$35,000,000 in The Bronx

That a boom in building would do much to break depression, everyone knows. That Government-financed low-cost housing will start the boom, Franklin Roosevelt's Administration sincerely hopes. Last week an announcement by Frederick Ecker, chairman of Metropolitan Life Insurance Co., cheered The Bronx and indicated that private finance could do its part. Mr. Ecker's announcement: Metropolitan has signed contracts with builders to put up $35,000,000 worth of housing, covering 120 acres in The Bronx. This development will be by far the biggest housing project ever undertaken in the U. S. When completed three years from now, 50,000 people will live in it.

Life insurance executives have not had an easy time finding profitable places to invest their policyholders' money. But real estate is traditionally such a bad investment for life insurance companies-- because when cash is needed quickest is just the time real estate is least convertible--that most States have passed laws against it. The 1906 New York Insurance code forbade insurance companies to own any land or buildings that they did not do business in or that they had not acquired through mortgage foreclosures--and these they had to get rid of again within five years. Most other States followed New York. But between 1921 and 1926 when there was a shortage of houses in the U. S. and real estate no longer seemed a poor investment, New York added an amendment: Insurance companies could buy land if they immediately put up buildings on it, if all their real-estate holdings did not amount to more than 10% of their assets, if the rent they charged was not more than $9 a month a room. Other States followed. Because of the various State laws there is no generalizing about the life insurance business, but recent figures for 49 legal reserve life insurance companies with 92% of the total life insurance assets show $4,686,000,000 (19% of their assets) in mortgage loans, $2,000,000,000 (8%) in real estate.

Last February the New York Legislature modified the insurance code again: Till 1943, by the O'Brien-Piper Bill, insurance companies can once again invest in low-cost housing. But the amount of rent they can charge this time is not specified. Metropolitan apartments will undoubtedly rent for more than $9 a room. Truly low-cost housing, with the price of building materials and building labor as high as it is now, will continue for a while to be built by the Government or not at all.

This file is automatically generated by a robot program, so reader's discretion is required.