The Rent Racket:
An Article Criticized To the Editor of the "Nonnt-Cuixa Dany News"
Sm=—As in exercise in special pleading, article contributed to. your columns this morning is an admirable effort. IL is so full of specious argu ments that to expose them all would need an article twice as long, Let us take a fow examples.
We are told that the drop in Exchange will not affect an. importer's income' in sterling, since he charges a fixed commission. "The assumption Is that his sterling' turn over, or the quantity of goods he sells, will remain the same—a piece of childish nonsense, since a certain Pesult of the lower Exchange will be fa heavy reduction in imports. Will {he petrol merchant and the dealer in Californian fruits sell as much as before? How many new motor-cars fare being bought by Shanghai residents today? There is going to be widespread descent to a lower standard of living and a reversion. to the use of native goods, from which it follows that the import merchant will suffer, And so will his employees, who, it seems, must pay me creased' rents to protect the Jand-Jard.
2. Again, we have the confident assurance that an investment in property, like that in goods, must neces-tarily. appreciate with the depreciation of the currency. Why should it? Ils neither a consumable nor a movable commodity, A consumable article of foreign origin which can be replaced only. at a higher price such asa motor-ear must quickly respond to lower Exchange. So also will something which can be exported Like mahjongg sets and silk lingerie. But house property is rooted in. the sell, "and its value is determined purely by local conditions, except Ju 80 for as imported materia) essential to its construction and maintenance, It is definitely Investment expressible in' foreign currency, nor was foreign currency used to acquire it Tneidentally, when, nearly twenty years ayo, the pound sterling was worth only three local dollars instead of sixty of seventy as now, id tone solitary landlord reduce" his Fonts? Did one solitary tenant_ ask for n reduction on that score? Such a proposal would have been laughed Out of court then. Why is it valid today? Will someone please explain?
'3, the article reeks of suppression veri, suggestion foist, The extortion: Ate rentals charged to sub-tenai With, the overcrowding that results, ootid easily be prevented by the Tandlord, whose approval is required by the sual terms of a lease before sub-looting is permitted. Have not Jandlords connived at it and pocket ced their' share?
'4., That Income on property has averaged only 3 percent. over term fof years is manifestly untrue; such turn would never have stimulated the building activity which has transformed Shanghai into a great tity. An ex parle use of, selected gues can prove anything, but com mon sense (ells us that capitalists do x. not persist_in sinking their. money into "the development of property yinMihinc T have said enough to show ietding only 3 pee cent
that "the article. is untrustworthy, Rud 1 will not take "up more of Jour space on that. ple. Let me Wat chs "aorta going, un. fon before the dollar declined. ietthords wore honest. they "would Kuni they ave aving more, simply because thay. con get Ht and that the Pisa'or 'Exchange is merely", fed Pushing. Ita root over one's head Were fist luxury' and mankind Mere, ar aya in the, Neolithle Aefeving" themselves civilized, people ge" the, problem. would solve itself Bapect protection from those. Who prompt from the misfortune of the war' which hag overwhelmed China.
Shanghai, Aug. 13.
Live and Let Live contributed article on the rental question the Sunday's issue of your paper is interesting but th thor wishes to prove his point the landlords only receive $'per cent, on their investments, he had better' produce ures certified thy an uninterested firm of Chartered writer's Jandlord frankly units making 7 or 8 per cent. and atler making an allowance of some 10 per cent. for vacancies which for the 1st twelve months simply do not exist.
"Again, his statement that 40. per cent, of the rentals is consumed. in overhead requires {o be proved. The writer is informed by a well-known and highly respected firm with a EDITOR (continued) large property department that they allow 25" per cent. for overhead, commission and vacancies, so. that the Mgure of 40 per cent, (my landlord slates nearly 50 per cent.) if true can only be due to gross mismanagement. These figures. of course are on the basic rent.
Let us now go into a few simple figures. "A compound consisting of three or four blocks of buildings Where a lot of heat is dissipated by having to pass for about 100 yards under cold' earth was recently. charge of a BOT. certificated This compound contains 274 rooms and used two tons of coal daily for|of meeting financial obligations—halt months and six tons dally during the cold weather, or encircling them, which leaves them approximately 1,180 tons year.
Assuming that the price of cost before hostilities was $20.0 ton gives cost for heating of $23,000, with oat today at $80" per ton (avery {iberat price for slack coal to a big buyer) "the. total cost would be $92,000 which divided by the number of rooms makes 'a yearly increase of $392 per room, per annum, or $20 Der, month, add to this a) further for Increased cost of electricity Wye have a total of $28, $180 before hostilities shoutd there:
'A three-roomed flat renting for
fore now rent for $234 or between 80 fud 55 per cent. increase, for'a more expensive apartment the proportion would be proportionately less Thus For example, a 4 roomed apartment renting for. $300 the increase. would Work out at $00 or only 92 per cent. 'Therefore to strike a happy medium, an all-round Increase of 40 per cent. fon pre-war' rentals. should. salisty Tandiords and tenants alike, The Utopian idea advanced by your" contributor that' because @xchange has depreciated by some 200 per cent, he should receives 200 per cent. increase. would be per= fectly" jusiined were all Jocal residents to receive a similar adjustment in their salary" cheques, Dut to probably 90 percent of local Fesidents the drop in exchange will make Iitue or no difference, To give a concrete example the writer came out from home some 30 years ago at a salary of £23100 per month and. at today's exchange he receiving some. #12.
Landlords therefore should not lose sight of the fact that trade, the life: blood "of Shanghai is dependent on Chinese in the hinterland. who under present. conditions. cannot possibly buy. The average "firm has only sufficient reserves to. carry on for 2 limited time and i forced. by living conditions to give enormous increases {o'theie stams will be compelled to close down and. send Gr they are able) their staffs "home, when the imdtords will be without any" one tat their apartments. ea any The motto for all at the present time should be "Live and let Live."
CNE. Shanghai, Aug. 14.
Text read from the printed page and cleaned; old type leaves the occasional error.