New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-02-13
For Making All Realty
Loans Quickly Salable
Proposition to Provide Lenders with Method Whereby
They Can Liquidatc Their Securities Without
Troubling the Land Owners-Plan
Outlined for Issuance of De
bentures Against Property.

terest. and convertible again readily
into money as soon as the demand for
IL became active. Think what bless
my i'm panic times such tranquility
would be to the owner of property
who has a mortgage on IT, The &c
Lenture companies would not be forced
&C call their mortgages, as there would
be no pressure on them, because, m
stead Of making q demand on the COM
panies, the holders Of the debentures
could sell them and thus secure the
necessary funds. Merchants and others
who find IL advisable 90 keep convert
bic securities on hand. 10 sell or 70
give as collateral when they need casn,
would find them very convenient The
strictest safeguards could be thrown
around the actions OF such companies.
So as TO insure their stability; but
such safeguards are thrown about bust
rcss banks, savings banks and trust
companies. and could be about de-
benture companies based on real estate
mortgages. The business must he done
on large scale to be profitable and
stable.
To be sure. the laws OF the state
must be changed before executors and
trustees could invest in such bonds
At present, executors. dm'nlstlatOrs
and holders of trust funds may inves,
in the same kinds of securities Is say
inCs banks are allowed by law TO invest
IN. and i'm bonds and mortgages on I'M
incumbered real estate worth 30 per
centum more than the amount loaned
thereon Sec. III. Decedent Estate
Law Savings banks have consid-
cradle fe q OF investment Sec. l46.
Banking Law. but are not allowed 20
invest in such debentures.
With proper safeguards there rs no
reason why such debentures should not
be the best form of investment for ex-
ecutors and trustees. combining safety
and stability and easy change into
money when the trust is ct an end. The
coming into the investment field Of two
or three large debenture companies
would widen the field for large loans
on large operations. At present this
field is extremely limited. few lending
institutions being willing TO invest
large part Of their capital in one loan;
but If they could issue debentures
agains, such a loan and get their CAPT
tai back, they might make the loan. If
the present lenders of large sums have
loaned all their money for the time
being, the borrower may be put 10 much
expense before he can get the necessary
money.
In Europe it is customary for such
loaning companies to loan on long time
mortgages. some as long as 40, 90 or so
years, with no thought of getting the
principal back except by amortization.
As conditions are less stable here, it is
unlikely that many lenders or borrow
ers would be willing TO make such
loans, but that Is not necessary. Short
- . ION.
under the supervision of the Banking
Department for mortgages upon which
debeutures were issued, would meet the
case. Mortgages reduced by annual
payments would be renewed without
difficulty
The effect Of such a system OF mort
cages Is bound 10 be beneficial 10
building i'm general, "a it will tend 10
prevent the erection Of freak or un-
economic buildings. Bankers who arc
about 10 purchase an issue of deben-
lures will have reports from their
building experts, as TO whether the
buildings are likely 10 pay for the
terms of the mortgages upon them.
Architects who will make II bust
ness 10 advise tinanciers Of the eco
monte features of buildings will advise
their professional colleagues that one
of the most important elements OF
building will be its economic value for
d term Of years. Under the present
system builder cares only for the
building until he can sell IT. and the
short term mOrtgagee cares little be
cause he thinks the property Will be
good enough security for him. If the
builder knows that he must erect
building designed. TO be economic for
long term before he can get loan on
/ IL, he viii he likely 10 build more care
| fully and along standardized lines.