The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-29
new LAW WILL NOT
y ATTRACT CAPITAL
Advisory Council Declares
Politicians Tried to
Placate Voters.

~will the bills rushed through the
legislature last Monday evening and
,hs other State and National measures
beIng discussed, solve the problems
which confront :he real estate interests
and particularly the builders and
tenants?" \
This question was framed by the Ad-
ylsory Council OF Real Estate Interests
after a survey of the four Albany bills
that we're passed and Senator Caldgr's
bIll at Washington to grant total tax
exemption to the various kinds of loan
and building associations and authoriz-
ing them under Federal supervision to
r.discount at cost of one-half Of 1
per cent. mortgages for not more than
70 per cent of the real estate encum-
bered. Senator Calder also incorporated
the Merchants Association proposal to
exempt from Federal tax all incomes in
the form of interest on not over $4,000
OF loans on real estate.
Answering Its own question In the
negative. the Advisory Council Of Real
Estate Interests call attention to the
following circumstances:
at is quite probable that the present
rental level is sufficient to encourage
new construction. The normal produce
lion Of new housing has been inter-
rupted for so great a period and there
s such a large number of people now
able to AFFORD better housing than ever
before, that adequate returns can be OBJ
talned upon the payment cost of mate
rial and labor.
100000 Available for Loans.
THE Lockwood legislative committee
reports that $35.ooo.o0o are available
for mortgage investments-only enough
n hnpCino 70 Z
lies and yet It Is more money than can
b used In this matter before fall
AS to the much discussed law pro-
viding for four family converted dwell
linga eone OF the statements to the
press indicate that its sponsors have
countsS the houses available for altera-
ton and have jumped to the conclusion
that all viii now be converted and also
that these houses are now vacant rather
than being occupied by at least one
family and often as boarding houses
which house moro people than would be
found in four family tenement In
view of the regulations which control
every such alteration. we can only hope
that the result will not be as disappoint-
ing as In the case Of the much heralded
three family Of two years ago.
Whether or not the savings banks
will desire to undertake the responsible
ites Of making building loans remains
to be seen. Few II any OF them are
equipped to handle this class of business
with proper protection to the interests
OF their depositors and a comparatively
small amount of loanable funds will
thereby be loaned to builders. In fact,
ehy real benefit from this source is open
10 question when we recall that It Is the
savings banks which must absorb those
millions or mortgage investments upon
which payment will be required by
wealthy individuals who are subject to
the higher rates OF the Federal income
tax.
The other two laws may be COM
mendaole from the viewpoint. of some
tenants. but It must not be forgotten
that they merely increase the number of
restrictions upon real estate owners and
10 that extent discourage the ownership
Of such property.
Meant to Meet Political Ends,
We look in vain in any Of these laws
either actual or proposed fcr any clear
intent to attract capital into the hous-
Ing field. The politicians responsible
Tor these acts seem to have had no other
object in view than to placate the
present demands of one class of voters.
After all these weeks and months of
agitation how much discussion has &C.
eulTeu as 10 tne conditions under which
building can be resumed and whereby
capital can be attracted in competition
with all the other sources of investment
now open?
AS to the builders, It is currently re-
ported that buildings are not started be-
cause the builders seek to work on their
Old basis of investing little or no capt.
tai in their projects. The lending in
Stuttons, on the other hand, have seen
the error of encouraging this type OF
builder and are seking TO protect the in
i~ests of the deposltors and others who
may represent them. Has anything been
done TO overcome this situation?
As TO the second phase. II is useless
70 overlook the comparative net return
70 the investor In real estate mortgages
as compared with other securities. No
general relief as to our housing needs Ia
possible or can be expected until money
IS attracted to the real estate and mort
gage markets as a sound business propo-
stion. The housing needs of the COM
munity can not be met by philanthropy
IT therefore follows that Some means
must be taken for paying TO capitalists
the present value of their money, or else
me public must wait until such balance
- struck even by paying more for the
capital or by overcoming the effect OF
me enormous tax exemptions which have