The New York herald., 1922-02-26

After a severe bombardment from
real estate forces Senator Davenport,
according to we'll substantiated reports
circulated yesterday, has finally with
drawn his Senate bill No. "A, Imposing
per cent. tax on moneyed capitai
in the hands of private banking inter-
ests or Individual citizens in competition
with national banking associations. me
real estate interests based their attack
on the assumption that the bill would
eventually impose a tax on mortgages
and real estate bonds. Senator Daven-
port is said to have expressed the opin-
ion that the passage of the bill would De
unnecessary.
One of the last shots aimed at the
bill was In the form of telegram TO
Senator Davenport by the Brooklyn Real
Estate Board. This telegram advised
the Senator that unless real estate bonds
and mortgages were specifically exempt
ed In the bill the organization was con-
vinced that the measure should not De
favorably considered by the Committee
on Taxation ad Retrenchment. The
boards telegram to Senator Davenport
read as follows:
"Our counsel and committee on legis-
Iation and taxation have given care
full consideration TO this bill and 1t is
quite unnecessary for me to point out
TO you the serious consequences OF a law
oe the kind proposed If II were tound
later on by the courts that this pro-
posed law applied to money invested IN
bonds and mortgages on real estate.
"You, of course, realize that practi-
cally every mortgage which has been
written in the State of New York ior
many yeaT~ contains a provision MAX
a. to- ctt, tha nnOrtgaRee TO
require payment of the mortgage in
debtedness in the event that any law
shall be passed which affects either the
security of the mortgage or the return
thereform. and / quote for your infor-
nation the following clause. which Is IN
corporated in practically every mortgage
written in this State:
an the event of the passage after
the date of this mortgage of any law OF
the State of New York deducting from
the value of land for the purposes OF
taxation any lien thereon or changing'
in any way the laws for the taxation OF
mortgages or debts secured by mortgage
for State or local purposes, or the man.
ner Of the collection of any such taxes
so as to affect this mortgage, the holder
of this mortgage and of the debt which
It secures shall have the right to give
thirty days written notice to the owner
of the mortgaged premises requiring the
payment of the mortgage debt If such
notice be given the said debt shall be-
come due, payable and collectable atsthe
expiration of said thirty days
This bill is SO fraught with serious
possibilities that to conform with your
expressed assurance that it does not seek
30 reach the investments suggested. we
believe either specific exemption should
be mentioned of bond and mortgage In
vestments or the bill should not be favor
ably considered by your committee"
Attention was first called to the posi-
bilfties of harm in the bill as far as real
estate mortgages are concerned by cyril
Burdett. vice-president of the New York
Title and Mortgage Company Mr.. Bur-
dett says the bill would affect bonds
and mortgages on real estate for the fol-
lowing reasons:
"In late opinion rendered by the SUI
preme Court of the United States in the
Merchants National Bank of Richmond.
Va. VS.. tie city of Richmond, handel
Asvn June g. 1921, 1t was held that the
method of taxation OF the stock of ma
tional banks in the state of New York
would be defective. Section 52l9 OF the
Revised etatutes Of the United States
nrovides that, while the Legislature of
each State may determine and direct the
manner aad place of taxation OF all
shares of natOlal banking associations
located wita,p the State. yet the taxa
tion shall not tie at greater rate than
that assessed upon other money capital
in the hands of individual citizens OF
such State.
TN 1920, az the time OF the passage
OF the income tax law. our tax laws were
amended by adding Section 4-a thereto.
exempting all intangible personal prop
erty from taxation, the term Intangible
personal property being defined as IN
corporeal property. including money de-
posits in banks, shares of stock. bonds.
notes, credits, evidences of an interest In