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entire farm debt is included in that which incumbers acre tracts and so is the debt that incumbers wood land that is not embraced in farm area, suburban tracts having speculative values and not subdivided into lots, and other land holdings commonly measured in acres, except tracts of less than five acres having considerably more than agricultural values. Notwithstanding unavoidable defects of classification, the foregoing table shows the influence of business and urban growth on the mortgage debt of the country. In Illinois, fifty-seven per cent of the debt incumbers lots; in Massachusetts, eighty-seven per cent; in Minnesota, sixtytwo per cent; in Missouri, fifty-three per cent; in New York, eighty-six per cent, and in the thirty-three States, sixty-six per cent.
Mortgage debt is limited by real estate values and may expand with them. This expansion of values follows density of population, the increase of net incomes from land, of individual incomes from other sources, and the growth of improvements, chief among which are buildings and railroads. The essential characteristic of the mortgage is its security; its amount is not permitted to equal the value of the real estate that it covers, and the value is generally much more than the debt; but, while this limits per capita ratios in one direction, they may grow in another direction until all real estate is covered by incumbrance.
The high per capita mortgage debt of some States and of cities is thus explained, or, at any rate, its possibility is explained. Doubtless the speculative buying of city lots, both improved and unimproved, contributes its influence, but the net income derived or derivable from real estate, in relation to the prevailing rate of interest, ultimately determines its value and consequently the extent to which it may be mortgaged. Another secondary influence on per capita ratios of mortgage debt is the buying and mortgaging of real estate by non-residents, especially when they buy for speculation;
a certain city in Kansas and one in California might be named as illustrations.
Among the thirty-three States included in the preceding table, New York has the highest per capita mortgage debt; namely, $268; the District of Columbia has $226; Colorado, $206; California, $200; and Kansas, $170. The lower ratios are found in the South, where Arkansas has a per capita mortgage debt of $13; Georgia, $15; Tennessee, $23; and Alabama, $26. The average per capita debt of the thirtythree States is $118. In New York City the mortgage debt is $554 per capita; in Philadelphia, $171; in Cook County, Ill., containing Chicago, $161; in Jackson County, Mo., containing Kansas City, $445; in Suffolk County, Mass., containing Boston, $255. In all large cities the ratios are greater than they are in the States in which they are situated. But, without further examination, per capita ratios are meaningless, if they do not give a false impression of the weight of the debt burden, and it will not do to refer to them as decisive measures of the burden.
There is a point, not definitely determinable, at which real estate reaches its practicable limit of debt burden, or, to borrow a meteorological term, its point of debt saturation. The probable place of this point is indicated by the census figures. In twenty-two States, containing twenty-nine per cent of the families of the United States, the Census Office reports that the incumbered homes (not including farms) that are occupied by owners have a debt that is forty-one per cent of their value; farms, thirty-five per cent; total of farms and homes, thirty-eight per cent. Suburban land and improved real estate used for business purposes are regarded as among the best of real estate securities, and very possibly are more heavily incumbered than farms and homes. So it would seem that the debt on all descriptions of mortgaged real estate must be as much as forty to forty-five per cent of its value. But this debt remains after the partial payments
have been made, and it has been established that these amount to thirteen per cent of the original amount of the debt, or, to about six per cent of the value of the security, and this six per cent must be added to the foregoing forty to forty-five per cent to indicate the actually tested debt-bearing capacity of real estate. Yet it is known that a large proportion of the mortgage debtors do not obtain as large a credit as the values of their mortgaged real estate permit them to do. With an allowance for this, it is believed that real estate may be made to bear an incumbrance that is twothirds of its value, without increasing the rate of interest to cover risk.
How nearly real estate mortgage debt has reached the limit of debt burden may now be determined. In the thirtythree States, several times referred to, the debt is nineteen per cent of the value of all taxed real estate, and this value, as already explained, will stand a debt that is two-thirds of itself. Hence, twenty-eight per cent of the debt-bearing capacity of this real estate has been reached.
With regard to the mortgages on acre tracts, in twentyseven of the thirty-three States it has been ascertained that thirty-two per cent of the taxed acres are covered by mortgage, and that in twenty of these States the debt represented by these mortgages is fifteen per cent of the value of all taxed acres, or twenty-two per cent of their debt-bearing capacity, if two-thirds of their value may be accepted as the limit of their incumbrance. In four of the thirty-three States it is known that twenty-four per cent of the taxed lots are mortgaged; in twenty States the debt on lots is sixteen per cent of the value of the entire number, mortgaged and not mortgaged, so that twenty-four per cent of their debt-bearing capacity has been reached, if it may be regarded as twothirds of their value.
Whether real estate mortgage debt has increased will appear upon an examination of the mortgage movement
during the ten years preceding 1890. This is shown in the following table:
AMOUNT OF REAL ESTATE MORTGAGES MADE DURING THE TEN YEARS 1880-89 IN THIRTY-THREE STATES.
A very decided progressive tendency in the mortgage movement during the decade is revealed by the preceding table, and no doubt this holds good for the whole country as well as for the States from which the figures are derived. The table shows the amount of debt incurred each year and an absolutely increasing debt in force is apparent. It is an assumption that can not be qualified by much error, that the average life of mortgages, or the duration of time from the date of their making to the date of their satisfaction, has not materially lengthened or shortened from the beginning to the end of the decade, and that the proportion of the partial payments has not varied considerably. How much debt incurred previous to 1880 survived in that year is not known and we can arrive at its amount only by a process of reasoning. The debt existing in 1880 may be roughly regarded as bearing the same relation to the debt existing in 1889 as the debt incurred in 1880 bears to the debt incurred in 1889. With this understanding, the existing debt of 1889 was 2.56 times the existing debt of 1880, an increase of 156 per cent.
In the meantime population increased about one-fourth and wealth about one-half, so that real estate mortgage debt increased proportionately about three times more than wealth and about six times more than population. Beyond question, the limit of the debt-bearing capacity of real estate was more nearly reached in 1889 than in 1880. If taxed real estate had increased in value as many times as mortgage debt did during the, decade its value in 1890 would have been nearly as great as that of the entire wealth of the country, real and personal.
Urban growth has led to most of the increase of this debt. Upon reference to the foregoing table, it will be noticed that while the incurred debt on acres increased but sixty-five per cent from 1880 to 1889, the incurred debt on lots increased 236 per cent, and a considerable proportion of the debt on acres has been influenced by their proximity to towns and cities. It is true that an enormous amount of wealth takes the form of new buildings every year and that urban land values are increasing, thus affording new security for mortgages; yet, notwithstanding this, the debt limit of all real estate has been approached nearer and nearer during the decade under consideration. At a later time it may be possible to determine whether mortgage debt has been gaining on farm and acre values faster than it has on lot and building values, or the reverse. As far as the values are concerned, it is known that the farms of the North, east of the Mississippi River (excluding Wisconsin), were worth less in 1890 than they were worth in 1880, while urban real estate increased enormously in value, largely because of new buildings.
Why mortgage debt should be overtaking real estate values now becomes an important question. The immediate explanation is that mortgages are a means of the distribution of the use and enjoyment of wealth. It has been ascertained that more than eighty-three per cent of the mortgage debt was incurred to enable the debtors to buy land, to erect