The New York herald., 1922-01-08


such adventurous aid as tax exemption
New York was the only municipality
to raid the city treasury to hand out
largess to accomplish what was already
an accomplished fact. If the victim OF
holdup gang which had stripped him OF
his yaluables were to call the thugs
back and offer them reward as token
OF esteem he could justify his action py
a comparison with the passage Oh the
tax exemption ordinance by the po"eiS
that be at the City Hall.
The outstanding. impelling incentive
20 tenement construction was the uI-
heard of rents obtainable. When II ls
realized that a pre-war apartment unit
producing a normal gross rent OF SI4,ooo
IS now a postwar production WIN
gross income of $4,000 1t is OBVIOUS
what was the moving, preeminent cause
of construction.
When Tenants Had Whip Hand'
yIarkinc back a few years it will be
recalled that building of all kinds had
virtually ceased in 1915-19l6. due TO an
enormous overproduction. Tenements
Of every type, from the lowliest TO the
most pretentious. paid nothing but haho-
some deficits. Rents had flattened out
to as little as 33 per cent. on the oo.iar
Of honest value. Real estate trageoies,
involving the loss OF the savings
many a lifetime, were being enacteu
daily at the exchange, ana priVa'eIs, &c
well. by conveyances either 10 the nioi'
goree or TO an outsider for q nominal
consideration over the mortgage. me
situation In all kinds OF realty was
equally distressing. which conoi'ion was
rejected in the withdrawal OF mortgage
money from realty, without which build
,nr in New York cannot exist. iehanls
had the whip hand, and the way tney
laid on the quirt made simon Les'ee
look like Gentle Annie OF tender inenno =;
In 1918 renting conditions began 70
,r,nrove- except In the lowest rent
houses. IN which latter type there were
numerous vacancies during the aHeseu
emergency" =. oo-
pents began to ascend slightly in ac-
cor0 with a natural law. and inmeoi-
ately the howl OF "rent pronteer ~as
heard In the land. Tenants VINO ha
paid only 33 to 90 per cent. Oh honess ,r,sS
rental value howled Vigorously, 90
,niouity of owners being unwilling 10
continue the greatest charity orgahiZa-
,ton society ever known. and their ae-
s,re 70 obtain even less than iiVins
vrooa for their holdings, was viciousS
attacl<ed. No article entering INTO .ne
cos, of living had been continuously
sold at a loss as housing space hau nav,
rcen. and in 1918 every other sucn
article was selling at from ioo 10 ovo
ner cent. over and above It's prlor p.on. on.
y,o,kinc price. Yet the just ana 1911
1850, i,v owners to secure an income
tr nIace Of an outgo met with hostility'
abuse and contumely.
Aa was logical, a demand arose TOT
building and for more building, to whicn
nuiiders turned deaf ear. because the
coet of construction meant that rents
would have to be two and halt tines
higher than the highest rents hitnerto
Obtained. and four to hve times nisner
han tho "prohteering' rents OF 1910
fa1o. In 1919 It was pointed out to the
Toclewood Committee that building
1yonId have 20 work out It's own salva-
tiop and that Il would recommencc only
Vyhen existing rents began TO approach
somewherc near the level of those neccs-
eitnted in new and tremendously expen-
sivo construction. Other factors quoted
we're the unwillingness OF mortgage
lenders to loan on the 100 10 lVv per
cont. excess cost over pre-war hgures'
ard that production was practically inn
nossibio until costs became Infinitely
lower and mortgage lenders modified
their ideas.
,rbese factors came into being later
an and a few daring builders gingerly
inferred tho field The astoundingly nigh
rents obtained. plus gradual descend
ing cost of construction and an en-
phatlc change OF heart In the lenders
paved the way for Whatever cohsu uc-
tion has since ensued.
Az the present time loans are close
,o 100 per cent higher than pre-war
loans. based entirely on the high rents,
which admit OF a heavy amortization 10
secure more adequate safety. Labor Is
giving more OF an honest days work Tor
i,s wages, 30 that the cost OF building
Is now about 100 per cent above pre-
war figures.
Conditions That started Boom.
The outstanding causes OF the rcsump-
tion of tenement construction are these
1 First and foremost In the drivers
scat in the band wagon Is the factor OF
high rents. say from t25 room up
ward. NO criticism Is made or these
rents as. no matter how far they may
be beyond the financial capacity OF so
per cent. OF our population. they arc
necessary for borrowing capacity ana
gaIabilIty. AS an example, an existing
unit renting for $4,000 can be pur-
chased for $4,000. The selling price
of n duplicate unit erected to-day will
have to be $1,000 To persuade
buyer 70 nay 500. 900 more for one unit
than its duplicate some very strong in
ducement must exist, which IN this case
Is gross income Of 100000. for the
rent laws exempt new building. The
excess income Of $4,000 for an addi-
tionai cost OF 100000 offsets in few
years the higher cost, the running ex-
ponses IN each unit being the same.
?. E1Scmntion from the Rent Laws
Procured by the Real Estate Board or
New York Building was retarded by
the rent laws. because If the uncertainty
(or was II the certantyO Of the appli-
cability of the laws 10 new buildings
When they were specifically removed
from tho hands Of judges and juries
builders went ahead. which they pre-
Viousiy had not dared 90 do.
3. Heavily Increased Mortgage Loans
The loans now being made are about
100 per cent. higher than pre-war losrs
so that building. which otherwise could
not exist, IS made possible.
{. Salability--As outlined above, the