New-York tribune., 1919-06-22
Housing Situation Here
Will Be Worse This Fall
New Construction Under Way Will Provide Homes
for Not More Than 100 Families; 10000 Homes
Normal Yearly Supply; Taxes Brighten Money

lavishly, for every other industry, but
when 1t was asked to extend the pro-
visions of this act to the construction
/ of housings in cities it refused. 1t
took away all the funds that had been
in use in this field and refused even
the use OF it's credit in return.
Credit for Rural Districts
The Administration did provide
money for farm mortgages and for
suburban sa houses, and the farmers
have protited largely by the fact, al
though they hardly seemed to need the
assistance given them. But, while
there may have been some show of
reason for discrimination against the
construction of housings in the cities
while the war was in progress, it is not
easy to find such a reason, nor any
adequate reason. for keeping up that
discrimination after the war was over
Yet that discrimination persists not
only by the Federal government, but
even less excusably by our own state
government as we'll. Four official
state and municipal investigating
commissions have been sitting for
weeks trying to reach a solution of the
housing problem and when, ten days
ago, Governor Smith called the legis-
lators back to Albany to make the fe-
male suffrage amendment effective, he
and they thought it was an oppor-
tune time to settle this housing prob
lem, and to it they went. With what
result?
They amended the law so as to per-
NIT the. alteration of old four-story
private houses into four-familv tene-
ments; another amendment per-
mitted savings banks to lend on build
Ings in coursc of construction, and two
more related to the practice in dis
possess proceedings. They also by
resolution requested Congress to re-
lieve the bonds of the state. land bank
from taxation under the income tax
law, and to establish Federal home
loan bank on similar lines to the Fed
eral Farm Loan banks.
There may be few instances where
conversion Of fourstory houses into
four-family flats can be done with ad-
vantage to the owner, as in the Wash
ington Square, Gramercy Square, Co.
lumba Heights and few quieter resi-
Dental sections, but several times the
quantity of new housings could be pro-
duced by investing the money in en-
tirely new construction.
Enabling the savings banks to lend
on buildings in course of construction
will not increase the volume of con-
struction if the banks keep within the
limits of the law, but it will provide
new temptation for them to go dan
gerously into building speculation
Under a strict application of the 60
per cent limitation they can do but lit
tie business at best, but they have not
hitherto, some of them, found this an
obstacle to doing anything they have
desired to do.
Relieving the bonds of the State Land
Bank from taxation, under the Federal
| income tax law, will be of no assistance
to the construction Of housings in the
city. The State Land Bank is dis
count institution for cooperative saw
ings, building and loan associations,
and is limited in it's Individual loans
to $1,000. 1t might be helpful to some
of the building and loan associations
| that have fallen into speculative ways.
but this only in relation to suburban
construction.
From this it will be seen that New
York City has gained little, if any
thing, from the legislation that was
enacted at Albany last Monday, and
VIII profit nothing from the legislation
requested of Washington. The dis
elimination against mortgage invest
ments in the Federal revenue bill of
State income tax bill of April has re-
suited in the elimination of that class
of securities from their investments
by hundreds of private investors. In
the ownership of life insurance COM
panies, savings banks and charitable
organizations the income from mort
cages is free from taxation, but in the
hands of private persons and executors
of estates it is subject to taxation un-
der both the Federal and state income
tax laws.
Mortgages Not Popular
1t should not be considered surpris-
ing, therefore, that private and fidu-
ciary owners are withdrawing their
funds from mortgages as fast as they
mature, in order to reinvest in Federal
Farm Loan Bank bonds and in Federal,
state and municipal bonds that are tax
free.
An inevitable effect of this discrm-
ination in the law against private and
tiduciary investment in mortgages is
and will continue to be to limit the
sources of supply of money to all bor-
rowers and to increase the rates of in
terest. This, in natural sequence, will
be reflected in further increase in
rents, for it is as certain as death and
taxes that nobody will put money into
new building operations if it is all
going to be taken away from him in in
terest and taxes.
Until now the title and mortgage
companies have been able to respond to
all the reasonable demands that have
been made upon them for building
money, but neither they nor the. life
insurance companies nor savings banks
will be able to meet the financial re-
qulrements of real and sufficient
building movement with the tax laws
as they are to-day.