The New York herald., 1921-07-03

State TO protect its citizens stands above
the Constitution. Do any OF those who
approve OF the rent laws and the sus-
tanning decisions realize the blow that
has been struck at the very foundation
of our form of government, whose Con-
stitution guarantees the inviolability of
contracts? The meaning of this is that
no real estate owner can make a con-
tract which any one Is bound to respect.
Do these men realize. when once the
state repudiates contract 1t will be
less difficult TO repudiate second time?
1t is true that tax exemption is an ad-
vantage offered to the builder. But if
this has not the desired effect of pro-
ducing houses. what guarantee does the
investor have that this contract will not
be discarded as a scrap Of paper when
the emergency arises?
Computing Returns From Flats.
The Courts-The emergency laws are
supposed to permit OF fair returns on
capital invested, the same to be subject
to court revision. Now to all appear
ances this is fair, and no reasonable man
could asR for more. Our municipal court
judges are as body men of high at
tainment and honest principles. But they
are human beings, therefore not in
ldiiDAt MY point ID pest iiluSlTdteu Dy
the following case drawn from my own
experience. A house on one of the best
avenues In The Bronx cost. together
with improvements. $4,000 II carried
originally s41.500 debt. which is now
reduced to So. $50 or sl4.750 has been paid
off. The house has been in the pres
ent owners hands for fourteen years.
For eight years 1t showed a deficit and
only for six years has II shown a small
return. But during all these years the
returns from the house do not come any
where near the s14.750 which was paid
off on the debt. Consequently the owner
not only has not realized any return but
would be many thousand dollars richer
IL the house had been given away four
teen years ago and the original invest
ment of s2i, 500 thrown away.
IL is an almost unbelievable fact that
when the owner recently went into court
10 have the rents adjusted ha came out
stamped as a proflteer. and loser. The
procedure which gave this result was as
follows
A bill Of particulars was filed which,
| gave total receipts from rents as $3.50;
| total for fixed charges. expenses and re-
| pairs, $6,313: net return for the year,
| $3.50; cost Of house, $4,000. or on a
mortgage $26.750 equity $35,25 per-
centage of income 6 1-3 per cent, or
with the increased taxes for this year,
As per cent.
These figures do not allow anything
for depreciation. &c. and clearly show
that the returns from the investment
are insufficient
Another Method of Figuring.
In The Bronx some Of the Justices ap.
pear to have a novel system for deter
mining a fair return from a multi
family house investment. In one case
in particular the Justices secretary
went over the bill OF particulars sub
rnitted by the landlord in a rent law
dispute and after some intricate figuring
informed the Judge that the landlords s
return from his house was IL per cent
The mystified landlord took the trouble
TO inquire into the secretary's method Of
computation and found that the fixed
charges of s4.936 had been taken out
of the bill altogether. Disposses ex-
penses had also been cut out. though this
item. amounting to s103. had actually
to be expended before the rent was coll
lected Commissions had been reduced
from per cent. to 3 per cent. and for
current repairs 10 per cent. OF the gross
was allowed. The actual expenses Of
the year were finally reduced from
1888 10 1854. When this case was ad-
judicated the landlord had already spent
this entire allowance OF 1854 in running