Evening star., 1930-12-13

Takes Note of Rumors.
The securities division of the State
Of Illinois already has taken cognizance
Of the fact that certain persons in the
State are finding it profitable to circu-
late adverse rlmors as to the stability
Of real estate mortgage bonds, and
thereafter to pick up valuable bonds
from uniformed investors in exchange
for worthless securities or for entirely
inadequate cash payment, and says:
Land has always been the basis on
which the wealth and prosperity of our
country has been built, and while other
kinds of wealth change constantly, land
throughout the ages has continued to
be the greatest part Of the worlds
wealth. There Is no reason today why
Investors should lose confidence in Sc
curities based upon land at conserva-
tive valuation.
From information which has come
TO the securities department of the
State, many investors are frightened,
and their fear is being augmented and
exploited by certain agencies which are
trying to trade holders out of their
mortgage bonds at low prices.
Holders of real estate and real se-
curities will do well to sit tight and
hold their investments. Securities
based on real estate should pay out in
full IN practically all cases. The inn
portant thing at this time Is that the
owners of bonds and the owners of
equities cooperate. The best way to
make bonds worth 100 cents on the
dollar is to prove that real estate Is
worth more than the bonds, and this
cannot be done by sacrificing the real
estate at forced sales during hard
times"
Two Factors Emphasize Security.
Mr.. Reaume, in outlining the present
need of emphasizing the very real de-
gree of security behind real estate is
sues, said that the process of readtust-
ment will shcw eventually that real es--
tate is substantially the only form OF
investment that has come through with
reasonable degree OF security and IN
vestment return.
He pointed out especially two factors
of the present longtime trend in the
development of real estate which are
bound to adeSt faForably the degree
to which real estate securities can be
safzgua-ded.
Tney are the development of ma
tiona1ly accepted and detailed stand
ards Of practice in the appraisal Of
real estate and the coming of new
realization that the management of an
o specific business, calling for quite the
same kind of specific management abll-
ity and specialized experience as would
be taken for granted as necessary in
the management of any other business
where like capital was invested.
THE present situation in regard to
real estate bonds has been brought about
by the entrance into the real estate field
Of adyenturers without experience and
without scruple. They have sold as a
conservative investment bonds that were
not even a half decent speculation.
These adventurers represent very small
percentage of the men and firms in our
field" Mr.. Reaume said.
Conditions Test Stability.
"The general prosperity of the last
few years, with their rising real estate
returns, has induced the entrance Of
these adventurers and has concealed
from the public the fundamental un-
soundness of their projects. Conditions
prevailing over the last few months have
tested the stability not only OF real
estate bonds but Of all business. Where,
as has happened. either through actual
- a<xwa~