The New York herald., 1920-01-18

pared only with the scarcity of food and
clothes. Were owners of real estate ac
tuated only by selfish motives TO get all
they could out of their houses their de-
mands of necessity would have to be met
and rents would be doubled. Restrictions,
no matter Of what kind. by law or pub
lie opinion, would avail nothing. The
remedy must be found in something more
than trying TO limit the price of rent.
The law Of supply and demand knows no
restriction or limitation and permits OF
no interference with it's effect.
supply Must Equal Demand.
There is and can be only one remedy
with this and with every other necessary
commo dity--make the supply equal TO the
demand: in other words, increase produc-
,ion But why has there been such a sig
nal failure even in any attempt TO meet
the great and ever growing demand? It
IS true that tho cost of labor and build
ng materials has been soaring higher and
higher. Yet even at these high prices new
buildings have proved profitable invest
nents In five story "walk-ups" in the
Grand Boulevard and Concourse, Bronx
twenty-five dollars n room has been read
| lily obtainable aud eagerly paid. The 1ea-
son is easily ascertainable-the almost
otaI lack of mortgage money to finance
mortgages struck vital blow to the
pecuiative builder whose business it was
. build according to the demand.
The incomo from mortgages, the interest
oaid on loans, Is taxed in the hards OF
he mortgage just as other income from
business stocks or other sources is taxed.
Money, like other commodities. seeks such
avenues OF investment which yield the
highest return commensurate with safety
ard conyertiblity into cash when neces
sary In these davs OF high ra teS for
money on call, and six per cent gold
bonds issued by public utility corpora
tons of unuucstioncd financial stability
ard soundness, who would be tempted TO
invest their surplus funds in real estate
mortgages at the face rate of five or five
and one-half, or even six per cent, as
limited by law. and then suffer that in
come to be materially diminished by an
income tax normal at four per cent, or at
a surtax in some cases running as high
+as forty per cent and more?
Tenant Pays the Cost.
On the otter hand. what investor would
not gladly prefer to make his investments
in bonds secured by first mortgages for
a conservative amount upon well located
improved real estate In New York city
s scurities that suffer no fluctuations, and,
II we'll selected, furnish absolute secur-
ity. II mortgages we're exempted from FED
eral or State taxation? Mortgage taxa
ton is double taxation paid by the real
estate owner and when the demand ex-
ceeds the supply Is collected from the
tenants. There are other forms OF double
taxation but the tax on mortgages un-
erringly hits the mark; the tenant in these
times pays the cost.
Nothing will so surely increase produc-
ton of houses as an abundant supply OF
mortgage money at reasonable rates.
Nothing will furnish the supply of money
or that purpose in larger volume almost
INSTANTLY than the removal OK tho imposi-
tion Of taxes. both federal and state, upon
the income Of mortgages. IL must follow
AZ a necessary corollagy that with the in
rluv or money, building Will be greatly
stimulatcd. the de Of the supply to meet
the demand Will set IN anu rents VIII teilu
TO reduction
II NAV DO good In theory that no income
of any kind should be exempt from taxa
tion TO meet the requirements or govern
ment, But we are confronted by condi
ton 80 acute and inviting or such peri
10 the public welfare that no mere theory
NO matter how sound In normal times.
must be permitted to even temporarily
Nithsta nd the pressure Of necessity.
The Mclaughlin bill now before Con-
gress. n enacted. will exempt from tho In
come tax mortgages owned by single
Individual amounting as TO the principal
thereof I'm the aggregate TO not more than
s40opo. The examination is to be applied.
not as is popularly supposed 20 mortgage
Tor amounts less than $4,000. no matter
what number. but 20 individuals ownin z
investments i'm mortgages up to $4,000 in |
the aggregate. The only objection to the
bill seems to come from savings bants
which under the existing laws have the I
monopoly OF investing thelr funds in tax /
exempt mortgages.
Not only does It seem to the interest Of |
owners, mortgages and tenants to support |
the Mclaughlin bill, but vigorous public 4
sentiment should be aroused to demand
It's enactment.