The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1921-01-01
PROF|TEERS AIDED
. BY HIGH INTEREST
S. w. Straus Voices Sentiment
Against Boosting Rate on
Realty Mortgages.

estate mortgages is making itself
felt. says S. w. Straus. OF S. w.
gStraus & Co. Exorbitant interest
Jrates. he declares, encourage profi-
teering. Everything possible must
be done to accelerate the flow OF
capital into realty and not divert II
ELSEWHERE through adverse legislation
and unsound financing brought about
by too high interest rates on real
estate investments" he said. Com
menting on the subject, Mr.. Straus
! said:
Although the processes OF liquida-
ton now in progress have brought
recessions in the prices of nearly
| every commodity of life, IL is of the
utmost Significance that rents have
not receded generally and that the
tendency of prices for housing accom-
modations is toward higher levels,
thus making more substantial the in
come from property.
at II also noted that a well-defned
sentiment against a higher interest
rate than per cent for frst-class
real estate mortgages is making
itself felt.
REIMBURSEMENT IN REALTY.
Enthusiastically a far-reaching and
permanent readjustment of income
from real estate investments is TAX
ling place. 1t sa fact generally con-
Lceded that in many instances and To-
,icalities income from improved prop
ierty previous TO the war was too low.
Estates and large holders of realty
IWere in such cases not able to secure
la return commensurate with the in
come derived from many other forms
of investment.
IAN indefinite continuation of these
conditions would mean a slowing
fdown of the building industry, and
Ithe present readjustment of rental in
leone. therefore, is a very favorable
indication and will help the entire
thousing situation and real estate
Emarket
while there has been great
amount of public agitation against
1.-THE present range of rents, it must be
'borne in mind that any conditions or
influence, wether they be legislative
or economic. which have the ultimate
effect of diverting capital from build
ing investments to other channels
simply impose additional hardships on
the public in the long run. The law
of supply and demand must hold full
sway in the final analysis. Property
rights must be safeguarded. and If
the nations housing conditions are to
be restored to normal. everything
possible must be done to encourage
the flow of capital through these chan
nels of Investment and not divert II
elsewhere through adverse legisla-
ton which would stop progress or
through unsound financing brought
about by too high interest rates on
real estate investments.
1.-THE first consideration of capital
seeking investment is safety. Efforts,
70 nj
horbitant rates of interest must neces-
sarjly be viewed with distrust. The
two great dangers of too high rate
may be epitomized as follows:
DANGER OF HIGH INTEREST.
"First-A corporation paying an in
f1ated price for capital is endangering
its future security. The purchasing
power of the dollar is just about one
half Of what it was five years ago,
which means that a corporation must
borrow twice as much money to meet
the same ends as was the case half
decade ago. If, in addition, 1t pays
an inflated interest charge it is in
dulging in practices that must weak
en- the financial structure and place
the safety of its obligations in
jepordy.
Observation-Disclosures interest RACES
necessarily encourage profiteerinS.
Thus, where too high rate is paid
to attract capital it necessarily means
unjust and inflated rents beyond the
ability and Willingness OF the public
to pay.
me interest rates on high grade first
mortgage investments at a conserva-
tive figure will rebound to the ulti-
mate benefit of the entire building
situation.
TAXATION is HEAVIER.
TN addition to the readjustment
OF property income now in progress
other factors are tending to keep
rents at present levels. In the first
Slace, taxation has been growing
continually heavier, and there is no
Immediate indication that these
canarges will become lighter. as all
governmental bodies are being OPP
Grated at greatly increased costs.
IN the second place, we are con-
t3nualfy developing better standards
Uf living. Finer buildings, more ex-
tensive improvements and convent
ences and a better environment are
continually being demanded by the
public. 1t is because of this rest
Ness Impulse that civilization has
advanced through the medium OF the
lions win continue as long as hu-
man nature remains unchanged.
These increased comforts and con-
veniences must mean corresponding
" increased prices. We also must
remember that the cost of operating
buildings is much higher than for
lnerly was the case.
THE tremendous housing shortage,
said to approximate some two mil
Ion homes throughout the nation,
also will continue to have an i'm
portant bearing on rents and the in
como from property. 1t is to the
best interests of the public that this
abnormal shortage be eliminated as
speedily as possible, and the vari-
Gus developments heretofore outlined
lend encouragement to the belief
that n great revival OF building soon
will begin to manifest itself"
ENGINEERS WILL SEEK
new u. s. DEPARTMENTS