New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-03-05

special uniform impost. In their report Mr..
Aids and his colleagues declared: Under the
existing system mortgage debts are liable to
very heavy taxation, and while they generally
"elude the taxgatherer lenders must OF course,
'be compensated for the risk The result is that
"as competent experts believe at least one-half
'of ! per cent in the average interest rate on
mortgage loans is tax paid by the borrower"
They also reported that in Pennsylvania, where
annual tax of four mills was imposed on
mortgages, the average interest rate, plus the
tax, was lower than the average interest rate
when mortgages were subject TO the chance of
local taxation. Likewise they said that the
result Of exempting mortgages from taxation
in Massachusetts had been an average inter
est rate Of 31h per cent If Mr.. Aids was con-
WINGED of these facts certainly the people Of
his district and other rural districts may be
expected to take a reasonable view of a meas
ure likely to reduce their borrowing rate in
the same fashion. AS the proposed law is a
compromise between the Massachusetts eXemp-
ton and the Pennsylvania annual tax system,
may fairly look for a reduction of about
per cent in interest charges.
Nor is the benefit to come merely from reduc-
ton Of the rate for money now in the market
through the removal of the danger of contisca-
ton of income by local taxation. The volume
OF money seeking investment on bond and mort
gage will increase. At present rural borrowers
have TO pay 6 per cent because there is little
competition for their mortgages, They fire.
quenty have difficulty in getting them at that
rate on large proportion Of their property
they want because savings banks are strict
~ limited as TO the amount OF their loans and
individual capitalists prefer bonds which they
can more surely hide from the taxgatherer. But
if real estate mortgages We're exempt from the
varying rates Of local taxation. and subjected
to one uniform charge, capitalists who are seek
ing safe investments with a certain income
which will not be halved by some freak OF local
assessment will compete for these loans. The
city mortgage rate is now lower than the coun-
try because, among other reasons, there is more
capital in the city seeking safe investment at
low rates, and there is less danger in the crowd
ed community of mortgages being discovered.
But there is no reason why farmers should not
enjoy similar privileges Farm lands are good
security, and people who want TO buy land. or
make Improvements on what they already have,
would be able to do so on much more favorable
terms If they would make investment among
them free from annoyance and the danger Of
having its income depleted by unexpected taxa
ton. The idea that a reduction in the legal
interest rate by legislation is necessary to Sc
cure easier borrowing is fallacous. If it were
reduced beyond the limit warranted by com
mercial conditions, borrowing would simply he
made more difficult. If commercial conditions
warrant lower rates than the law allows. money
will seek investment accordingly and be glad
to get farm mortgages only trifle better
rate than the next more attractive investment
in the market offers.