New-York tribune., 1921-06-03
Some Of Biggest Banks
and Insurance Com
panies in City Named
by Lockwood Witnesses
Obliged to Take
Over Vacant Lots
Given Victory and Lib
erty Bonds at Par That
Were Quoted at 05

AS result of the sensational rev.
elations made before the Lockwood
committee yesterday in connection
with the gouging operations of finan-
cial institutions in lending money
for building purposes, the committee
believes it has uncovered the primal
reason for the shortage of housing.
The desperate straits TO which
builders were driven through the
eXorbitant exactions of the financiers
would be seen, it was pointed out,
from the fact that they were forced
to pay as high an interest rate as
1876 per cent for money. In many
instances the borrowers received
only two-thirds of the loan, the other
third having been deducted as q
bonus by the lender, witnesses said.
This bonus reached as high as so
per cent Of the loan in some cases,
according to testimony
Other Extortions
In addition to these deductions, it
was said, the builder had to pay 6
per cent interest charge, pay legal.
brokerage and title fees and finally had
to take some undesirable tenement
house or vacant lots in New Jersey or
the Bronx as part of the loan or 500
7 1,-+r Il T.n%0 II.
were selling in the market for only
95 In many instances, too, it was re-
vealed, he had to pay interest for the
bonus, which the lender had deducted
IN the first place. It was quite the
general thing, as some witnesses testi-
fed, for a builder to start out for
loan and come home with only
property of dubious value.
This resulted, it was declared, in the
borrower generally obtaining about
one-third the money he was paying
interest on, and that if he wanted to
realize quickly on the properties load
ed upon him by the lenders he would
have to sell out at loss.
The institutions declared to have
engaged III these practices include
some of the largest banks, Insurance
companies and mortgage brokerage
firms in the country.
Among the institutions named in the
testimony were the Prudential In
surance Company, the Mutual Life In
surance Company, the Manhattan Life
Insurance Company, the Manhattan
Savings Bank, the Empire City Savings
Bank, the Brooklyn Savings Bank, Ex-
celsior Savings Bank. S. w. Straus
Company, Columbia Discount Company,
City Mortgage Company, Dime Savings
Bank of Brooklyn, New York Savings
Bank and the American Savings Bank.
1000 Specific Deals
1t developed in the course of the
examination that more than 1000 such
transactions had been brought to the
notice of the committee within the
last few years and that these were
merely a sample" of the overwhelm-
ing exactions to which is attributed
the general paralysis of building op-
erations.
Samuel Untermyer, chief counsel to
the committee, suddenly took up this
phase of the investigation into the
housing situation after announcing
that the inquiry into the activities Of
the New York Fire Insurance Exchange
would be suspended until next Tues
day, pending conferences with the
members of the exchange with view
to agreeing upon the correction of ex-
listing practices and other matters con-
nected with the fire insurance busi-
ness"
Willis O. Robb, manager of the ex-
change, declared to reporters he knew
Of no conferences with the committee
and "knew nothing of the grounds upon
which Mr.. Untermyer made his state
ment." 1t is thought that Henry
aI. of
directors of the Continental Fire Insur-
ance Company, who disapproved on the
witness stand Of many of the practices
OF the exchange and who is a power in
the FIRE insurance field here, had some
thing to do with the procedure.
Connor Lawrence, of the mortgage
loan brokerage firm Of Lawrence, Blake
&, Jewel, sprang the first sensation OF
the day.
First Sensation
He told how he negotiated loan OF
100000 for "53 West Seventy-second
Street, Inc" from the Manhattan Life
Insurance Company, FOR five years at
51s per cent. The borrowers had to
pay II. c. Forbes & Co., brokers for
the insurance company, per cent
fee, or $4,000, for getting the loan; the
borrowers also had to purchase froa
orDeS q 20 lnree-Stpry Drlck heuSs
on upper Fifth Avenue" which they
did not want, but which they had to
pay $500 for, part in cash and part on
mortgage.
When Mr.. Untermyer insisted on
knowing where this upper Fifth Ave.
nue." property was located it deyel-
oped that it was somewhere on GOATS
HiIl.s
The Brooklyn Savings Bank gave
loan, the witness went on, of s24n, 600
to the. North River Building Corpora
tion. the loan to run for FIVE years at
s per cent. The money" was handed
to the borrower in Victory Bonds At
par, which were selling then somewhat
under 50. The borrower had to pet
the money by disposing of the bonds irn-
mediately at loss. Mr.. Untermyer
to the bank through title company.
The Armstrong Realty Company.
later the Eastern Building Company