Evening star., 1932-06-27
Inflated Rental Properties.

There is one matter in connection
with the rental situation in Washing
ton, now receiving the attention of in
terested Senators, that deserves more
than the passing mention made Of it.
This relates to the inflated value of
some rental properties. Such imitation
is advanced as one reason for high
rents. The tenants, it is argusd, should
not be made to pay rents based on fic-
titious value or to furnish adequate"
return on investments that are based on
fictitious value. OF course, they should
not.
But at the same time it is interest
ing to look for moment into the con-
ditions that permitted the incumbering
of properties by trusts in excess of
sound value; what has happened to
some Of these properties and what has
happened to the so-called gouging
landlords who own them.
Imitation" Of Washington real estate
has been under discussion in Senate
and House since the war. There have
been recurrent Investigations by Con-
gress, by the Department of Justice, by
the United States Attorney. Some of
the investigations have been eminently
worth while. A good many rascals have
been sent to jail. A good many shady
deals have been exposed.
But If one considers the sort of in
nation usually spoken of in connection
with the financing of apartment houses
as the root of much of this evil, what
has been done to kill the root? Practi-
cally nothing. Since 1924 organized
real estate men, bankers and others
have been urging the enactment here
OF laws to prevent the sale of fraudu-
lent securities, the licensing Of real estate
statesmen and brokers, the regulation of
real estate securities. The latter pro-
poSal was designed to control the pyra-
midlng Of trusts and values, skyrocket-
ing Of appraisals and much of the skull
duggery which today is being blamed
fo- high rates. There was, naturally,
much controversy over the form that
these various laws should take. Senator
Blaine sponsored a bill to which real
estate men objected. But the long and
short of it is that nothing has been
done about the laws. The Senate passed
two of them toward the close of the
last session, but they were blocked in
the House District Committee. At that
time the chairman Of the House Dis
trict Committee said something about
doing something next session, appoint
ing a subcommittee and having an in
vestigation. Nothing has come of it
and another session is ebout to end. 1t
may be granted, however, that during
the last year the opportunity for selling
securities-good or bad-waS not ex-
actly golden.
Now, what has happened because Of
those inflated values? Some people
are in jail. But they are not the
Landlords" or owners Of the buildings.
A good many Of the landlords have
had their life savings taken away and
are in far worse shape, financially,
than the tenants who occupy the
buildings that these landlords thought
they owned. The landlords may be
individuals who invested in bonds, or
they may be insurance companies, TAX
ing the property by process of fore
closure that wiped out equities of other
owners. But the ones who bear most
of the blame are the promoters who
had no embarrassing legal restraint on
their activities during the boom times
of prosperity and who found Wash
ington, unlike the surrounding States,
an ideal field for easy pickings.
BY all means, If the charges placed
before the Senate District Committee
relating to gouging landlords are true,
they should be thoroughly aired.