The New York herald., 1922-04-19
Rents Of 50 = Room.
A Real Estate Dealer Tanks the
Standard Impossible.

To THE New YORK HuRALD: Your edi-
toriai article entitled THE New Housing
Laws contains this most interesting
statement: "It 1.-THE Lockwood commit
teeJ has to its credit this constructive
experiment. the satisfactory working out
OF which is predicted by some Of the
ablest business men in New York"
This experiment OF the Metropolitan
Life In providing homes for about 5000
persons at rents far less than 1t Is pos
sible for experienced. economical. operat-
ing builders to charge will be watched
with intense interest for the very simple
reason that on q basis of IL per cent.
net on the investment 1t II proposed to
charge the same rents which formerly
obtained on a basis OF 2 per cent. net
on the investment when building costs
were so per cent under to-day's figures.
1t is very simple matter to deter
mine whether or not It Is possible for
the Metropolitan with building costs 100
per cent. higher than pre-war costs to-
produce housing at pre-war rents on q
basis OF so per cent higher return than
the pre-war return. For instance:
A four story unit containing IA
rooms will cost. at minimum 81 rs 900
Land. interest during construction.
fees, &c.. ......s......... lOoOO
Total cost .$lc5.o0o
Six per cent. return and per cent.
amortization or II per cent. on
this sum Is. s..................-.. $l3,toO
Depreciation on building .......... 900
Total Sf6. .o50
Divided by 144 this is rent Of more
than 50 q room. This rent of 80 room
is for fixed charges only. In addition
there are all the various items OF up
keep: taxes, water. janitor, insurance.
collections. light. coal. assessments, va
cancics, loss OF rent. general repairs to
roof, plumbing heating, tiling. glass, car
pentry and the numerous others entering
into upkeep which amount to at least
IS room, indicating minimum rent
Of $14 room instead Of 50 or less.
The Metropolitan proposes to invest
S5, 100000 as an initial experiment. This
would admit of about forty units hous-
ing 1900 families. At rent OF 80
room this shows loss of So a room or
an annual loss OF $345,o0o.
The cooperation Of labor unions by
concessions is a joke worthy OF the Lock-
wood committee, for the scarcity OF me-
chanics at this moment entails the pay
ment of wages from 80 per cent to 80
per cent. above the union scale Of wages.
accompanied by restricted output. Under
such conditions the likelihood OF conces-
sions is obvious. With a tremendous de-
mand. for building materials in every
part Of the country the reason for con-
cessions on the part OF material men or
contractors is not clearly apparent.
Your article contains the glaring mis-
statement that the Metropolitan Life
will invest 500. 100000 Immediately in
gigantic building enterprise to furnish
homes for 100000 persons" This Is abb
solutely untrue and 1t is as harmful as
untruthful. The readers Of the ncwspa-
pers have been fed most freely on this
sort OF buncombe and have como to be-
lieve il, tho wish being father to the
thought. Hence they are unwilling to
pay the rents OF SIS to s25 room in
houses produced by builders, such rents.
unfortunately, being necessary to pay
return on union inflated costs.
Builders will OF course under such
conditions quit cold. Wherein lies the
silver lining in the cloud. for when the
builders quit the mechanics likewise quit.
When, as is not improbable. tho only
housing construction In operation Is this
petty Metropolitan Life project--$5, ,ooo.-
900 is drop in the bucket--then wages
will drop to level which will make 1t
possible to produce housing within finan-
cial reach OF the great bulk OF our peo-
pie; something which Is not possible to-
day because of unionism. This consuna-
nation, unexpected and certainly not in
tended. may readily ensue.
WILLIAM DOUGLASS FITZPATRICK.
NEW YorE Apri1 1S