The New York herald., 1922-02-13
OPPOSE DIVERTING
INSURANCE FUNDS
Realty Board Against Bill to
Permit Companies to In
vest in Houses.
EMERGENCY HAS PASSED.
Declares Crux Of Matter To-
day Is High Wages in
Building Trades.

The legislation and taxation commit
tee OF the Real Estate Board OF New
York las submitted to the members CT
the Legislature. and particularly TO
members Of the Lockwood legislative
committee on housing. an analysis and
adverse report upon the. bill recently In
troduced that would permit life insur-
once companies to invest 10 per cent.
OF their admitted assets In apartment
houses to rent at not more than 80 a
room. as means of stimulating build
ing to meet the housing shortage. The
report says in part:
This BILL like others introduced by
the joint legislative housing committee
during 1920 and 1921. is predicated on
a housing emergency The Real Es-
tate Board is convinced, and has stated
to the joint legislative housing commit
tee. that whatever color may have been
lent to the claim two years ago that a
housing emergency existed has long
since faded: that an almost unprece-
dented amount of housing construction
in 1921 has converted a temporary
shortage of housing into an almost suf.
ficient amount of housing. though this
has been produced at costs which the
average wage Garner cannot meet
THE business of producing housing
is highly speculative. In. normal times
it is surrounded by a degree Of risk
which individual builders or private
corporations have to assume. Errors
Of judgment, changes in market condi-
tions, overproduction and so forth all
lay speculative builders open to the haz-
ard Of financial loss.
"It is now proposed to permit the life
insurance companies to embark upon an
enterprise of thise character. entailing
the use virtually, for speculative pur-
poses, of millions Of dollars of the saw
to these companies for the benefit OF
widow and orphans against the time OF
the decease or the breadwinner.
80 sacred has the Legislature con-
sdered the trust placed in these institu
tions that it has prohibited their invest
ing In stocks and even real estate, re-
stricting such securities to certain spe-
Gifted investments, among them mort
cages upon real estate. Their real es-
tate holdings are confined exclusively
to such building as may be needed in
the administration of their business as
insurers.
''It is now proposed to remove these
wise restrictions And while no one
would question the conduct of these cor
porations under existing management.
4 his hich standard of efficiency or probtty
is not necessarily guaranteed for all
time nor even for so long time as the
Legislature might consider that an
emergency existed
Practical builders and those having
other than a theoretical knowledge of
the housing situation are aware that the
crux of the matter is not lack of hous-
ing but inability to produce housing at
rents which the wage Garner and others
OF moderate means can afford to pay
and that the main reason for this condi-
tion is the fact that wages of labor in
the building industry remain at war
time levels. while the incomes of wage
earners generally are declining.
Loans made recently by insurance
companies to builders of housing have
been on a basis of approximately so per
cent. Cor less) of value at present.
Aside from the foregoing. the bill
as drawn is ambiguous in it's terms. 1t
does not seem to the Real Estate Board
of New York to be sufficiently clear in
it's language or specific in It's provisions
to meet the requirements Of a plan in
volving so radical a departure from the
existing safeguards heretofore consid-
cred necessary to be thrown around the
use OF the funds entrusted to the safe
keeping of life insurance companies"