The mirror., 1921-03-24

prominent street of any large American
city today cannot help but impress one.
Where once there existed structures of
one, two and three stories for the most
part, we now find skyscrapers towering
eighteen, twenty-five and forty stories into
the sky. So completely has the skyscraper
supplanted the old-style building that bus
mess centers of American cities have been
practically rebuilt during the course of
only two decades. In no other country
has such a revolution occurred. The
story of how it came about is interesting.
1t was, of course, inevitable that need
should be felt for higher buildings. AS
cities grew larger and land values scarce,
owners of buildings found that their pro-
perties were not returning sufficient in
come on the investment 1t was felt that
a parcel of land should be utilized to
greater extent than by erecting three or
four-story building on it. But there were
practical difficulties in the way.
A building under the old plan of con-
struction could not be much increased in
height. The necessity of having enor-
mously thick walls, if height was to be
obtained, resulted in loss of light and
space, especially on the lower floors, where
room was at premium. Until the ad-
vent of the steel skeleton type of constru-
ton, therefore, little progress was made
in attempting larger buildings. The new
idea swept aside at once the construction
difficulties.
Then there was another problem to be
solved. How were the larger buildings
to be financed?
At that time the first mortgage bond
issue was practically unknown in America.
If builder desired to secure financial CO.
operation in erecting building, it was
necessary to enlist the aid of bank, in
surance company or private capitalist,
and secure straight mortgage. But there
were limits to the size of loans to be OBJ
tanned in this manner. Institutions and
individuals, even though they were able
to invest the money, hardly desired to
tie up large sums in one project. A mort
gage of $4,000 was difficult to secure.
When one considers what drop in the
bucket $4,000 is in financing skyscraper,
some idea of the financial problem con-
fronting builders of that time is gained.
Often times when money was tight or
financial institutions had loaned out their
limited allotment of capital for the year
builder was actually unable to secure
financial cooperation to any extent.
As result of this condition worthy
building operations were frequently re-
stricted or abandoned and the development
of American cities suffered.
But, almost simultaneous with the intro
duction of the skyscraper in Chicago, an
adequate method of financing was also
brought to the attention of the public. The
idea was not new, having been borrowed
from Europe. The principle was to place
a straight mortgage on the property. This
mortgage was then to be divided into frac-
tional parts and offered to the public in
bonds of convenient denominations. Thus,
not one, but many, investors might share
in financing project and loans of al
most unlimited size could be secured.
The plan was tried out on one of the pio-
neer skyscrapers in Chicago The oppor-
tunity to share along with the large capi-
talist in mortgage on the highest grade
property appealed to investors and the
bonds were readily sold.
The success of the experiment soon led
to the use of first mortgage bond issues
in other projects and today it is perhaps
the most widely utilized method of finan-
cling buildings. Without the introduction
of the first mortgage bond issue, it is diff
6cu1f m conceive how American citv huild-