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VoL LXVII.





MARCH 9, 1901.





No. 1721.





T T 7" HILE speculation on the stock market is some-
^ ^ what uncertain, heavy investment buying contin¬
ues. This buying is mainly confined to railroad issues
and the older and better class of the Industrials, but
It gives great strength to the situation. If investors
are so satisfied with the prospects for railroad business
that they are willing to buy up securities standing low in
the scale ot priority and at present incomeless, it follows that
they are satisfied with the outlook for general business, because
it is upon that that the prosperity of the railroad depends. This
argument may be carried further to the point that, if the gen¬
eral situation is good, the position of any and all securities not
organically unsound is good. As has been pointed out before,
the market does not move in the way it was once accustomed to
do. Had it done so, there would have been long ere this a re¬
action from the big eieetion revival, but stocks have been so
scarce owing to buying for investment or long pulls and to
carry out deals and consolidations, that bear operations have
proved unprofitable and dangerous. It is the universal cry ot
professionals that a reaction is due, but the known inability to
reach long stock makes them refrain from selling in any whole¬
sale way. This is a very singular position of affairs, but it is one
that reflej3ts so cheerful and confident a tone in all business cir¬
cles that Its singularity may be welcomed.





IN view ot the very considerable importance attached to the'
changes in the tenement house building regulations, which
have heen submitted by the Commission, the Record and Guide
publishes in another column a number of interviews upon the
alterations they propose in the law. The architects and real
estate dealers and brokers interviewed, who were selected be¬
cause ot their practical experience in tenement house operations,
uniformly come to the conclusion that the recommendations ot
the commission are of so stringent a character that they will go
a long way toward putting a stop to speculative tenement house
building on the East Side, where prices are already very high.
A tenement house erected on a 25 x 100 ft. lot under the proposed
conditions will no longer be commercially profitable, and the
effect of the severer restrictions will be largely to decrease tene¬
ment house building, to lower the price of real estate in the
more crowded sections, to raise the general level of rents, and
so to increase the overcrowding. All this may be true; but even
If it is true, we should Hire to call attention to one important
consideration. The Tenement House Commission deliberately
rejected some of the much more restrictive regulations which
were proposed, because it appreciated the tact that tenement
houses are not improved by being prevented. It realized that at
bottom and in the long run the interests of the owners and the
tenants of tenements are identical, and It framed the
restrictions for the purpose not of curtailing the num¬
ber of tenements which were built, but of improving
their quality. If the regulations they have submitted
can be changed so as to attain the prime object of im¬
proving the sanitary condition ot the tenements, while at
the same time doing still less to discourage the construction of
such buildings, the Commission will welcome suggestions to
that effect, and the Record and Guide wili be glad to open its
columns to such suggestions. But operators and builders inter¬
ested in tenement house construction must keep in mind one im¬
portant fact. Prevailing tenement house conditions must be in
some way improved. That was the necessity which called the
Tenement House Commission into being, and which must be as¬
sumed as the basis of all discussion of the subject. The question
is:    How lar can such improvement go without doing more





harm than good? The proposed law may have drawn the line
too closely. In that case it is extremely necessary that repre¬
sentations should be made to that effect at Albany. But in any
opposition to the work of the commission, tbe main fact must be
kept in mind that commercial conditions operating on the pres¬
ent building law have not resulted in tenements which permit
their occupants to be physically and morally healthy. Severer
regulations will necessarily be costly to somebody, and the pur¬
pose ot any revision should be to keep the increased cost down
as low as possible, and to distribute it fairiy. This Is what the
Commission has tried to do, and its work must be tested on
those grounds.





Tax  Free   Mortg-aees.

T T Is reported that Senator Slater's hill to exempt real estate

■^ mortgages from taxation is one of the most popular measures
in the Legislature. It is altogether the most popular in realty
circles in this city, which would, of all things, like to see the
Investment ot capital in real property treed from all doubts, ob¬
stacles, and restrictions. It is admitted that bnt two per cent,
ot the total of mortgages in this State pay taxes as personalty,
but it is also claimed that their legal liability for taxation and
the possibility of that liability being at any moment enforced
somewhat deters investors from taking them up, and also keeps
the rate of interest much higher than the security warrants. In
the rates from 4 per cent, to 6 per cent, there is probably paid
from 1 to 2 per cent, on this account alone. A tax on mortgages
i^ further objectionable as a double tax, that is to say. the prop¬
erty lien is taxed at par in the hands of the holder of the fee;
the mortgage, which represents from one-half to three-quarters
of the total value ot the lien, is taxed in the hands of the mort¬
gagee; and, further, the proceeds of the mortgage may also be
taxed as cash in bank or other personal property o! the mort¬
gagor.

That such a chain ot liability has a considerable effect In
keeping capital out ot real estate, it would he Idle to deny,
and it would he equally futile to deny that realty tax valuations
would rise In proportion to the ease and availability of money
for the improvement of real  estate.    There are those who. In
exchange for the tax liability previously described, would pre¬
fer to see a small fixed tax placed upon mortgages, because, they
hold, that while satisfying the demands of the public purse,
it would secure the base of mortgage Investments by making all
liabilities certain and calculable.   There is no doubt that in In¬
vestments a  certainty Is preferable   to   an   uncertainty,   even
though in the end the one may cost somewhat more than the
other.   If It were known that mortgages would have to pay a
half of one per cent., interest rates and the market would soon
adapt themselves to that condition.    What neither can accurate¬
ly adjust themselves to is ignorance of whst may at any time be
demanded.   This is a risk for which practically special rates are
charged;   that Is to say. In the aggregate the amount paid In
interest because ot this state ot things Is more than is realized
by the authorities from the 2 per cent, ot mortgages that are
taxed as personalty.      We are not advocating a tax on mort¬
gages, but simply stating the arguments by which those who do.
support their position.     We hold that the dues ot the public
have been tully met when taxes on the par of the property Hen
have been paid, though we might have to admit, ff the case
were put to us that, of the two evils, a small fixed tax would.
In the long run. be better than a large one of uncertain and too
often unjust application.    The public may find themselves face
to face with this alternative.    The administration tax bills.  If
passed in their present form, will not afford the State that In¬
come It needs to avoid  the  necessity of levying a  State tax,
which was the avowed object of their framers. and the Stat©
may apply to mortgages to make np the deficiency.    It Is report¬
ed In political circles here that the final outcome of the present
discussion will be a compromise, substituting a direct tax of a
quarter of one per cent, on mortgages for thefr present liability
to taxation, accompanied by a declaration of their ineligibility
as offsets, as Indebtedness, to other personal property.   The re¬
vival of Senator Stranahan's proposition of last year to tax all
mortgages with a modification excepting those held by life In-
surnce and trust companies and savings banks, so as not to
conflict with the bills taxing surpluses of those Institutions, may
be intended to pave the way for this compromise.    It Is one that
the tax authorities will regard with favor.

Doubtless the realty world will oppose Senator Stranahan's
proposition, especially as discriminating legislation, as strenu¬
ously as they support Senator Slater's, and they will be right,
because whatever tax Is put upon mortgages Is an additional tax
on real estate, and one that must Inevitably be paid by the same
person who pays the tax on the property Hen.   This would not





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