Rent Restriction

The granting of financial aid for house building may interfere with private enterprise less than some forms of restriction. To restrict rents artificially, however necessary as a temporary expedient, cannot be regarded as sound from an economic point of view. If carried to a certain degree, it makes public aid to building a necessity,as has been the case in England. Proper restrictive measures are those which prevent abuses and nuisances such as the overcrowding of land with building or the occupation of unhealthful premises. Where houses conform to proper health standards, there should be no interference with the law of supply and demand by government restriction of rents, which inevitably results in reducing the supply. Where rent restriction has been applied in New York, its justification has been that the war created an emergency which had to be met to protect tenants against the greed of landlords. It may have been necessary as a temporary measure. In England the restrictions have been maintained long after the emergency has ceased to exist, and great numbers of tenants are making large profits there out of other tenants and out of losses of the landlords, while other great numbers of tenants have to pay higher rents for unrestricted premises because of the effect of the restriction in preventing the supply of new houses. The New York Times, on March 28, 1856, remarked in desperation, in referring to the greed of landlords, "Our experience, like that of the cities of the Old World, is that the avarice of capitalists renders governmental interference for the protection of the poor and the unfortunate an absolute necessity."

Exactly the same propensity was in evidence in 1920, according to the testimony before the State Housing Commission, and again in 1923. It appears to make no difference who the landlords are. As one writer said, "If the tenants of to-day were to become the landlords of to-morrow, and the landlords the tenants, the same extortion would exist, for it is inherent in the system." This is precisely what happens. Tenants who enjoy rent restriction become in effect a protected class having the power as temporary landlords to make money out of sub-tenants. Avarice cannot be controlled by a law which assumes that it is restricted to one class of citizens, and protection of the poor cannot be obtained by restrictions that make building unprofitable as an investment.

Rent restriction was first adopted in America in the District of Columbia, by direction of Congress, in 1919. The states of Wisconsin and New York adopted restrictive measures in 1920. Testimony given in 1923 before the National Housing Conference in Philadelphia and before the New York State Housing Commission, while conflicting in many respects, seemed to agree that the acts had been beneficial to tenants in actual possession, but at the same time were frequently unfair to the landlords and therefore had served as a deterrent to further building, notwithstanding the fact that they applied only to buildings existing at the time of their adoption.