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November 19, 1910.
RECORD AKD GUIDE
825
MF^
^ ESTABUSHED ^W MRRpH Sl^ 1668.
"bD&lflJp) REJvLESTAjt.BuiLDTf/c ABpKirEeTURE'KoUSEMOlDDEQffli^TBf^
Bifsirtess jutoThemes OF GeiJer^I lliTERf ST.,
PRICE PER YEAR IN ADVANCE EIGHT DOLLARS
Communications should b& a.ddre88edl ttn
C W, SWEET
Publlsfied EtJerff Saturdag
By THE KECORD AND GTJIDE CO.
President, CLINTON W. SWEET Treastirer, P. W, DODGE
Vlce-Pres & Genl. Mgr.. H. W. DESMOND Secretary, F. T. MILLER
Som. 11 to IS East 24tli Street, New York Cltr
(Telephone, Madison Square, 4430 to 4433.)
"Entered at tiie Post Office at Neio York^ N. Y., as s-rcoiid-class matter."
Copyrighted. 1010, by The Eecord Sc Golde Co.
Vol. LXXXVl.
NOVEMBER 19, 1910,
No. 2227.
THINGS AS THEY ARE.
NOTHING is to be gained by blinking the fact tbat con¬
ditions pj'evitiUng iu the real-estate and building mar¬
kets are far from satisfactory. Nobody had anticipated a
very large volume of real-estate trading or buildiug con¬
slruction, but at least so far as Manhattan is concerned
the actual developments are inferior to the very modest
expectations which were advanced some months ago. Last
week, for instance, the conveyaiices recorded in iVDanbattan
were only about one-half what they were a year ago. The
falling off in the Bronx was almost equally as large, and
even in Brooklyn there was a diminution of 33 per cent.
The election may have had something to do with tbe un¬
usually poor showing made by the totals of last week, but
at best the amount of business transacted is decidedly
smaller tlian it was a year ago, and a year ago the totals
were nothing to brag about. Unless some quick aud de¬
cisive change takes place, the real-estate year of 1910-11
will be the least active of any year since 1900. It may be
as wel! to recognize also that no very sudden or decisive
change is likely to take place. The cause of the existing
stagnation is threefold. In the first place, the difficulty of
obtaining loans on favorable terms tends to restrict botli
real estate and building operations. In the second place,
there has been overbuilding, both in the business and the
upper residential districts of Manhattan and to some extent
in Brooklyn. The Bronx and Queens are in a better con¬
dition in this respect, and these boroughs are likely to be
relatively more prosperous during tbe current real estate
year than are Manhattan or Brooklyn. The Bronx and
Queens will be the parts of the-city which will be most
benefited by the improvements of the elevated railroads and
by the opening of the Steinway tunnel, and as these im¬
provements can be completed soon after they are authorized
tbese boroughs have more to look forward to in the way
of better means of coinmunication than has tbe rest of
the city. But there is one cause of real-estate stagnation
which affects all boroughs alike, and tbat is tbe constantly
increasing drain upon real estate reventies because of the
increase in taxation. During the past four years taxes have
been'increased about sixty per cent., while values, except
in a few favored districts, have beeu stationary. Neither is
there any immediate prospect of relief. It looks as if taxes
would continue to increase for some years to come, and
undoubtedly this fact tends more to discourage purchases
of real estate for investment than does any other single
cause. An investor who buys a modern building is sure of
an increase of taxes, while the possibility of obtaining a
larger net rental from the building is precarious. The con¬
seciuence is that purchasers scrutinize much more closely
than they otherwise would the properties offered for their
consumption.
WHAT THE TRIBOROUGH WILL NOT DO.
IN looking around for some change in real-estate condi¬
tions w]iich will tend to stimulate activity, most brokers
fasten upon the Triborough route, but If one can judge by
the analogy of the existing subway the actual authorization
of the new subway system will have little immediate effect
either upon real-estate trading or real-estate values. The
effect of the existing subway upon the real-estate market
was not-JgltiintJl after it was actually in operation, and
there is no reason to suppose that the benefit qf the Tri¬
borough route would be reaped any sooner. Moreover, when
tbe time comes for its beneficial effects to be gathered in,
the harvest will be greater in the outlying boroughs than
in Manhattan. Brooklyn will be very much helped, so will
the Bronx, although tbe benefit which the Bronx may get
will be postponed for seven or eight years, because th?
Bronx lines cannot be constructed except under the assess¬
ment plan until after tbe rest of the system is in profltable
operaticn. But the benefit to property in Mauhattan will be
small. From 42d street down the Triborough route merely
duplicates existing means of communication. North of 42d
street" it will be a great boon to a very densely populated
district, but that district is already so completely filled
up, and real-estate values are so very high, that they can
scarcely be much increased without driving out many peo¬
ple of moderate means domiciled along the line of Lexing¬
ton avenue. It must be remembered, also, that if the Tri¬
borough route is authorized it will undoubtedly hurt the
credit of the city, and the consequence will be a generally
unfavorable reaction on property values. Rightly or wrongly
the bankers believe that the Triborough route will not pay,
and that the city will be obliged to meet an operating deficit.
They will, consequently, be loth to lend money to the city
for the purpose of building tbe road; and they will charge
more for such loans than they would for money which
was in their opinion to be profitably spent. There is no
telling how much the city may have to pay for these pro¬
posed subway loans. Even now it looks as if the coming
issue of city stock would bear interest at 4 ^^ per cent.;
and it may well be that during periods of money stringency
the Metropolis would be forced to pay five per cent, for the
enormous amounts of capital it would be borrowing. If
sucb a condition was ever reached, it would constitute an
aw-ful drain upon the municipal revenue and would un-
questionably damage the value of real estate. At the present
time the city is straining its credit, and if it goes on bor¬
rowing at an increasing rate, particularly for a purpose of
which conservative financial opinion does not approve, its
iMedit may be strained lo the breaking point.
THE INFALLIBLE COMMISSION.
THE Public Service Commission of the New York dis¬
trict has probably been tbe most criticized railroad
commission in the country, but never yet has the commis¬
sion, or any member of it, admitted that it had or could
make a mistake. The Chairman's latest defense of the Tri¬
borough route as usual refuses td admit that the plans
of the commission are not perfect in every detail. He sticks
to the early estimate that the system can be constructed for
about $150,000,000, but apparently he still neglects to in¬
clude in his estimate the cost of real estate for stations,
or any interest on the investment during construction. And,
of course, the estimate does not pretend to include the cost
of equipment, which might have to be borne eventually by
the city. On the otber hand, -be refuses to predict what
the probable trafiic of the new system will be, but he inti¬
mates that inasmuch as the existing subw-ay is now being
operated to its full capacity a similar result might be ex¬
pected from the Triborough route—the capacity of the Tri-
boroiigb route being 3,000,000 of passengers a day. But in
this calculation he leaves out of account the fact of com¬
petition, and the fact that the proposed Brooklyn and Bronx
liues would for many years run through very much less
densely populated districts. The estimate of the Rapid
Transit. Committee of the Chamber of Commerce, which was
less than half the maximum suggested by the Chairman,
looks like a very liberal calculation. But one consideration
should be final about this relation between tbe probable
cost of the system aud its probable revenue. If the Tri¬
borough route is going to be as profitable as Mr. Willcox
claims, it ought to be easy to procure au operating tenant.
If such a tenant could be secured any opposition to the
letting of the contract would immediately disappear. The
fact that tbe Commission cannot argue away is tbe suspicion
with which their plans are regarded by a consensus of expert
financial and engineering opinion.
SOMETHING IN MR. McDONALD'S PLANS.
THERE is something to be said for Mr. John B. McDon¬
ald's idea of a six-track subway along the line of Third
avenue and the Bow^ery. It has always seemed to Tbe
Record and Guide that the ultimate rapid transit needs of
the Bronx and Westcbester w-ould not be satisfied without
subway trains which ran as expresses froru the Harlent