Unfreezing Assets*

If a man owns $50,000 worth of U. S. Steel common, he can readily and speedily realize on his holdings. For his shares have an instant market.

If a man owns a $50,000 piece of real estate, he may have to sacrifice $20,000 or $25,000 for an immediate sale. His land has no immediate market. It is an asset, but it is a frozen asset. From a merchandising standpoint, the realtor handles an excellent product but is handicapped by a primitive distribution system.

Last week Manhattan realtors tried to unfreeze their assets. They announced the formation of the New York Real Estate Securities Exchange. Such an exchange has been talked of for years, but though often discussed was always postponed.* This year, however, the real estate business has not been good. Money has been tight, credit high, realtors embarrassed. So the exchange idea was revived and on Oct. 1, at No. 12 East 41st St., the first real estate exchange in the world will open under the presidency of Cyrus C. Miller, Manhattan lawyer and member of the New York Real Estate Board.

How will this exchange operate and how will it make real estate more liquid?

In the first place, it will list the securities of real estate corporations. Thus, for instance, Benjamin Winter, Inc., potent Park Avenue realty house, might well issue 100,000 common shares, 100,000 preferred and $1,000,000 in bonds. To be sure, there is nothing to prevent Benjamin Winter, Inc., from doing such financing without any exchange. But with 250 potent real estate houses all offering stocks, bonds and other securities in a recognized exchange devoted exclusively to realtors, the market for Winter securities would be better than if the financing was undertaken as an isolated effort. Furthermore, the Exchange will guarantee the validity of the securities listed, will appraise property values, investigate financial conditions in the companies offering securities, and provide the investor with reliable and impartial information on his prospective investments.

It must be clearly understood that the Exchange is not listing property itself, but only the securities of the corporations handling the property. The investor will not buy the Chanin Building at so much a share but will buy stock in the Chanin company. If the investing public can be induced to think of real estate in terms of stocks and bonds and not in terms of brick and earth, there would seem to be no reason why the investing public will not learn to trade in real estate securities.

When such an educational process has been completed, and the public is as ready to become a profit-sharing real estate partner as it is to become a profit-sharing partner in General Motors, the realtor, now dealing in readily negotiable securities, will find his once frozen assets now thawed, liquid and disposable.

Potent real estate operators appear generally to have commenced their careers as bewildered immigrants and to have proceeded through bewildering skyscrapers. Famed in Manhattan are:

A. E. Lefcourt, in some quarters considered Most Potent Realtor, came from Russia. His first U. S. job was blacking boots. His most recent achievement was the opening of his own bank, the Lefcourt Normandie National Bank. He has specialized in building industrial centres.

Benjamin Winter also immigrated from Russia. His early U. S. years were spent in painting houses. Now Mr. Winter's business address is No. 250 Park Ave. He is a leading dealer in apartment houses, particularly in choice Park Avenue property.

A third onetime Russian is Frederick Brown, known now as a daring speculator. He not only buys to resell but generally has resold before he buys. His procedure is to take an option, find a buyer, complete the purchase, make the sale. He has been known to invest $100,000 in an option, find no purchaser, let option and $100,000 lapse, start philosophically on another deal.

Russia supplied another outstanding realtor in Irwin S. Chanin, better half of Chanin Bros., though Henry I. Chanin is also able, active. Mr. Chanin was born in the U. S. of Russian parents who, however, took him back to Russia, then brought him back again, this time no more to roam. His father was a painter-plasterer in Brooklyn. Irwin also painted, plastered by day, went to Cooper Institute by night, won a prize for designing a bridge and got an engineering job in subway construction. During the War he helped build speedily erected laboratories for making poison gas, saw the advantages of speedy construction.

After the War he had $200. He borrowed $300 from his fiancee, $600 from friends of his father, $19,000 from Brooklyn bankers, started putting up small houses in Bensonhurst, Brooklyn suburb. His carpentering and plastering employes mostly came to work in their automobiles. Mr. Chanin arrived via bicycle. He sold his-$10,000 houses for $13,000; was off on the way to his "56 stories of sunlight."**

No Russian is Joseph P. Day, famed auctioneer, present friend of the Manhattan Democratic organization. It was Mr. Day who bought the Tammany Hall property on 14th Street, who then sold it to the New York Edison Co., and who then turned the profits of the deal over to the new Tammany Hall as a graceful political gesture.

*In 1923, Brooklyn Realtor Joseph M. Gross suggested a real estate exchange to the Brooklyn Chamber of Commerce.

**The Chanin Building at 42nd and Lexington, Manhattan. It has 20 elevators, each with a different interior and all paneled with imported woods used ordinarily in jewel boxes and violins.