Evening star., 1925-01-16
Explains Realty Trusts.

To the Editor OF The Star:
/ read. with much interest, your edi-
torial of last Thursday In respect to
the rent legislation, and I note you
put a great deal of stress upon the
so-called trust pyramiding." and in
dulge the hope that the bankers"
will take hold of and assist in rem
edying the situation. You apparently
assume, as has apparently the Presi-
dent. that this is a substantial evil
and the cause of all the difficulties
which now face the owners OF resi-
dence properties in the District, and
the Justification of the Communistic
legislation proposed.
|. think that there is a great deal Of
misinformation and misunderstood
ing on this subject OF trust pyramid
ing" AS apartment houses are sell
dom sold for cash. but most frequent
iy exchanged for other properties.
there often arises in these exchanges
such differences in equities that these
differences are partially adjusted by
additional trusts being, put upon the
properties so that a large amount Of
cash will not be required in effecting
the exchange. This Is perfectly
legitimate and straightforward trans
action, and often results in three or
four trusts being found as recorded
against such properties. These trusts
do not represent money loaned, and
they are not necessarily supposed to.
1 assume that 1t would be fair to
say that there are not 10 per cent of
the apartment houses In the city of
Washington that have fictitious trusts
against them, but, even suppose that
there were as many as this, how
could this fact possibly affect the
rental values, even of these particu-
lar apartments, in a competitive mar
ket such as we now have? If, by
chance, 10 per cent of the apartment
houses should have cost twice as
much per room as the other 80 per
cent of the apartments in the city,
you do not imagine for a minute that
the owners thereof could secure twice
as much rent as, or any more rent
than, for similar apartments costing
half as much. Therefore. how can the
amount Of trusts in any way affect
the price that the apartments bring?
Only supply and demand and, sad to
say, commissions can affect these
prices.
Again, the District has been operat-
ing for the last six years under a
Rent Commission, and this Rent Com
mission Is supposed to have had the
intelligence and the discrimination to
fix rentals upon fair values. Now, If
this commission has been competent,
1t could not in any way have been
misled by the amount of recorded
trusts against any property under
consideration, and, therefore, if they
have given any consideration to trusts
as indices to values, they have GER
tainly admitted evidence that, to any
one experienced in real estate, means
nothing.
Now, what have the bankers" got
to do with the situation? Apparently
the President, in his reference to
them, has some notion that these
'pyramided trusts are for money
loaned by the bankers" 1t should
be clearly understood that no bank
err" as such term is generally under
stood, lends money on real estate.
Such money as is loaned by trust
companies Is loaned only on first
trusts, and these have no relation
whatsoever to the execrated "pyra-
mided trusts" Therefore, as she
| bankers" are completely out of the
picture, and must be exonerated from
any connection with so-called 'pyra-
mided trusts" Gone of the imputed
causes of the rent evip), and trust
companies are involved only to the
extent OF legitimate first trusts, how
under the sun can they be of any re-
| medal use whatever? Or, how can
any one exercise any control on any
one else's business or methods of
business? The only effective control
will be the always operating law of
supply and demand, and there never
has been and never will be better
one, despite the distinguished prestige
and impetus given to the law now
proposed by Congress.
Truly yours. j. P. STORY.