Special Message to the Congress Urging Extension of Rent Control.

To the Congress of the United States:

In my State of the Union Message in January, I recommended extension of rent control for another year beyond the present expiration date of June 30. Developments since that time have made it even clearer that a Federal program of rent control is still required in many localities. I wish, therefore, to reemphasize the urgency of Congressional action to extend the rent control program.

I strongly advocate extension of rent control because I am convinced that the public interest requires it. Housing is the one area of acute shortage remaining from wartime. Removal of controls would mean serious hardship for millions of tenants who are caught in a "seller's market" and cannot obtain lower rents by shopping around. Until supply is near enough to demand so that the forces of competition will again operate effectively to protect the tenant, rent control should continue.

At the same time, we should continue the present policy of granting the landlord all justifiable increases in rent. The basis of our policy has been fairness to both the landlord and the tenant.

Since the end of the war, our aim has consistently been to overcome the housing shortage. With this objective, we have vigorously pressed programs to expand the volume of housing. At the same time, we have decontrolled rents in a gradual and orderly manner, community by community, as soon as the supply of housing in each community achieved reasonable balance with the demand. Extension of rent control for another year will be consistent with this policy. It will also contribute substantially to the stability of the national economy as a whole.

The policy of orderly decontrol has resulted in a steady reduction of the number of units under control. At its peak in 1946, Federal rent control covered over 16 million dwelling units. It now covers 11 million. Within the last year, the Housing Expediter has decontrolled 1,300,000 rental units while State and local governments have decontrolled 1,800,000 units. However, in many cases State and local decontrol actions were premature, and resulted in excessive increases in rents.

Actions taken by four States will remove Federal rent control from an additional 2,600,000 rental units by July 1, 1950. The bulk of these units will not actually be decontrolled but instead will be shifted from Federal to State rent control. Even taking into account these latest State actions, over 8 million rental units will still be under Federal control.

In areas where Federal control has remained in effect, the Housing Expediter has followed a fair policy in granting rent increases to landlords. During the last year alone, increases have been authorized covering over 900,000 units. The average increase authorized was 18 per cent.

But while we have made progress in reducing the coverage of rent control and can look forward to further progress, the time has not yet come for the final elimination of Federal rent control.

The 8 million rental units which will still be under Federal control on June 30 are located in 40 States of the Union. Federal control will still be in effect in 63 of the 92 cities with populations over 100,000 in the last census, as well as in thousands of our smaller cities, towns, and localities. Rent control will still be a national problem. The housing shortage will still be acute.

Despite the record volume of housing production in recent years, only in the past year or two have we begun to catch up on the accumulated shortage. But even the recent gains have been mainly in certain areas and for certain types of housing--not equally for all. The bulk of new construction since the war has been priced to meet the needs of the higher-income families. In large cities, new units suitable for families with children generally rent for $85 a month or more. Housing at rentals that families with incomes of less than $300 a month can afford is still extremely scarce in most urban areas and in thousands of smaller communities. In many of the larger urban areas there are virtually no rental vacancies in livable dwellings. The situation is also particularly severe in smaller communities near military installations where the families of many married servicemen live.

The housing legislation enacted by the Eighty-first Congress will help to meet these urgent housing needs. The Act passed in 1949 initiated a broad new program of lowrent public housing. The Housing Act of 1950 provides new incentives for privately financed homes for families of moderate income. Much of the additional housing made possible by these measures, however, will not be available for some time. Nor will these measures be as fully effective in meeting the needs of all our people as would have been the case if the Congress had adopted the cooperative middle-income housing program which I proposed. Therefore, while there is every reason to expect steady progress in expanding the supply of housing, it will be some time before supply comes into reasonable balance with demand on a national basis.

It is highly significant that every one of the 63 large cities still under Federal rent control on June 30, as well as each of the thousands of smaller communities covered, has had the option to remove controls but has chosen to retain them. The reason for their decision--and the wisdom of it--is clearly evident in the results of a Bureau of Labor Statistics survey of rent increases in 14 cities where Federal rent controls were removed during 1949. Of these 14, all but one were decontrolled through State or local action; in two cases, State controls were substituted. This survey shows that of those units whose rents were free to rise (excluding those whose rents were controlled by lease and those which had been earlier decontrolled individually), the proportion of units having increases ranged from 17 to 74 per cent, with 60 per cent or more in such large cities as Milwaukee, Dallas, Omaha, and Knoxville. Among units having increases, the average rise in rents ranged from 12 per cent in Madison, where State law limited the amounts of increase permitted, to 41 per cent in Houston. In 8 of the 14 cities, the average increase was over 25 per cent.

The survey also shows that the impact was heaviest on low-income groups. Among units renting for under $30 a month, the proportion having increases was greater than among higher-rent units. The average percentage increases were also markedly higher ranging up to 46 per cent in Houston, 52 per cent in Wichita, and 56 per cent in Dallas. In 7 cities, the average increase was 35 per cent or higher.

These increases, I want to emphasize, occurred in cities where it was believed the housing shortage had been reduced enough to permit decontrol. There is every reason to assume that in other cities, and particularly the largest ones, the effects of decontrol at this time would be even more drastic. Chicago landlords, for example, argued in court last fall that they were entitled to a 71.5 per cent rent increase. It is clear, therefore, that a sudden and simultaneous removal of rent controls on a national scale would precipitate a wave of exorbitant rent increases. Such increases would seriously reduce the purchasing power of millions of families. Since there are very few vacant livable housing quarters available for rent within the means of low and middle-income families, they would have no choice but to pay the rent increases demanded. These families are already living on tight budgets. The money to pay high rents would have to come out of their purchases of food, clothing, and other necessities. The burden would be most serious for the onefourth of our families with incomes of less than $40 a week.

A sudden and rapid increase in rents would affect adversely sales and employment in many industries and trades. In addition, public assistance costs would rise, increasing Federal, State and local budgets. Public and private pensions for the aged would become more inadequate.

In contrast to the hardships and economic dislocations which would follow a sudden and premature termination of rent control, we have the sound alternative of continuing a policy which protects the tenant and at the same time is fair to the landlord. The welfare of our citizens as well as the stability of our national economy require that this policy be continued. I therefore urge that the Congress extend Federal rent control to June 30, 1951.

HARRY S. TRUMAN