Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 80, no. 2065: October 12, 1907

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RECORD AND GUĨDE 559 ESTABUSfflD^ MWFH £1^"* 1868. Dei6iED ĨD REKL EsTAIE.BUlLOIlJb Í^RpííITECTlJRE .KoUSQfOlD DeQŨFĨATIOIÍ. Busn&3SAiÍDTHníES0F'GE|Í£R^l WrciîfST., PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Commuiiicatiotis should be addressed to C. W. SWEET Vablished EVers Satarday By THE BECORD AND GUIDE CO. Preaident, CLINTON 'Vi'. SWBET Treasurer, P. W. DODGB ■Vlce-Pres. & Geul. Mgr., H, W. DESMOND Secretary, F. T. MĨLLER Nos. 11 ío 15 East 24tli Street, Nctv York City (Telepbone, Madison Square, 4430 to 4433.) "Entercd at thc Post Officc at Ncw York, N. T., os sccoiiil-cltiss inaller." Copyrighted. 1907, by Tbe Record & Guide Co. Vol. LXXX. OCTOBER 12, 1907. No. 2035. INDEX TO DEPARTMENTS. Advertising Section. Page, Page. Cement .....................xviii Lumber .....................xxii Clay Products ................x\ĸ iMachlnery ...................xvl Consulting Engineers .........xv Metal Worlc................xiv Contractors and Builders......iv Quick Job Directory..........xxiĩ Electrical Interests ..........xvii Real Estate ...................ix Fireproofing ...................ii Roofers & Roofing Materlais.xyli Granite ......................xx Stone ........................xx Iron and Steel..............viii Wood Products .............xsiii A Moment wíth Finance THE EXISTING FINANCIAL SITUATION is extraordĩnary in its uncertainty and in ĩts complexity. The financial community is, indeed, precĩsely in tíie situation of a doc- tor's patient, wíio cannot recover without a surgical operation, and ■who is thoroughly disconcerted and scared at the prospect. The economic con- ditĩon of the country early last winter was of a líind whlch could not endure. The business men of the Unĩted States were expanding their operations in a way not justified by their capi- tal, and capital was bound to become too scarce for their pur- poses. In the same way, and for the same reasons, the labor market had reached an întolerable condition. The demand for labor was so great, and its price so high, as large'.y to increase the cost of conducting business, while at the sarae time its efScieney was decreasîng. Employers coiild not afford to select only efficient men, because there were not enough to go around, and they were obliged to pay high wages for second-rate worlĩ. Manifestly, both of these evils could be cured only by a con- traction in business. There must be a temporary cessation in the employment of án increasing volume of capital in business, and employers must again be placed in a positîon which would enable them to díspense with inefficient labor, Better a smaller volume of business, wbich was economically handled, than a large vo'itime whîch strained a man's resources and endangered his credit* witiiout adding to his proíĩts. This business contrac- tion is now evidently taldng place; but the financial community, instead of taking it with a cool head, is thoroughly frightened hy its symptoms, and a question as to the meaning o'f this panic can scarcely be avoided. Is it simply a matter of un- settĩed nerves, or does it raean that the contraction cannot take place without many more failures than have been generally suspected? How many business men, that is, are in a condition which permits them the luxury of contraction? These are the questions whieh the next few months will answer. In the mean- tîme investors, who can keep their heads and can control a cer- taîn amount of cash, have opportunities whîch may not occur again in ten years. The only question for such a man is: "When should I buy?" It is true thafc stocks may be cheaper; but the attempt to buy at the very bottom is attended with as many dangers as the attempt to seĩĩ at the very top. business, and the Trinity Buiĩdings are accomplished facts. For the first time in its history, it is doing no building on its own account, and it ís not making any preparation for new building. The City Investment Company still has its hands full wĩth its colossal improvement on Cortlaniĩt Street; bitt in other respects it is apparently out of the marĩiet.- So it is with .' the large 'individual operators. They are holding on tight, but they are not increasing tĩieir responsibilities. As to the thou- sands of smaller operators, who a year or two ago were buying and selling tenements so freely, they, too, have disappeared. from view; and one cannot help wondering how many of tliem will reappear as factora in the making of New York real estate values. The speculation in tenement houses, on which they have lived, has become an unremunerative occupation; and, so far as can be discovered at present, it is not likely to become remunerative again for many years. They lack the capital to deal in more expensive classes of property, and under existing conditions they cannot disengage even what capital they have, Tlie important question raised by the sĩtuation is whether tlie apathy 'will result in mtich liquidation, ■Will the operators who have been buying real estate so assiduously in tlie speculative district be obliged to stimulate the demand for íheir holdings by means of the substantial reduction of their asking prices? So far little or no liquidation has taken place; anS'the extent to which it will take place will doubtĩess depend chiefly on the duration of the existing apathy. The duration of the existing apathy will, ín its turn, depend chiefly upon the relief in the stringency of the money market. Such relief can hardly be expeeted until next spring, and it may not become really effective until nêxt fall. In the meantime it is improb- able tliat the liquidation, if it begins, will proceed very far. The forces whieh are making for the improvement of real estate'values in a eity, which adds over 125,000 people to its inhabitants every year, are too powerful to be quiescent for long. The Busíness Season AS THE SEASON ADVANCES the real es- tate market does not gain either in the vol- ume or in the scope of its actĩvîty. Apartfrom the sale of a few private houses, and the oecasional transfer of business property of some importance, it is almost completely quiescent. The widespread and buoyant speculatîve movement, whĩch has "been the mainstay of the raarket since 1901, is at the present time praetieally dead. The large speculative and investment corporations are teraporari'.y out of business. The United States Realty Corporation, for insfcance. has finished its great constructive operations. The Plaza Hotel Is open for Cost of Railroad Terminals IT IS A SINGULAR fIcT that the increase in the value of urban real estate constitutes both the strength and the -weakriess of the economic situation of the greaf .American railroads. During the ĩast few years their expansion in business has been dut of all proportion to their expansion in mileage; and new railroads cannot be built, in order to keep pace with the increase in busi- ness, chiefly because of tbe expense of securing terminals in the large cities. The large existing railroad systems which own such terminals possess thereby a strategic advantage in the conduct of their business, whieh must be described as something in the nature of a monopoly. Possessed, as they are, of means of doing business which are essential and which cannot be dupli- cated, tbe business raust come to thera; and it must come to them in a volume which is somewhat independent of their traffic effieiency. Unfortunately, however, the very conditions whieh places them beyond efCective competition also makes it difficult for thera to handle econoraically this increasing volume of fcrafflc. In times of financial abundance they can, of course, add to fcheir raileage, double-track their roads and increase the effieiency of their systems by tiie reduction of grades and sirailar împrovements; but when it comes to enlarging their terminals, they are confrouted by an expense from which even the riehest corporatîons shrink. As Mr. James J. Hill has so often pointed out, the cost of such terrainals is almost prohibî- tive, The experience of the Pennsylvania and the New York Central in iraproving their terminals in Manhattan is not sucli as to encourage other corporations in undertaking similar tasks. They have been obliged to raise enormous sums of money, fre- quently at a huge expense; and they have thereby impaired for the tirae being both their credit and the security of their divi- dends. It is probable that at the present time the stock, both of New York Central and Pennsylvania, wouId.be selling thirty points higher in case these euormous sums of money had not been spcnt: aud no doubt tbe stockholders of both of these rail- roád companies have made this reflection with some bitfcerness of spirit. It is none the less true, however, that twenty years from now the wisdom of these huge expenditures wil! be fully vindicated. By these means these two railroads will have se- cured an advantage over theĩr competifcors which will place them in an invincibĩe position. They will have built for the fut:ire in the most substantial possib^e manner, and will be re- paid many times for their recent, present and prospective sacri- fices. It would be wise policy on the part of the great Western railroads, durîng the next period of easy money, to reduce divi- dends if neeessary, in order to provide the terminals, without which they cannot properly continue to fulfil their functions aa comroon carriers, '^