The Birmingham age-herald., 1907-04-14
HARDING POINTS
 OUT THE DANGER
Mistake to Drive Money from
 the District
URGES NEED FOR ACTION
Much of Construction Work In 5ir- mngham Is Done With Outside Capital and It Should Be
 Encouraged.

To the Editor of The Age-Herald
 In your report of the proceedings of the Commercial club Friday afternoon, which appeared in your issue of today, I am incorrectly, and evidently through a typographical error, quoted as saying that, "The legislature was short-sighted and unwise." The word Legislation should have been used instead of "legis- lature," The legislature itself was not under discussion or criticism, but a par ticular piece of legislation, viz: That portion of the general revenue bill which provides additional taxation of foreign corporations making loans on real estate in the state of Alabama. The new tax amounts to about per cent of the gross receipts from this state of these compa- nies, and is regarded by them as exees- sive. l have it from high authority that the object of the law was to force these foreign corporations to bear their proper share of taxation; but matter of fact this tax will not be borne by the loan companies. but by our citizens who borrow from them, as there has been an advance in interest rates to cover the tax. One company that has been doing business in the state has withdrawn and others who had contemplated entering the state have decided not to do so. Cor porations like the Travellers Insurance company, Penn Mutual Life Insurance company, United States Mortgage and Trust company, Prevalent Life and Trust company and others have several mil lion dollars loaned on real estate in Bir- mingham and other large cities in Ala bama These loans compete .n no re- spect with the operations or the local banks, and have been a strong factor, not only in the physical growth of Bir- mingham. but in it's development as a money center as 1t has enabled banks to employ in other channels funds that might otherwise have gone into real cs- tate loans None of these loans have been made at excessive rates of interest,". in fact all of them have been made at much less than the legal rate, and the major ity of the larger loans are at and 52 per cent.
 Several years ago these companies would loan but little money in Alabama, but at the same time they. and others. were placing large amounts In Georgia cites, like Atlanta, which city is indebt- ed to very great degree for it's marvel pds hSN tippiHtiil tO llle tHtdD hOHty lnat has for years past been poured into it by northern and eastern loan companies. Alabama needs capital for the develop ment of her natural resources, and 1t seems a pity that any legislative ob- stacles should be placed in the way of free and unrestricted flow of capital in this direction. New states like Wash ington on the Pacific coast, realize that cheap money is the most potent of all developers. and recent legislation in that state, instead of taxing loans, has specl- fically exempted them from any taxation whatever. Most of the larger buildings In Birmingham have been erected by the aid of cheap money furnished by these foreign corporations, and the revenues of the state, county and clty have been greatly increased by the taxes on hand some buildings now standing in place of the shacks of a few years ago l believe that instead of adding anything to the revenues of the state. that the present law will really decrease them, as the ad- ditional taxes that our real estate bor- rowers will pay to the state through the medium, of these real estate loans will not be sufficient to offset the loss in real taxes that would accrue from the construction of large buildings. Should number of loan companies decide to with dray from Alabama and place their loans in states imposing fewer restrictions upon them the result would be serious, as a large amount of the loans now out standing would have to be paid.
 It IS perhaps impossible to secure any modification of this law at the July ses- sion oS the legislature. but it seems to me that effort at least to do so should be made, and that the commercial or ganizations throughout the state should express themselves on the subject.
 w. P. G. HARDING
 ApriI f0n-