Evening star., 1920-03-28
BY j. A. FLEMING.

Money is worth more than per
cent in these days of strenuous de-
mand. with the supply small when
compared with the needs of the times.
The entire world is calling for
funds. for credits in all lines of busi-
ness and manufacturing industry and
the competitive bidding has made the
legal rates in many of the states look
entirely below the price that borrow
ers are willing to pay
Samuel J. Henry. formerly a prom
inent local bank official. but now in
the real estate business, expressed
this condition when he made the fol-
lowing statement:
The limitations of the District of
Columbia code making per cent the
legal rate of money should be altered
because it keeps real estate interests
from obtaining the funds that they
need so badly in the upbuilding of the
CITY and forces realty men to go to
New York for large loans and COM
pete there with the broader and great
er demand for funds
Financial institutions naturally
prefer TO send their cash TO New York
and obtain the going g-higher rates on
call loans, perfectly safe but to an
extent questionable. for the reason
that Washington funds are not being
used to push local activities Bank
ers can hardly be blamed, for they
have TO meet added costs of operation.
several tax assessments and the high
wage schedule.
Deposits of local banks have been
increasing, but the available amounts
open for realty operations have been
decreasing, the constant need of more
funds being emphasized by the much
higher amount involved in building
and realty costs"
Changes in Business Methods.
Referring to changes that have oc-
Cured recently in the real estate busi-
ness. Mr.. Henry had this to say:
1t has come to be essential that
the big real estate companies of today
nave to meet the views of prospective
owners in this way: The purchaser
ANNOUNCES that he has SO much money
Tor building purposes, that the es-
adjustment. site and completed struc-
ture tgiving such and such a capac-
lty- measured by cubic feeD must
be ready at such and such a time
1t is up 10 the real estate corpora
ton or company to find the ways and
means to meet the purchasers de-
mandS as to money, building, etc,
and that is what they are doing. They
are aided in this kind of financing by
the public in purchasing real estate
bonds. but the bonds must bear an
attractive rate of interest not less
than per cent. There are many in
Nestors who are conducting a paying
business in making second trust in
vestments. but they must perforce
be good judges of real estate and
take the risks of owning a junior lieu
and the second trust notes must pro-
vide for monthly curtail, or, in the
event of buyers of small homes, week.
ly curtails are desirable
Code In Ambiguous.
Continuing, Mr.. Henry said: Then,
too. the District code is ambiguous
You may not recall it. but it is a
fact that the code permits the charg-
ing of 10 per cent interest 'on special
contracts This matter should be
clarified.
One thing is too evident to call
1or elucldation, there is not enough
money in Washington to finance the
needs of the people of the city in the
matter of homes or apartment build
ings or business structures. and the
situation is decidedly unsatisfactory,
TO say the least.
1t is patent from the rates that
some of the great corporations are
paying for their financing that 6 per
cent is not the value of cash at this
time The ruling rates in the open
market in the United States are from
eE 70 ~ and even per cent with
some slight concessions in price for
notes and bonds as further induce
ment to raising the money
There are ways for money lenders
and banks to get around the per
cent rates if they so elect. Notes Of
Tered for sale do not carry the rate
limitation; commissions can and are
frequently charged, compromising bal
ances are used, certain deposit ac-
count being provided for during the
life of a note-matter. deprecated By
the controller of the currency, but
nevertheless occasionally resorted to
just the same"
On the Bankers Side.
There is this to be said from a
bankers viewpoint: 1t is essential
that very large part of their de-
POSTS be invested where the funds
may be obtained Immediately in case
of necessity. When depositors ask
Tor their money they must be accom-
modated at once Call loans are i'm
mediately available for funds: bonds
such as are listed on the New York
and other stock exchanges can be sold
IN snort order. but real estate lacks
TINS lquidity, save where financed by
bonds after the manner of the Strauss
Plan. now being adopted by many big
realty corporations.
National banks are not allowed TO
make loans on real estate. but they
may protect themselves by taking
over real estate TO make good loans
that they have made. but are not ex-
pected TO carry it beyond a reason
able time
Farm Loans Provided For
The much discussed farm loan law
has taken care of farm loans. and
has apparently given satisfaction to
the agricultural sections of the coun-
try, so that it may be that some Sol
Omon may Yet arise to solve the real
estate problem, one which is very
serious all over the United States. as
witness the near-riot at Albany the
other day when hundreds of tenants
expressed themselves in plain terms
over the prevailing high rents it,
New York city and with the scarcity
of homes even at high rates. One
big insurance company is offering ~
per cent money to farmers
The head of one of the largest local
trust companies had this to say on
this subject:
Il should say that il was a serious
problem. for Washington no less than
for many other cities. and. what is
more, / do not see where il is going
10 end-cannot see the solution. Wages
are so high for skilled labor and
money so firm and scarce that there
is little new construction work being
undertaken; apartments are only OBJ
tanned by keeping tab on many build
ings and personal acquaintance with
landlords
Worth the Price.
prices for homes and for build
evidently are worth the price. and it
is difficult to see where IL will end
Before the war there was small Weld
from apartment house property or
from realty of any kind. If an owner
could realize per cent he was doing