The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-09-14
How Chicago Banker Took High Finances to the
People, Thus Balancing the High Cost Of Living
BY CAMERON LANDoN.

3s diligently building skyscrapers and
Impairment buildings. In Chicago the
|crcdit for a large part of the years
building, and the total will be over
kl00, 900 900, will be due to what has
been accomplished by Harvesting the
Remand for higher income to balance
The high living costs. The towering
pfIice buildings and part of the acres
BIZ apartment buildings. including some
BIZ the luxurious apartments, are in
fact monuments to what an Idea can
DO.
This is the explanation given: dur
tng the years when the wildcatters
harvested three or four million dol
BARS annually the major factor in the
harvest was the cost of living that
created a need for higher rates of
Income from savings and for small
amount form Of investment such as the
wildcatters offered In profusion. The
fabulous rates and the size Of the
shares Haunted by the wildcat pro-
moters combined to take savings away
from the public as easily as a bully
takes candy from his kid" brother
AS for bonds. they were inffexibly
Isl, 900 and offered in blocks OF 5000.
(which was q sum too great for the man
|or woman who had saved hundred
or two. The small investor saw little
ito help his income above the three
needed more.
Finds a $ tuition.
Then came the !uea. the result of
years of study Of conditions and OF. a
solution. The altwu!sm OF Chicago
banker, g. w. Straus. had taken prac-
fsicai turn. he had made study OF A.
nance abroad as we'll as in the United
States and he proposed that bonds OF
small denominations bearing per
|cent. be issued. bonds secured by first
mortgage on improved city real estate
and maturing lserialIy Instead of
making the irnnrnYement Of city prop
|erty the business of rich men. he
worked out way by which the hg'
|Eums for mortgages by which sky
|scrapers ard apartment houses are
Financed could he split UP fine enough
for small investors to take a part
|That liz how the ''Straus' system OF
Financing. which has spread far be-
|yond Chicago, was originated. The
first mortgage real estate bond, which
was a fraction Of a big mortgage of
stable value. was the result.
BY means of such bonds as these
today large part of the urban build
ling operations I'm Chicago are carried
on. Here was r. simple thing, though
Ia departure from custom, ore that
serves 10 add improvements TO IA city
at a rate far greater than before. 1t
was obvious that dividing up mort
gage into "A series Of bonds did not III
mintsh the value of the security, Of the
mortgage or of the individual bond
even If II was only for sfno. BY df-
ytdfug fHa Ixay into hpn1S wb{rb
ture ser!aliy the safety was enhanced
and that discovery has caused the old
plan OF sinking funds'' TO he aban-4
ldoned in large measure In the mid
die west where interest rates rule
high. and security must he douhle-riv
eted. For as each series OF bonds Is
retired, the margin of safety between
the loan and it's security is increased.
There has been a steadily increasing
proportion of the annual bond output
in the serial form.
Millions Made Availhle.
with the advent of this small mort
gage bond the vast aggregate of indt-
vidual savings we're discovered. With
In few years millions of dollars
monthly were made available for city
building by It's aid, During one month
OF 1912 the building permits issued
in Chicago alone were for structures
HAVING u FtTHSL IEpHAAE@ vi dS,SSU IRGS
and involving the expenditure OF $i2,
$3.50. In contrast TO this record Tor
one month, was that OF the CORES
ponding month of 1907. when the
buildings involved only $6.00e.8o9.
This theoretical solution of the prob
lem of thrift was proved to be rracti-
cal In the application of 1t. the success
of the urban financing being encour
agement to the proposals TO finance
the American farmer better by some
similar plans.
about the rearing OF the huge city
structures. Banker Straus, has made
thrift his hobby and has consistently
shaped his course in the faith that
the cooperation of the people is a
necessity to and the solution OF all n
nancial operations. That his business
has reached a magnitude of millions
Is significant of the trend Of things.
Sees New Era. :.
"As q matter of fact" said Mr.
Etraus In an address to the American
Society of Thrift. this era Of the
'people-ization' OF tho nations indus 1
tries already is davntng. and In. spite j
OF concentrations of capital the basis
Of the financial world today Is really
n democratic one. The foundations
of the whole financial structure rest
on the shoulders of the people.
'Our tremendous Industrial expan-
sion of the last forty years is due.
more than any one thing, to the |
fact that ways were found of tapping /
the credit reservoir Of wealth, owned |
In the aggregate by the people. of con- |
centrating the funds of thousand or
q million loaners. and Of bringing the |
people into active participation In
great financial operations"
The expenditures for new buildings |
In the leading centers OF the country |
have run about 100000, 600 year |
until the plan was hit upon by which |
the small investor could have a hand !
In the financing and thereby get much
higher returns from his savings and |
avoid the temptations which beset /
him when his living expenses were far !
higher than his interest returns and /
the wildcat promoter Haunted bogus I
profits in his face with the height OF t
artfulness.
According to the Investigations OF \
the postoffiee department the sums
wasted ON the wildcat enterprise were
not less than billion dollars In FIVE
rears. III the record Of the few years I
N which real estate bonds Of popular
denominations have been offered II an
Indication ~ fhe future. Il large part
X u htl1lon doIlnkM Will w &rl1t4ted ~ Il
NM ifx6 III NrIsfS