMENT OF EDWARD P. DOYLE, ESQ., OF THE REAL
ESTATE BOARD, NEW YORK CITY
Mr. Doyle. Mr. Chairman and gentlemen of the committee, all I want to do is tell briefly our experience in New York and show you that what you propose here really would not benefit the tenant, but might do a great deal of injury to real property interests. That is the only reason why I came here.
The CHAIRMAN. That is a very broad question.
Mr. Doyle. I mean by the bill. We had a housing shortage in the State of New York and mainly in the city of New York in 1920. The real estate board of New York directed me to write to the mayor suggesting the appointment of a housing committee made up of representatives of the real estate interests and loaning companies and labor. That committee was appointed and I was made secretary of it. It was called the mayor's housing committee. The legislature in the spring passed the first remedial legislation, and with the approval of the real estate board it was merely the extending of the power of the municipal court judges to grant stays, giving them the power to stay eviction so there would not be any hardships in evicting a tenant. Unfortunately there was a provision in the legislation which provided that if on October 1 a landlord failed to notify the tenant that he wanted possession of the premises or wanted to increase the rent, the tenant went over for another year at the same rent.
Just before October 1 of that year a great many landlords felt that it was necessary, in order to protect themselves, not that they had any desire to evict the tenants, to notify the tenants that they would require possession on October 1. That created the so-called emergency under which Governor Smith called the legislature in session and the court of appeals sustained the rent laws and the United States Supreme Court sustained them. That was the so-called threatened
eviction of 100,000 tenants on the 1st of October. Then the rent laws were passed against the opposition of the real estate interests. The real estate board opposed them, but we succeeded in having them amended so they did not apply to new buildings, otherwise building construction would have stopped in New York City and in the State. If you will remember, we had them amended so they did not apply to new construction, and we also succeeded in getting a bill exempting new buildings from taxation, although the real estate board opposed that in principle, but they consented to it in order to help building
Since that time we have not opposed the extension of the rent law, while the so-called emergency existed, although we denied the existence of the emergency and we tested out the laws, going to the United States Supreme Court. Our rent laws will expire in February, 1926, Last year we did not oppose their being extended to 1926, although opposed to them in principle.
The main result of the rent law in New York State was the building of an enormous number of one and two family houses. Sixty-five thousand I think were built in the several boroughs of Greater New York. The shortage, as far as the middle class or high-priced apartments, has passed, but it did succeed in effecting a tremendous change in ownership which I think has been very detrimental to the tenant.
For instance, I have been a landlord since 1884. Immediately after the passage of the rent laws I sold all my real estate-that is, all the real estate I had which was not business property. My example was followed, to a very large extent, by the old-fashioned investors in real estate. I invested in real estate believing it to be the very best kind of investment and so had the experience of being a landlord. I took care of my tenants and kept my houses in repair and even did not raise my rent during the war when everybody else raised their rent, although I was justified because during the trouble with the shipbuilding before the war I had 68 apartments vacant for three years and would have been justified in trying to get increased rent in order to get my money back that was lost during that time.
But the tendency of legislation is to drive out the old-fashioned landlord, the old-country man. The old-country men who came from where they could not own real estate were very proud to own real estate in this country. We had the German Jew and the Eng. lish Jew and the Scotchman and the Irishman, and they were all property owner Their places have been taken by the Rumanian Jews or the Russian Jews who are traders and by men who are traders generally of all nationalities and who are not investors and landlords and who have no love for the tenants as we have.
Our relations with the tenants were always of the best. We find that with this kind of legislation the tenants are just as dissatisfied as they ever were. We have had four years of rent legislation, and the tenants had a larger lobby at Albany the last time than ever before. It has not been a real benefit to them, but has been a detriment to them in that it has changed the character of the landlord.
Of course we are opposed to your bill as a matter of principle, and we came here to voice our sentiment. We had no real right to come, it being a matter affecting the District of Columbia;
but that you would be establishing a bad precedent to go into any kind of rent-fixing proposition, as you would in any other proposition affecting price fixing, food-price fixing, clothing-price fixing, or any other measure of price fixing.
Mr. BRANDENBURG. What was the statement you made about encouraging building in relation to the payment of taxes ?
Mr. DOYLE. There would have been no building but for the passage of the law exempting new buildings from the operation of the rent laws.
Mr. BRANDENBURG. In other words, you exempted them from taxation ?
Mr. Doyle. Yes; and we also exempted them from taxation.
Mr. BRANDENBURG. In other words, you encouraged building in that way?
Mr. DOYLE. Yes.
The CHAIRMAN. It is necessary for the committee to adjourn at this time. We are to have no further hearings until next Monday and will therefore stand adjourned until 10 o'clock next Monday morning.
(Thereupon, at 12 o'clock meridian, the joint subcommittee adjourned until Monday, January 19, 1925, at 10 o'clock a. m.)