Evening star., 1934-02-04
EFFECT
ON BUSINESS AND
PRICES UNCERTAIN
Nations Steady Recovery
Continues, However,
Reports Show.
GOVERNMENT B0LSTERS
MOST OF WEAK SPOTS
Mortgage Certificate Tangle in
Large Cities Declared Deserving
of Early Attention.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, February (NA.NAO.
1t is too soon to determine the effect
Of the new gold basis on commodity
prices and on business in general.
AS a result Of the tardy response to
other phases of the managed cur
rency program, there Is disposition
to discount the influence Of the latest
maneuver on prices.
However, effects of recovery by arti-
fetal and natural forces are more and
more visible. They are cumulative and
progressive The country is steadily
emerging from the depression. This
statistics and observations in the field
prove. Most of the weak places in
the business structure have been re-
inforced. The general public greets
each new monetary proposal from
| Washington with approval, and. in
| its own way, acts on it.
The threat to Government credit
has been removed. Apparently the
Treasury intends to make it impreg-
nable with consistent support in the
market and the lowest discount rates
! in the history of the Federal Reserve.
! The New York rate is now well under
that of Paris and London, which in
| PRODUCES another factor in the foreign
exchange situation.
BY means of Government direction
and Treasury funds, the railroads, the
! banks. some of the insurance and
mortgage companies. the farmers and
| several millions Of the unemployed in
| the industrial districts of the country
! hoy tII- viii
relieved of their pressing financial
/ burdens. Each week has witnessed
| some new effort by law to aid the un-
/ Gully oppressed. The latest Of these Is
! bill just signed by President Roose-
welt which guarantees the principal as
we'll as the interest of 50 900 900 900
Farm Mortgage Corporation bonds.
Realty Problem in Cities.
Next may be an act by Congress
! that will likewise place the full credit
! Of the Government behind the Home
! Loan Owners Corporation per cent
bones, now only guaranteed as TO in
| terest There are s155 100000 out
! standing Since their market value
| advanced from the low Dos to the
-! middle COS. the attitude of mortgage
| holders has become more friendly. The
| January total Of loans closed was more
| than one-third of the total transac-
tons since last July.
There IS a situation. however that
so far has received little attention by
Washington in proportion to the dol
| lar amount involved and the condi-
tjonS which it has created. 1t has to
do with guaranteed mortgage certifi-
Gates amounting to approximately
50 900 900 900 on property in the
Greater New York area and the mort
! cages in default on commercial and
residential buildings in other metro
poIitan centers. All are submerged by
legal processes. The laws delay" and
an unsCrupulous band OF lawyers oper-
ating over a wide area have depre-
Ciated securities once held in high
esteem by the most conservative OF
investors and removed many of them
from the income class.
1t is recognized that because Of The
varying values underlying these GER
tificates. it is difficult to adopt a
blanket program. such as reduction
in the interest rate to a figure that
could be earned on the amount out
standing. If practicable this would
give stability to the securities and
fixed income to their holders. 1t
has been fairly successful where small
amounts were involved.
A national policy. however. is re-
quired TO hasten the untangling Of
legal phases of the affair and to pro-
vide the unfortunate certificate holder
u-itt " Nv 10 ,,-l,
he now holds for paper that will be
negotiable at a fair value and pro-
ductive of income. 1t has been sug-
gested that those of the mortgage
certificates that can pass the test
might be replaced by the obligations
of the Home Owners Loan Corpo-
ration on percentage basis.
Slow Improvement Visible.
In most parts of the country the
real estate situation remained steady
until the Spring of 1881. As always,
it was slow to react to the decline in
securities. Similarly. it has not re-
sponded to the rise in stocks or bonds,
which touched their low average in
the Summer of 1882 For this reason
it is felt that 1884 will be conspicuous
for real estate improvement in the
United States. In this vicinity there
are manifold signs of it. Foreclosures
are decreasing. Occupancy is on the
increase. Unemployment is redis-
tributing families who have been
doubling up for several years. Rents
are more stable.
Inquiries made by the writer In
sections of the country where real es-
tate troubles were the basis of bank
ing troubles have brought favorable
replies. In Philadelphia rentals are
better and mortgage and building and
loan associations on a sounder basis.
In Chicago properties are changing
hands at rising prices; rentals are in
creasing without rise in dollar value.
San Francisco pictures the situation
as definitely improved after a long
period of low and defaulted rents,
with real estate mortgages so per cent
up in price. 1t Is of interest to note
That building permits in San Fran
cisco last year were approximately as
high as in the boom year, 1926, while
In Los Angeles they were only 10 per
cent OF those OF the record year, 1925.
Conceding the fact that the cities
and suburban sections Of the country
were much overbuilt in 1850, 1t
must be admitted that there still Is
much for the building industry to do
following an interval of suspended
animation equal to that of the war
years.
Securities and commodities have re.
sponded in fair measure to business
recovery and to imitation. It Is now
real estates turn to 60 forward.
Copyright 1884 By the North Americas
Nswspapsr Alliance. Incl