Evening star. [volume] (Washington, D.C.) 1854-1972, 1947-08-29
Real Estate Prosecution

The antitrust proceedings WHICH VLe
Department of Justice has instituted
against Washington realtors and the Ma
tional Association of Real Estate Boards
raise issues which cannot be preJudgeo'
For reasons which are not clear the
Justice Department has Instituted two
proceedings-one a criminal prosecution OF
the national association and the Washing
ton Real Estate Board, and the other
civil action against the two organizations
and certain of their members. But the
facts involved in each case are essentially
the same.
The burden of the complaint Is that the
organizations and members consplred 10
fix real estate commissions in the District,
and that, in 1943 there was substantial
increase in commission rates. 1t remains
to be seen what the trials will bring forth.
II the Department of Justice can prove
that the individuals and the organizations
have conspired to violate the Sherman
Act, then it is entirely proper that the
defendants be punished. For the Sherman
Act is designed to protect the interests OF
the public, and where that purpose has
been thwarted in violation of the law 1t
is Il1e QuIy VI prosecuting doIioAAViSo
to take action against the offenders.
In fairness to all concerned, however,
there are certain aspects of this case which
should be mentioned. For one thing, these
individual defendants are respectable
businessmen, some of them being leaders
in the community. 1t would be ridiculous
to proceed against them as criminals, and
the Justice Department has refrained from
doing that. In the public mind some OF
the stigma OF the criminal indictment OF
the examinations may attach to the indi-
viduals, but this would be unjust and 1t
should be emphasized that no criminal
complaint has been brought against them
Another point is that the business OF
which the department complains was car
ried on out in the open. There was no
secrecy or concealment about It, And this,
while it would not excuse a violation of
law,'raises a strong presumption OF inno-
cent intent unless and until the contrary
Is proved.
There is one other aspect of the case
which should be noted. The Attorney
General has said that "our inquiry into
the housing field indicates that artificial
restraints on competition. such as those
involved in this matter, bear a definite
relation to present high housing costs"
That statement, to the extent that 1t Is
directed to the current proceedings,
sounds more impressive than it really is.
The old commission on the sale price of
real estate was per cent on the first
$4,000 and per cent on the balance. In
February of 1943 this was raised to per
cent on the first $4,000 and per cent on
the balance. The justification for such
an increase in an active real estate market
is dubious. But it has very little to do
with the present high housing costs to
which Mr.. Clark refers.
Builders say that 1t costs $4,000 now to
put up a house which would have cost
$4,000 before the war So there has been
an increase in cost of $4,000. The brokers'
commission on the $4,000 under the old
rate would have been $780, Under the new
rate it would be 5000. In other words, of
the $4,000 increase in the cost of this
particular house, $40, or slightly more
than per cent, is chargeabe to the higher
commission. The remaining SO per cent of
the higher cost is attributable to materials
and labor. If Mr.. Clark expects to achieve
anything worth while in the direction of
lowering the cost of housing he will have
to come to grips with both material costs
and labor costs