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Real estate record and builders' guide: v. 87, no. 2250: April 29, 1911

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April 29, 1911 RECORD AND GUIDE 785 ^ ^^ ESTABDSHED-W M.IIRCH 2V^ 1868. De/oteD 10 I^L Estate. BmLtujJb AR,GifiTEeTijR.E .t{ousErioiD DEeai^Tiorf, Bifsit/ess Alto Themes of GEfteR&l !;/TEREs-f,^ PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C. W. SWEET Published Every Saturday By THE RECORD AND GUIDE CO. President, CLINTON W. SWEET Treasurer, F. W. DODGE Vlce-Pres. & Genl. Mgr., H. W. DESMOND Secretary, F. T. MILLER Nob. 11 to 15 Eaat 34th Street, New Tork City (Telephone, Madison Square, 4430 to 4133.) "Entered at the Post Office at Ncto York, N. Y., as sccond-elass matter." Copjriehted, 1911. hy The Record & GuiJo Co. Vol. LXXXVL APRIL 29, 1911. No. 2250 CONSERVATION OF REAL ESTATE VALUES, PERHAPS the most important lesson to be drawn from the train of consequences set in motion by the Triangle factory flre is the fact that real estate values are extremely sensitive to changes in public opinion. They may he pro¬ foundly affected at any time by a change of attitude on the part of the public towards a variety of matters oE general concern—-fire prevention, sanitation, distribution of popula¬ tion, the standard of living among working men, taxation and so on. Heretofore, social questions have reacted hut slightly upon real estate values, except through rising taxes and through tenement house legislation. However, the recommen¬ dations contained in the report of the City Commission on Congestion of Population indicate tbat social questions must hereafter exercise a growing influence upon real estate values. In a general way, these recommendations typify the same body of opinion as is represented by the Citizens' Committee of Safety, organized after the Triangle flre. It is altogether likely that the reform measures which that com¬ mittee will propose will be far more radical than those which the Joint Committee of the New York Chapter of the Amer¬ ican Institute of Architects and the Building Trades Employ¬ ers' Association will recommend. The two committees are bound to view the question of public safety from different standpoints. Social reform is certain to be more strongly emphasized by social reformers than by architects and build¬ ers. In saying this, there is no intention of disparaging in advance the work of either committee. On the contrary, the purpose is to bring out the fact that if we are to conserve real estate values our laws, in so lar as they bear on real property, must be in harmony with enlightened public opin¬ ion; they must conform to the true interests of the com¬ munity as a whole. Real estate brokers and operators should place tlieir technical knowledge at the service of social progress, with a view to seeing that equal justice is done to the property owner and the factory operative. If the fram¬ ers of the present building code had given proper attention to sanitation and fire prevention, there would not be in exis¬ tence to-day scores of modern steel buildings which public sentiment regards as unsafe, and which have, consequently, depreciated heavily in value. The bulk of the value of im¬ proved city real estate is represented nowadays by the build¬ ing rather than by its site. The time has come when the problem of conserving capital invested in real property is quite as insistent as is the problem of conserving onr natural resources; and hoth are inseparably connected with social reform. FINANCIAL HESITANCY. DURING the last few months the amount of business trans¬ acted by the com.mission houses in Wail Street has been smaller than at any time since 1S98, and that in spite of the fact of the enormous growth in the meantime of the volume of securitie's. Coincident with this extreme dullness in the financial center of the country, general business has proved to be disappointing. The symptoms of a revival which took place in January have disappeared, A process of slow contraction is apparently taking place. The railroads are economizing and have cut down their renewals and improve¬ ments to the lowest possible point. Business in the West is following the example set by the East, and is steadily dimin¬ ishing. No one has any idea how far this contraction will go and when it will stop. The increasing business depression is usually attributed to the succession of blows which have been dealt to security values from political or governmental sources, and these blows have undoubtedly been very severe. The long agony over the anti-trust cases which has lasted for almost a year and a half, the refusal of the Interstate Commerce Commission to permit an increase in railroad rates, tbe danger of a disconcerting reduction in certain tariff schedules, and the persistent hostility to propertied interests exhibited by the State Legislatures—all these ad¬ verse political conditions have undoubtedly contributed to the financial uncertainty and the business depression. There can he no doubt, also, that politics will continue to have a depressing effect for some time to come. The business world knows or will soon know the worst that can happen to it through the action of the Supreme Court or the Interstate Commerce Commission; but the agitation for lower tariff duties has come to stay, and the hostility to corporate in¬ terests on the part of the State Legislatures has not yet run its course. During 1!)12 business will have to face the em¬ barrassment of a Presidential campaign, and a campaign in which the two parties will compete for eminence in radical¬ ism rather than eminence in conservatism. Altogether, the outlook for business recovery, in so far as it depends on an improvement of political conditions, is uot very reassuring. GENERAL BUSINESS CONDITIONS. WHILE adverse political conditions aud polities have un¬ doubtedly contributed to the increasing contraction of business, their influence may easily be exaggerated. The fundamental difliculty with the flnancial and business situa¬ tion lies deeper than that. It is becoming generally recog¬ nized that the recovery from the panic of 1907, which took place in 1909, was too sudden and too complete. It took place before the business of the country had really repaired the mistakes which had caused the financial earthquake of 1907. The consequence was that early in 1910 the business of the country was rapidly drifting into a condition of over- expansion similar to that of 1907; and it was only saved from another earthquake by the policy of forced liquidation adopted hy the banks. Since then Americau business has heen slowly readjusting itself to the new conditions which have become dominant during the last few years. It has been economizing in certain directions in order to meet necessarily increased expenditures in other directions. A hnge expan¬ sion in real estate values, particularly in the West, had to he flnanced and assimilated, aud a generally higher standard of wages had also to be faced as a permanent fact. How far this process of reorganization has gone, and how long it will have to be continued, could he ascertained only after an ex¬ haustive investigation; but there is every indication that it is proceeding steadily and prosperously. The eventual re- suit will be a considerable increase in productive efficiency. The dangerous symptoms which caused so much alarm in 1910 are disappearing. Imports are diminishing, and exports, particularly of manufactured goods, are increasing. The cost of living is lower than it has been for some years. Loanable capital is accumulating, and there is no danger of a squeeze in the money market for ah indefinitely long time. Finally, crop prospects are unusually favorable. These conditions may not bring about a revival of business, but they are likely to prevent any further contraction. The great fact is that the country has returned to a condition of more general economy and is accumulating capital. A larger surplus of loanable money has been and continues to be its great necessity. For the last ten years it has suffered from its inability to accumu¬ late as much capital as its business expansion and the in¬ crease in prices made necessary; and in all probability a general revival of business will be postponed until there is some assurance of ease in the money market for a really long ueriod. A reform in the currency system would con¬ tribute enormously to such an assurance; hut, unfortunately, there is small chance of urging any such a reform from the present Congress. -.♦ ■ ■'■ ■■■ ■ MONEY RATES. r-ry ME ease in the money market has not availed as yet to 1 reduce the rates of interest at which money can be borrowed on New York real estate. During the first four months of the year, the amount of money loaned on Man¬ hattan property has diminished from about $125,000,000 in 1910 to a little over $81,000,000 in 1911. The diminution in Brooklyn has been almost as large, proportionally. A large fraction of this decrease must be traced to the diminu¬ tion in speculative building operation, but a still larger fraction is due to the fact that the prevailing rate of interest