New-York tribune., 1919-10-26

really get something out of INVESTORS,
without taking just as much in addi
tion out Of the overtaXcd real estate
owner
Income Tax Unjust to Realty
Money has left the mortgage mar
ket because the life insurance COM
panies and savings banks we're forced
to invest heavily in Liberty bonds, AMI
the large individual lenders have with
drawn their money from the mortgage
market because the income taxes were
so heavy that they could not afford to
stand them. AS has been stated the
place of this money which has left the
market must be taken by money from
other sources, and the great supply
is in the hands of the people. We are
apt to think that the institutions and
big lenders carry most of the mort
cages, because their loans are of the
most conspicuous; but this is not the
fact. The statistics show that only
about one third of the mortgages are
carried by such lenders and that two
thirds are carried by the masses, and
what the mortgage market needs now
is the support of the masses.
Small Investors the Saviors
The small investor must be looked
to hereafter, even more than before,
to carry the mortgages of the country.
This will not only take care OF the
mortgage market but will take care of
him. 1t is the safest thing into which
within few days of the report of the
Federal Trade Commission, in Wash
ington, that '$500000,00O year are
lost in wildcats,' and we all see the
papers full Of advertisements Offering
seductive investments to investors. No
better training for good citizenship can
be naugurated than by getting the
thrifty to put their savings into good
real estate mortgages, which neither
60 up nor down, but, if carefully Sc
lected, always pay par to the investor.
will not continue to do so if he puts
/ his savings into foolish investments
and loses them. He will spend as he
goes. This country needs nothing 50
much as an ever increasing number OF
thrifty savers, for they will be the
backbone Of our citizenship.
"Given the exemption from the in
come taxes and surtaxes which the Nc
Laughlin bill promises, and which the
state should also grant, and given the
machinery making it easy for the man
with 81 900 or $4,000 to get good
mortgage investment, the common
people will do the real estate financing
of this country as they have that of
Europe. The business of cutting up
the large mortgage into small pieces
by which the small investor gets the
same high class security as the large
investor has been getting, is being
rapidly developed. The title insurance
and mortgage guarantee companies are
of the public. They act as great mort
gage exchanges. They are the CON
duits through which the money OF the
masses can be safely brought to the
mortgage borrowers at low cost and
much more uniformly and steadily
than when the market is dependent
on the big institutions which, when
money is plentiful, are free to lend
and when it is not do not lend at alt
"Thc Legislature has helped to make
this possible by making investments IN
piece of mortgage lawful for
trustees, provided the whole mortgage
would have been a lawful investmen'
for them. AS yet, the mortgages are
not likely to be for very long terms
The demand for long term mortgages
arises largely from the desire te
escape renewal fees, but 1t is doubtfu vi
from the borrowers own standpoint
whether he should prefer a long term
mortgage. Certainly, at the presen'
time the interest rates are too h'gh &c
, make such contract advantageous
He is likely to fare better with the
opportunity to readjust the rate al
frequent intervals. 1t is more just te
,, both lender and borrower to deal a
the market and every three or hV'
years adjust the contract than to make
a twenty or forty year contract when
if made now, would in time be dls
advantageous to the borrower ant
which, when made fifteen or twenty
years ago, has turned out to be very
disadvantageous to the lender.