The Washington herald., 1921-01-30
PICKS FLAWS
SENATE REPORT
ON HOUSE NEEDS
Proposed Remedies Will
Not Help Housing
Or Construction.

Dissatisfaction with the housing
report of the Senate Committee on
Reconstruction and Production was
expressed by w. A. Sadd, president
of the Savings Bank Division, Amer
ican Bankers Association, in an ar
ticle in the New York Times.
The report of the United States
Senate Select Committee on Recon-
struction and Production, is disap-
pointing" he said, although the
country has learned to expect very
little from such so-called investiga-
tions. The report fails to give any
facts of value either to housing or
construction interests, and even the
conclusions appear to be. based on
such superficial reasons as to be
worthless or even dangerous.
Turning first to the remarks on
finance and taxation, the committee
appears to favor D investment of
time deposits of national banks in
part in real estate mortgages, ca
exemption for a limited period OF
interest from real estate mortgages,
90 exemption from the income tax
CT profits from home building to the
extent that they are reinYested in
bond issues by a Federal instrument
tality for rediscounting mortgages
on dwellings by building and loan
associations and other institutions,
and (5) development of a national
savings institution in the United
states Postofice Department.
Proposals UnsOund in Theory.
Careful consideration of these
various proposals seems to indicate
that they are not only unsound in
theory but actually unnecessary so
far as they are not absolutely i'm
practical. The only exception we
would make from this general con-
demnation is that with reference to
real estate loans from the actual
savings deposits in national banks.
The present growth in the saw
ings departments of those institu-
tions gives some ground for a fear
that the institutional support for
real estate finance will not increase
in proportion to the growth of the
capital funds of the country.
However, it must not be over
looked that the housing and other
real estate interests obtain but a
small part of their loans from saw
ing system should not be imperiled
by requiring mortgage investments
through institutions which. by rea-
son OF their small size or their spe-
cial line of work, are not equipped
to handle mortgage investments as
trustees for their depositors.
1T is difficult to discuss this
question in view of the persistent
neglect and even refusal of the
Treasury Department to require ma
tional banks to segregate and re-
port their savings deposits.
las to the need of exemption of
the income from real estate mort
cages If revision of the taxation
system does not restrict the issue
OF tax exempt securities such ac-
tion has been condemned in strong
est possible terms by the American
Bankers Association, the Invest
ment Bankers Association, the Ma
tional Tax Association, the recog-
nized economists, and various other
organizations and persons qualified
to speak.
Defeats own Ends.
Not only has such a form of sub
sidy been shown to be fallacious
from the viewpoint of borrowers
but it tends to defeat its own ends.
Our program of war finance depends
very largely for success upon the
progressive system of income taxa
ton, yet 1t will be defeated by
mortgage exemption and thus in
crease the tax burden upon persons
of small income through need of
higher normal tax rates and the
addition of consumption taxes.
Those results would be hurried by
the inevitable. extension of exemp-