New-York tribune., 1920-10-10
Subsidize Building by
Exenlpting Il, Says Builder
E. l.. Brown Urges Importance Of Removing Taxes
From New Construction a Home Building
Stimulant; Rent Laws Obstacles, in His Opinion

building operations, have practically
ceased to function, due to their inability
to sell real estate mortgages. and the
savings banks and insurance companies,
with few exceptions, have no free
money to lend. The great investing
public, which is, after all, the final
ssbsorbing power of real estate loans,
has placed them, for very good reason,
on the black list; and there they are
placed on parity with other sound
investments.
Building Costs Not the Fault
The supposedly high cost of building
material and labor has not been the
of building activity. Building costs are
high. compared to the pre-war period.
but until the labor costs are materially
cut by drastic reduction in wages and
increased efficiency, practically no
change in present prices can be hoped
for, notwithstanding newspaper ac-
counts of building material reductions.
Ihe labor cost, direct and indirect, in
bulidlng construction. represents about
% per cent Of the total, and with four
years of actual shortage of housing.
plus the yearly normal requirements
which alone are not nearly being sup
piled, one would indeed be rash to
predict any material reduction in the
selling or rental price Of houses for
the next five or ten years.
The sale values of many things are
being reduced, and perhaps many more
will soon be included After ali, how
ever these reductions are made posi-
Bile only by reason of an oversold mar
ket. With housing, the situation is
directly reversed. The demand is out
of proportion to the supply, and even
with active building we cannot hope
years new legitimate requirements
without taking into account the ac-
cumulated demand made necessary by
practically four years of building sus-
pension.
The fundamental cause. therefore, of
present building inactivity is not the
high cost of material and labor, for
these are not likely soon to be sub
stantially lowered, and even if they
thing in New York which for thirteen
years has declined rather than in
creased IN value, will probably absorb
the major part OF any reduction made
in these items.
Difficulty in Getting Loans
The real obstacle facing the land
mortgage money in sufficient quanti-
ties, and this obstacle cannot be over
come until real estate mortgages can
compete with other income tax exempt
securities, which are bein. offered at
prices yielding vastly larger interest
returns. This can only be done by the
Federal and state governments exempt
ing these mortgages from income taxes,
thus making them attractive to the in
vesting public. The exemptions, as a
rule, are unwise and should not be
allowed, except to meet state or ma
tional emergency. The housing short
age is nationwide, and no situation
from q state or national standpoint
can be more serious or hurtful to good
citizenship than an inetficently and
improperly houasd people. No legisla-
tive committee can make the public in
vest Ill something ii does not want and
under present conditions real estate
mortgages are not wanted
City Should Adept Exemption
The bill passed at the special term
of the Legislature exemDting from tan
alton new construction completed since
April /, 1920, should be adopted imme-
diately by the city. At best much time
Will be necessarily consumed before the
Congress and the state can exempt
mortgages from income taxes In the
mean time the people of New York
City are suffering and the imperative
need is for new housing now. New
construction in the next eighteen
months is of vital Importance, and
nothing but Immediate exemption from
taxes, in accordance with this bill. can
meet the present emergency pending
permanent relief, which VIII be afford
ed by state and national income tax
exemption on real estate MORTGAGES.