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Real estate record and builders' guide: v. 27, no. 673: February 5, 1881

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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-