Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-19
An Emergency.

ent session of Congress is so far ad-
vanced that there is little time in
which to act upon the report of the
Senate committee, filed yesterday by its
chairman, Senator Blaine, which for a
number of months has been inveStlgat-
ing the conditions respecting the con-
duct of real estate transactions in the
District of Columbia Recent happen
ings in the District have perhaps been
the cause Of the Fastening Of this re-
port. The conclusions which are pre-
sented, however, might easily have been
reached earlier. save for the labor OF
detailed and painstaking inquiry, with
out the demonstrations of urgent ne
cessity which these happenings have
afforded.
The committee urges the enactment
Of law to license and regulate real
estate brokers and statesmen, the Gre
alton of a "blue sky" commission to
regulate the issuance of real estate Sc
curities prior to sale, and revision OF
the mortgage foreclosure system, setting
or borrower. The most pointedly spe-
cific recommendation is for the enact
ment Of legislation that will prohibit
the release of mortgages until proof is
adduced that the funds loaned have
been actually repaid to the holders Of
mortgage notes.
difference of judgment respecting
the precise form Of regulation to be
adopted In the shape of new legislation
affecting real estate and other financial
projects in the District has delayed
enactment for so long that the Capital
has been left unprotected and heavy
losses have resulted to residents Of this
community through fraud and misman-
agement. Had Congress acted more
promptly in the enactment of regu-
latory law, much of this loss would
probably have been prevented. Now
that disaster has occurred, there is
preparatory action, but so late in
the session that the chances Of enact
ment before noon on the fourth OF
March are slender.
Revelations respecting the methods
employed in the handling of large real
estate deals and developments in some
instances in Washington, resulting from
failures and prosecutions for fraud. have
proved conclusively that the cure for
the evil lies in legislation that will set
UP protective system Of official super
vision over financing plans, over the
marketing Of securities and over the
methods Of real estate and security of
fering financial organizations-just as
oficial supervision is exercised over
banks and building associations and
correct the evident fault Of the present
system of mortgage recording and re-
leasing.
Prosecutions for fraudulent practices,
after the fact, will not effect the res
toration of losses TO security purchasers
who have been mulcted in dishonest
transactions. What is needed, regard
less of whatever the courts may do to
punish fraud and breach of trust, is a
system Of protection, under which the
District cannot be made the field of
deals and bargains and traffic in worth
less or weak or speculative securities.
In the circumstances the Senate and
House would be warranted in considering
this an emergency conditica Ju5tifying
and even requiring the expedition O.
these legislative proposals to the point
Of enactment at this session. The Dis
trtct has been hard hit by the dis
honest and incompetent conduct of one
of its major industries, the buying and
selling Of real estate and the market
ing Of the securities issued in the pro-
motion Of development projects. Delay
until the next Congress may mean
further losses to investors. Will there
not be a realization in Congress Of the
urgency Of this need?