The Washington times., 1921-02-05
BANKERS OPPOSED
TO CALDER'S PLAN
Savings Division Head OF A. B.
. A. Thinks Housing Relief
Idea Dangerous.

= Bankers do not think we'll of Sem
ues for housing.
The United States Senate report on
housing, presented Dec. IL, fails TO
give facts OF value TO either housing
or construction interests and even
the conclusions appear TO be based
on such superficial reasons as to be
worthless or even dangerous, accord
Ing to w. A. Sadd. president OF the
savings bank division. American
Bankers' Association and president
Chattanooga Savings Bank
Turning nrst TO the remarks on
finance and taxation the committee
appears to favor investment OF time
deposits OF national banks In part In
real estate mortgages, exemption for
a limited period OF interest from real
estate mortgages, exemption from In
come tax pronts from home build
ing to the extent that they are re-
invested In the construction OF other
homes. bond issues by q Federal in
strumentality for rediscounting mort
cages on dwellings by building and
loan associations and other institu-
tions, development of a national saw
ings institution In the United States
Postofrice Department" said he In a
formal statement issued by the Saw
ings Bank Division.
''These various proposals are not
only unsound in theory. but actually
Unnecessary so far as they are not
absolutely impractical. The only pos
sible exception we would make from
this general condemnation is that re-
lating to real estate loans from saw
tngs' deposits In national banks. but
even this may be questioned.
CONDEMNS TAX EXCEPTION.
-As to the need for exemption of
the income from real estate mort
cages II revision OF the taxation sys-
tenn does not restrict the issue of tax
exempt securities such action has
been condemned in strongest possible
terms by the American Bankers Asso-
citation, the Investment Bankers
Association. the recognized econo-
mists, and various other organizations
and persons qualified to speak. Not
only has such a form of subsidy been
shown to be fallacious from the view
point of borrowers. but II tends to
defeat its own ends. Our program OF
war finance depends very largely for
success upon the progressive system
of income taxation, and IL will be
{ defeated by mortgage exemption and
the resulting increase in tax burden
upon persons OF small income. Those
results would be hurried by the inevi-
table extension OF exemptions to pub
lie utilities and other interests equ-
ally hurt by the Federal sur taxes.
But, aside from the above, IL has
not been shown that any icrease in
funds for real estate finance would
, lower the cost of hatitations within
the term of the present emergency
to point where wage-earners can
jafford to invest.
TAX exemption for profits from
real estate operations which are re-
invested in the construction OF other
homes Is subject to the same objec-
lions. All tax exemption schemes are
Vicious, undemocratic. and confer
spe;ssl privileges upon those most
able to pay taxes.
NO USE FOR HOME LOAN BANK.
I'VE are unable to concur with the
committee that the Federal Home
Loan Bank would be "a most desir-
able national facility and a most
promising substitute for govern
mental participation in the housing
business We are not looking for a
substitute. This national instru-
mentality would of necessity be ac-
companied by not only a national but
a distinctly. bureaucratic control of
housing finance, which varies accord
ing to the economic and social status
of each community. This is shown by
the fact that the building and loan
associations have assumed twenty or
more forms as to plan OF operation
and their actual local differences are
almost as numerous as the associa-
tions themselves. In New York,
where the mutual savings banks alone
have over two billion dollars of de-
posits of which half Is invested in
real estate security. tho loan associa-
tions boast only about one hundred
million dollars OF assets.
'In fact the advocates of this plan
appear to look solely to the subsidy
of tax exemption from all taxes which
the bill carries and which we con-
demned above.
The committee advises that all
Federal thrift activities be consoli-
dated under the postal savings branch
of the Postoffice Department, with