Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 22, no. 547: September 7, 1878

Text version:

Real Estate Record AND BUILDERS' GUIDE. YoL. XXII. NEW YOKK, SATUBDAY, SEPTEMBEK 7,1878. No. 547. Published Weekly by TERJIS. OiVE YEAR, in advance....SlO.OO. Communications should be addressed to C. W. SW^EET, Nos. 345 AND 347 Broadway CENTRALISM AND DISTRIBUTION IN REAL ESTATE. In a 3'oung and growing city like New York, it is pcrtinent and interesting to inquire w-hich principle is to be the Controlling one in determin- ing the coui-so of real estate tifcles—the principle of centralism which would concentrate these titles in'a limited number of individuals, or the priuciple of distribution which would scatfcer them broadcast among the masses of the people. With varying ascendancj'^ these two principles have heretofore worked side by side in the devel¬ opment of this metropolLs, never harmoniously, however, because antipodal and naturally autag- onistic—the supremacy of oue implying the sup- pressiou or exclusion of the other. Amid the changeful phases of commercial affairs, so char- acteristic of this city, such supremacy mustlneces- sarily be precarious and short-Iived; and with the ebb and How of business prosperity, these principles have interchangeably and alternately occupied dominant aud servient positions. The most striking exemplification of the princi¬ ple of centralism may be found in the early his¬ tory of this city, when the greater portion of the island was occupied as farm land, and the titles were necessarily but sparsely distributed, the city itself being the owner of extensive tracts then known as the common lands of New York. With the breaking up of farm lines, and the blocking out of farm tracts by the extension of municipal limits, the titles to these various estates gradually became dispersed and sub-divided. Still the priuciple of centralism found fresh, Ulustrations among the later owners. The pioneer repräsen¬ tatives of the now famous landed aristocracy of New York, those keen-sigbted and courageous men, were then laying the foundations„of the colossal fortunes that are now enjoyed by their descendants. Outside of the City of London, probably no city in the world is distinguished by so large a body of owners of inherited tracts of valuable land. With the lapse of time these tracts have suffered continuous and gradual sub- division. To this day, however, a sufficient num¬ ber of extensive parcels has been retained in Single families to furnish apt and fitting ulustra¬ tions of this general principle. Foreclosure suits are now creating single ownere, both corporate and individual, of collective parcels to a conspic¬ uous and alarming extent. The principle of distribution finds its exemplifi¬ cation notably in periods of prosperous land speeu¬ lation wheu the wbole community, erat least those in.the commimity possessed of adequate means, seek the titles of real eatate with a view of thereby bettering their fortunes. Such holdings are apt to be of an ephemeral chaiticter, the tenvure, hnder the circumstances, being maintained dur¬ ing the continuance of the speeulation or until successfuUy marketed. At the moment of recoil and collapse speculative titles are apt to be rele- gated into the .hands of mortgagees, usually the original owners. The best type of the distributive principle may be found in the Operations of the speculative builder who buys parcels] of adjoining lots, sub- divides them into sizes convenient for improve¬ ment, and after having erected suitable buildings proceeds to market them as he may have oppor¬ tunity. Occasionally, improved property is dealt in by wholesale, and builders succeed in finding a Single purchaser for a whole block of buildings, but in tho ordinary course of business the produc- tions of the speculative builder are retailed off by piecemeal to separate buyers. Choice dwelling property particularly is apt to flnd an individual purchaser for each dwelling. In this way, be¬ yond any other method that can be devised, is the wholesome distribution of real estate effected. Building loan projects, as commonly conceived, are not promotive of this distribution; because, in the large majority of such cases, the properties fall into the hands of capitalists who help to float these schemes, and are by them held for invest¬ ment. Having defined these principles, it is our pur¬ pose to try and determine which one is more be- neficient and desirable in its Operation, and more likely to promote the healthy growth of the me¬ tropolis and the true welfai*e of its Citizens. Centraxism.—This principle finds many zeal- ous advocates, and strong arguments can be offered in support of it. For example, when the real estate of a large city is concentrated in a few hands, it may be said to possess a greater element of strength than when scattered among weak holders. The qualification of owning a large tract of property implies the ability also to carry it through all the vicissitudes of business. The mainstay of land speeulation in this city al¬ ways has been, and probably always will be the extensive holdings by individuals and estates who are able and detennined to carry them, and who bear the reputation of being ready buyers at low prices, but sellers rarely at any price. A strong element of conservatism and solidity is thus in- fused into staple New York property. Besides, the improvements made and owned by these wealthy holders of large parcels afford the op¬ portunity of renting premises which might not be satisfactorily attainable if the same property was split up into innuraerable ownerships. The leading estates of our city that make a business of renting property, particularly stores and dwellings, enjoy an enviable reputation for fair dealing. The solid guarantee which their wealth affords of good faith and strict Performance of contract, constitutes an invaluable indemnity to tenants who have suffered at the hands of weak and unscrupulous landlords. The promptness with which repairs are executed, and tbe per- manence with which the tenant may retain premises, so long as the rent can be agreed upon, are other features especially acceptable to the tenant class. Under a system of taxation which has grown hoary with age, it is the established rule to levy the, major share of local taxation on real estate. This consideration at the present time is operat- ing to deter jiersons of small means from em¬ barkiug in real estate investments. It is much more convenient for the city to levy and collect its great blocks of taxation from those who are so abundantly able to respond to the demand, and this consideration no doubt determines the perpetuity of the present system. It is puzzling to decide w-hether this method of levying taxa¬ tion fosters the principle of centralism in real estate, or whether the fact that there are so many miUionaire owners of property in the city, oper- ates as an incentive to our law makers to fasten the great Ioad of taxation upon this class, under the conviction that thereby the poorer classes are relieved from the bürden. The determination of this proposition belongs so strictly to the philosophy of taxation that we shrink from enteriug upon its consideration here. AVe may remark in passing, however, that it is a notorious fact that during the present revulsion, few, if any, representative miUionaire owners have appeared as purchasers of real estate at what are considered the depressed prices. Either their past experience in these investments must be of a discouraging kind or they are w^aiting for the e-stablishment of still lower prices. Wealthy and centraüzed ownership has also the effect of buoying up values. Where property is withheld from sale or held with no Intention of ever offering it for sale, values become undefina- ble, and the speculator in saleable property seems to be justified in indulging the wildest vagaries as to values. There is also a reciprocal working of this influence. When titles are limited to a few wealthy owners, prices will naturally under- go an artificial inflation, and this very inflation when established in a Standard of high prices, effeetually excludes persons of small means, and renders real estate an investment .suitable only for persons of large wealth. So much for the views advanced in favor of this principle of centraUsm. A consideration presents itself as strongly inimical to this condi¬ tion of real estate titles. The typical wealthy land owner in this city is afflicted with a chronic prejudice against meddling in public affairs. Though all his interests are so largely bound up in the course of legislation, and in the current ad- ministration of public affairs, no great property holder has as j'et figured successfuUy or conspicu- ousl}' in shaping and directing the title of public events. In this city we have the anomaly pre¬ sented of an interest of colossal niagnitude and incomparable public concem that is heavily taxed, and yet w-hose voice is searcely heard in public Councils. Under a repubUcan form of government, this result must be deemed prejudi- cial to, if not subversive of, the public welfare. Distribution'.—-The other principle which we have outlined aims to divert land tenure from these few and dominant owners, and to scatter it as widely as possible among individuals of a com¬ munity. One good consideration-will serve to strongly enforce the value and merit of this principle, and to demonstrate its political superiority o-ver the other. In a populär government, the only sure and reliable safe-guard against the mnl-admizds- tration of affairs lies iii the intelligent devotion