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RENT
CONTROLS
DURING THE
ECONOMIC
STABILIZATION
PROGRAM

By: Robert M. Rosecrans

This paper discusses the role of rent controls in the Economic Stabilization Program. It tracks the development of that policy in the context of the economic and political climate which influenced policy towards rent. It includes a discussion of how the regulations were formulated, the problems of their effective administration and the reasons rent controls were not included as part of Phases III and IV.

Mr. Rosecrans is a senior at Yale University.

RENT CONTROL DURING THE ECONOMIC STABILIZATION

PROGRAM

Introduction

Federal controls on residential rents were part of the Economic Stabilization Program from its inception on August 15, 1971 until the end of Phase II, on January 11, 1973. The role of rent controls in the Economic Stabilization Program was both complex and significant. Its problems, successes, and failures dramatized the influence of noneconomic factors in determining stabilization policy. The Economic Stabilization Program, although reflective of a new economic policy, was not entirely economic in nature; a major goal of the program was to alter the nation's "inflationary psychology." The rent control program was a major element in the pursuit of this goal. The economic justification for rent control is questionable, however. Data compiled at the time of the decision to include rent controls in Phase II were not extensive or conclusive enough to demonstrate that widespread inflation existed in the rent sector or that the rate of increase in residential rents could effectively be restrained by a Federal program with limited resources. More extensive data compiled during Phase III, after controls had been lifted, still left the question unsettled.

In subordinating the economic aspects of the rent control issue to the non-economic ones, the Cost of Living Council, the Price Commission, and the Rent Advisory Board were engaged in an effort to maintain consumer and labor support for the overall stabilization effort. The need for this support was thought to warrant rent controls. Economic justification was not advanced by proponents of a rent control program as strongly as this non-economic justification.

This paper will consider the specific issues of this experience with rent control-initial policy, selection of a standard, definitions of key terms, exemptions and decontrol, compliance, Phase III decontrol, and the functioning of the Rent Advisory Board. In addition, overall program effectiveness will be discussed. This history is based on in

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