New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-02-09
A PLEA FOR BUILDERS
Scheme Suggested for Lessen.
ina Their Troubles.


overlooked, says The Title Insurance
News" The truth is that he is now more
or less OF an outcast I'm business circles,
and this Notwithstanding the fact that
every dollar he is able to get into build
ing helps along the genuine prosperity.
The money he pays out for labor goes
into local business channels for food.
clothing and shelter He is doing proper
tionately as much for his city as the
manufacturer. Let the building opera
tons of a city come to a standstill and
every business man quickly complains OF
hard times.
Continuing. it Gays:
Yet the man who has enterprise enough
to go ahead and start something in
building line often loses his reward
cause he becomes a prey to needlessl.
nbusnesslike conditions.
II is not enough TO say that these things
ought not to be. The condition does exist
and it must be faced. The reason for II
is plain: the remedy, in our opinion. is
equally clear.
We have credit system in this coun-
try which enables builders with a small
amount OF actual cash capital to under
take some very ambitious building pro-
jects.
But there are many adverse conditions
constantly arising with which a builder
operating i'm this way is not able to cope
delays in securing cash on mortgage
loans, disputes and litigation with con-
tractors, perhaps a fnanciel catastrophe
caused by an impatient creditor, who, in
order. as he thinks, to protect his own in
dividual claim. so to speak, pulls down.
the entire structure upon himself and hisi
fellow creditors.
II cannot be denied that when builders
and material men thus employ their capt.
tai. depending largely upon an equity inl
the yproperty for it's security, IL Is con-
stantly i'm danger.
Past experience has shown that thesei
conditions periodically bring disaster
BY way Of contrast it is interesting to
consider the way they prevent such things
i'm Germany-that country OF successful
economic experiments under state super
vision.
The plan is carried on there in each
locality under a public official whose
duties are both executive and judicial. Hei
is called q Commissioner Of Construction.
Builders may file plans and specifications
in his office The contract with the mort
gage is likewise filed there, and theI
money to be loaned is paid over to the
commissioner.
Filed with him also are contracts for
labor and material, and he receives a
bond from the contractor guaranteeing the
completion OF the work in accordance
with the contract.
Moreover. the difference between the
amount loaned on mortgage and the cost
of the building is deposited with the COM
missioner by the builder. In case money
from the MORTGAGE or builder and owner
is not deposited, a bond guaranteeing
payments at specified times is accepted.
All disputes as to the fulhlment Of con-
tracts are decided by the commissioner
Thus there can be no litigation or Other
delays to hinder the work. II the builder
lacks money to pay in full for the opera
ton. contractors may subordinate 10 the
first mortgage such amounts as are due
them Their claims become fixed liens on
the property and the income therefrom
until paid in full, the commissioner act
ing as receiver for the property Until
these subordinate claims are fully paid.
II would not be without precedent for
our federal or state government to exer-
else "A similar supervision though some
would probably call it "paternalism." and
say it was socialistic I'm its tendency.
The national government, through the
Controller of the Currency. superyises the
national banking system; the various
state banking departments control the
state banks. trust companies, building
and loan and similar associations: the
Postoffice Department does its best TO
protect the unwary from the get-ricn-
quick schemer and promoter Of bad ia
vestments.
Real estate mortgages to-day occupy
stable position. and the inflow OF capital
for this form of investment is constant.
State regulation. limiting the amount OF
loans of savings banks and trust FUNDS
and giving specifications as TO the xmas
of investments permitted them. has helpsc
to make this condition. individual lenders
or investors realize that the state posi- 4
ton as to the funds it protects is SOUND
and have therefore taken it as stand
ard of practice.
Why should not the powers that De take
coSnizance of the conditions 10 when
we have called attention in this article
The evils existing in the present creut
system are responsible for the hlgh oos'
of building materials as much as AL!
other factor Great losses are eXperi-
enced in building and the man VINO
able and does pay his bills must pa! ~.
losses the dealers suffer in unsuccessiui
operations.
Material dealers know that apparent
margins of profit are much 100 sie""
Yet they realize that when credit losses
are considered. the worry and decay
through legal entanglements and the en-
pense involved make il impossible 10 u"
business on any less margin.
Almost any dealer i'm building mater'S
will tell YOU that if the dangers III NV
credit system could be eliminated ~
could well afford reduction. ana "o''o
expect to see costs Immediately reduce u
all kinds of material from 10 TO y per
cent. =,
But great bodies move slowly. II "ou''
take a long time TO arouse sufficient sen
timent i'm favor of such an idea. even -
face of the glarinsly unjust conui''o"
that exist. To bring about governments.
supervision OF loans and contracts
the benfit of builders and material ue'