New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-11-23
A THREATENING EXPERIMENT
Reducing improvements and Increasing Them Unused Lam
kelv to Strike at Value of Invesment-Woud nure Owner
and Probably Whole Community.

of land strikes vitality at the high grade OF
the investment, whether by way of ownership
or by mortgage. As soon as the grade OF the
investment is lowered the rate of return de-
manded is at once increased. To illustrate:
/ OF two properties similarly situated, each
worth 100000. if one of them has land
value Of 100000 and building value OF S4o.-
/ 000 and the other has a land value of s4O,OOO
and building value of 100000, The first OF the
two (other things being equal will secure
either larger loan a better rate OF inter-
est. II is land against bricks and mortar. as
the saying is, and in the first case there Is
more land value.
| This is further illustrated respecting mort
gage conditions in Vancouver where i'm
provements are not taxed. for, although the
author says that mo one was found who
claimed that the tax system had made more
difficult the securing of loans he states
that it is practically impossible to secure a
/ loan on unimproved real estate; thae so per
cent is the upper limit on conservative
value for loan on improved property, and
tina. 40 per cent is usual. and the usual rate
of interest per cent.
These figures speak eloquently for them
selves to any one who is acquainted with the
mortgage situation in New York City.
/ The expert frankly admits that only the
liberal policy of that city, in regard to selling
/ land for taxes, prevents very great distress
among taxpayers.
/ He mentions forcing of lands into use.
This seems to be a favorite idea of those
without experience in real estate matters
There are Of course, here and there occa-
sional lots in built up sections which have
not been built upon, but even these frequent
-. LD.,A hnnN Fnr+
innate circumstances, for the improvement
when made is much finer than what would
ordinarily have been erected.
As to a general forcing of lands into use,
the idea is grossly absurd. Normally the
city is well supplied both with places OF
business and places of residence, and the en-
terprise Of builders in anticipating need at
times comes near to the point of reckless
ness Any artificial stimulation of activity
would seem like forcing additional wine ~ on
one already too well supplied
In many instances the net return TO the
owner in rent, after payment OF taxes, allow
ing a certain percentage in series OF years
for vacancies, does not exceed the ordinary
return from fairly safe railroad securities,
and the owner is satisfied in view OF the sta
bility OF his investment. IL il were possible
10 take from the land all value, so that the
owner would have his money invested merely
in bricks and mortar it is open to question
whether rents would be at all reduced IN
amount, in view of the decreased safety OF
the principal so invested.
In view of the foregoing it seems 10 be
quite beside the question TO talk of beneiit
accruing ito the public treasury and the IN
Jury to the owner" There is no benefit to
the public treasury, for the assumption is
that the total of the annual tax would remain
the same as heretofore. The injury would
accrue TO the owner first, and through him II
would speedily spread itself over the COM
munity. probably TO the ultimate consider
able embarrassment Of the public treasury.
Ii would seem TO be common sense 70 try
this decidedly threatening experiment on
the dog" in the shape of several smaller
cities than New York. such cities to be con-
sderably larger than any Of those mentioned
in the above reports, especially in view OF
the fact that serious injury 10 New YORK
would be felt the world over
Il is perhaps well to remember that it took
some Of our states about half century to
recover from the reputation Of state obliga-
tons. II ought to take little thought to fore
see what kind of a shock the faith of the
community would receive respecting the de-
sirability Of real estate investments if tie
"experiment" were tried in New York City.
The mere fact that the proposition is seri-
ously considered is to some extent an ex-
PLANTATION Of the present unsatisfactory con-
dition of real estate values. The Mayors
COMMITTEES ought 10 give its attention to
something practical or else await the rcpor,
Of the legislative joint committee on taxa
ton. CHARLES l.. MANlERRE.
New York, Nov. l3, 1916.