EAL  Estate   Record





AND BUILDERS' GUIDE.





Vol. XXYII.





NEW TOEK, SATURDAY, FEBRUARY 5, 1881.





No. 673.





Published Weekly by

C^t Eeal €stat« Eetartr %%BQtmiian,

TERMS.

ONE YEAR, in advance___SIO.OO.

Communications should be addressed to

C.   W.   SASTBET,

No. 137 Broadway





There is one consideration in a real estate
speculation which should never be lost
sight of. Even after a panic the i^rice of
realty holds up. Two ytjars after the panic
ot 1873, lots were sold at public auction at
the Mott estate and other sales, on Riverside
Drive, for as high figures as could be ob¬
tained to-day, If real estate is the last to
feel the impetus of higli prices, it is a safe
and profitabii^ sale after a panic has set in.
Then there is no probability that we shall
ever ses so disastrous a recession of prices
as occurred after 1878, for that was due to
a paper money inflation, while the present
advance in values is based upon gold and
silver. We look for higher prices all
around.

It is only tlie other day we were told that
Chicago suddenly discovered it was short of
houses, both for business and residence.
Now the news comes from Ohio that all
kinds of land in that State are enhancing in
value, especially in Cleveland, Cincinnati
and tiie other centres of population. We
shall soon hear the same story from other
States and, moreover, the investing public
will wake up to the fact that there is a great
deal doing in real estate in New York City,
and that on this island ought to be found
the choicest fancy lots in the whole world.
Soon we will hear of land companies, and
tliere is a great deal of quiet buying in un¬
suspected quarters, to take advantage of the
coming " boom" in real estate.





REPEAL THE TAX ON MORTGAGES.
The senatorial election having been dis¬
posed of by the legislature of our state, tho
great and pressing question of the period
will, no doubt, shortly be taken in hand by
our legislators, in order, not only to remedy
thr failures of the past, but also to prevent
any future litigations in the courts. We, of
course, allude to the revision of our tax-
system, which can, with safety to the state
and its continued jarosperity, no longer be
postponed. It is only a few weeks ago that
we urged in these columns the appointment
of a special commission to revise the tax
laws and nominated in connection there¬
with, among others, Mr. Isaac Sherman. He
has passed away from us since that time,
leaving behind him a record of views
and princii)les, well-known to his intimate
reinds,   but  unfortunately not  engrafted





upon om- statute books. There are not so
many men in our state, schooled in the laws
of political economy, that we can contem¬
plate the loss of such a man with feelings
of indifference. His most persistent attacks
were always aimed at that most pernicious
system in our state which requu-ed the tax¬
ation of mortgages, and it is upon thig sub¬
ject that we desire to say a few words from
time to time while the legislature remains in
session.

Of course, when our present tax laws
were enacted, all sorts of property was
grasped at. Real property could not escape,
as it was recorded piece by piece in our
various County offices. Personal property,
however, money and securities, not so re¬
corded, were not so easily come-at-able, and
that, too, in a state, where four men to one
possess personal to real property. This ap¬
parent injustice to real property was some¬
what overcome in the course of time by
assessing, land below its market value, but
the unequal taxation was nevertheless not
remedied. Now in order still further to
relieve land from burdens which were felt to
be excessive, our system, as now in vogue,
seized upon the profits accruing to personal
property, and therefore taxed profits. As
we have already stated, neither personal
property nor its profits were easily discover¬
able, and hence this attempt proved a failure
with the exception of the taxation of mort¬
gages. These being recorded and therefore
easily found, were readily taxed as person¬
al property.

The truth is, mortgages are actually, and
in fact, deeds of conveyance, absolute only
so far as they are under certain conditions
subject to the original owner's right of
redemption. For this reason, a tax on mort¬
gages is a tax on real estate, and as real estate
is already taxed regardless of mortgages, the
mortgage tax is a double tax, anS on land
already too heavily taxed.

Now this attempt to tax money that is lent
out upon mortgage security is not only
foolish but injurious. It is not the creditor
who pays the tax but the debtor. Let us
look at it in the proper manner. Say a man
borrows |5,000 on real estate worth |10,000.
What becomes of the money? It is either
put on the land in the shape of buildings,
thus increasing its taxable value, or it is
paid away to some one else in whose hands
sooner or later it assumes a taxable form and
is productive of revenue. The money on
which it is pretended to raise this tax does in
no wise disappear. This money lent to the
land on mortgage has sunk into the land and
if not, it has gons further where it can be
pursued. In either case the tax upon mort¬
gages is a double tax.

While thus remembering that this mort¬
gage tax is virtually a land tax, let us not
forget that to the individual owner there is,
as a rule, less annual profit in real estate, in





proportion to the capital invested, than in
any other commodity. In all civilized na¬
tions the theory of taxation commands a
levy upon property, according to its produc¬
tion, as a source of profit. To prove this,
we merely need to recite the fact that in
some countries, like France, for instance,
unproductive land is not taxed at all. In
our own country, as in Iowa, unproductive
land, when held by aliens, is heavily taxed,
in order to compel those aliens to improv e
it or to sell it to others who will. In both
instances it shows that the law endeavors to
obtain a tax from the profits only. While
these profits on real estate are already so
very small, why should they be burthened
with a double tax, such as is infiicted
upon it by the taxation of mortgages '?

A great deal has been heard of late, espec¬
ially in the report of our State Controller,
in regard to the necessity of equalizing our
taxes. The first step towards the equal dis¬
tribution of taxes must be the removal of
double taxes. Hence, the tax upon mort¬
gages must be first repealed, and this, too,
before any other attempts are made at re¬
viving the tax system of the State. Let
our legislators cypher out for themselves the
gain to the State's resources in taxable prop¬
erty that would ensue upon the remission of
over $4,000,000 taxes now realized through
the tax on mortgages. Let them consider
the consequent infiux of capital and the
the large amount of capital now idle which
borrowers would then apply to the develop¬
ment of lands and improvement of towns and
villages. To-day many would-be borrowers
cannot take that capital, because, owing to
this nefarious tax, it is held at too high a rate
of interest. Take away the mortgage tax
barriers and the vacant lots here, as weU
as elsewhere in the State, will readily absorb
all the capital offered, as then, and then only,
it will flow there freely and abundantly.

--------------------^t*.-------------'■------:

IF GOLD STOPS COMING, WHAT ?

Last winter and spring there was a stop¬
page of the drain of gold from Europe to
this country. We retained the 80 million we
imported in 1879, also the 77 million pro¬
duced by our mines. But the spring of
1880 was a disastrous one to speculators.
All who put up margins on stocks, provis¬
ions and cereals, metals and general mer¬
chandise, lost a great deal of money. The
surprise at this state of affairs was general.
What can be the matter ? was asked. We
have a redundant currency, our railroads
have all they can do, trade is good, and yet
behold a general shrinkage of values; New
Jersey Central in May had fallen from 71 to
45, and other stocks in proportion.

Could it have been that to keep up a bull
market, a constant addition to the currency
was the one thing needful. Upon the re¬
sumption of specie importation in August
came a stiffening of prices.   Every gold dol-