Real  Estate   Record





AND BUILDERS' GUIDE.





Vol. XVIII.





NEW YORK, SATURDAY, OCTOBER 7, 1876.





No. 447





Published Weekly by

TERMS.
ONE YEAR, in advance... .§10.00.
(,'ominunications should he addressed to

C.   sv.   S\%EET,
Nos. 315 AXD 347 Broadway.

THE TRANSITION.
At the i^resent time the questions upper¬
most in the minds of business men are: Have
values touched bottom ? have the vapors and
gases of inflation been entirely combusted ?
liave the muck and rubbish, on wliich we
have  hitherto had to build,  been cleared
away ? is the bed rock at last laid bare where¬
on the walls of solid prosperity may be surely
built V   Upon the solution of such questions
hang the fortunes of many a man, and with¬
in their scoiie is embraced the future weal or
woe of our financial and commercial systems.
The present revulsion will be distinguished
above all preceding ones for its prolonged
aud far-reaching effects, as well as for the
persistent resistance which on every side has
beeu offered to it.   The panic of 1873 flashed
like a meteor across the sky of apparent pros¬
perity, and after its explosion in brilliant
coruscations, the entire country was electri¬
fied by the spectacle, and the gloomy ashes
of its path fell blightingly on every business
iaterest or financial venture.    The long and
seemingly invulnerable perpetuation of arti¬
ficial values and conditions allured even the
most conservative natures  into the belief
that at length the country had entered upon
a career of prosjaerity which was to know no
period.   The most sober minded and shrewd¬
est business men of the country, though they
had mentally reserved the possibility of such
aa event, were caught in the supreme crisis
with embarcations "of great pith and mo¬
ment," mostly undertakings and investments
which at their best estate under natural con¬
ditions would be deemed of dou.btful pro¬
priety, and which in the light of subsequent
events have proved lamentably disastrous.
Grown accustomed to speculative fluctua¬
tions in prices,  merchants   and financiers
were wont to regard these frequently recur¬
ring panics as fitful and sporadic, and hurtful
only to the most reckless.   In all. previous
crises, beginning with the memorable one of
1857, patient waiting and brave resistance
were the sufficient antidotes to such financial
I  maladies, and by holding on with a stout heart
tlie man of invested property, whether of
I  stocks,  merchandise or real estate,  felt a
i  leasonable confidence of realizing intact the
I   capital sum of his investment.   Perhaps the
i   Pievaihng  optimism  of our   Anglo-Saxon
nature has fostered this peculiar frame of





mind, and, in consequence, Ave see men to¬
day bravely asserting that the present evils
are but temiioraiy, will soon jdeld to better
influences and pass away, and that safety
from loss consists in biding one's time.

When the history of the latest era of infla¬
tion comes to be written from its inception
in 1862 to its disastrous climax in the sum¬
mer of 1874, its critical ijhilosophy will teach
us many valuable and instructive lessons in
financial aud commercial polity. The most
interesting phase of that history will be
found in its sequel—in its gi'and culmination
and close, showing the various kinds and de¬
grees of stresigth which opjiosed the force of
revulsion when the natural law finally and
fairly asserted itself.

The dry I'ot of the past three years, as the
press felicitously terms this natural reaction
from over expanded and artificial conditions,
lias gradually told upon the sailing qualities
of our financial and commercial craft from
smallest to greatest, and according to their
variou.s degrees of resistance. In looking
back, we can see how quickly many a bark
was foundered in the first moments of disas¬
ter, like the unfortunate " Mohawk," simply
for the want of time to take in sail; how
many another, as sturdy and well manned,
but closer reefed, swept cheerily along, drift¬
ing unconsciously but surely on the shoals
and quicksands of bankruptcy; how the
tougher craft, strong men-of-war, iron-clad
and nobly rigged, essayed to weather out the
storm only to founder at last under a clear
sky ! These figures fitly denote the various
classes of enterprises which have succumbed
one after another to the irresistible forces of
reaction and revulsion. The banking houses
of railroad fame felt the first fuiy of the gale
and after a slight resistance succumbed.
The various mercantile houses with expanded
credit were next laid low. The stock list,
vrhich yielded to the first sliock of the panic
only to recover under the first breath of in¬
flation, now yields along its whole line—the
weaker first, the stronger last, but none the
less hopelessly. The speculators in the great
commodities of petroleum, cotton and wheat,
the manufacturers of great staples, the miners
of coal and the raih-oads connected therewith
have each in turn been shriven and wrecked;
last but not least the real estate interests,
colossal, stately and calm, with flying pen¬
nants disappear from laublic view, and are
lost amid the wreck of foreclosure suits.

In all this turmoil and commotion we can¬
not fail to discern the signs of a great tran¬
sition of values, the most momentous and
radical our country has ever known; the
disintegration of inflated and forced systems
through the application of that stern resol¬





vent, "hard times," and the reorganization
of values, justly equated and related, upon
the basis of natural laws and sound and
healthy conditions. "Vahies are unsettled and
unstable in every market except in those
which have already passed tlirough tlie ordeal
of revulsion, declining for a time below the
level of natural values, and then slowly re¬
cuperating, in an effort to regain their places
in the new equililsrium that is about to be
established.

This is aptly illustrated in the case of cot¬
ton and print cloths ; from the highest pos¬
sible elevation they have i^assed through all
the degrees of depreciation until near the
zero i)oint in prices ; far below their natural
values and below the lowest possible cost of
Ijroduction. The stoppage of mills, and the
legitimate consumption of the country at
length reduced existing stocks almost to
scarcity and thus tended to revive this crip¬
pled industry, and now an active demand,
which low prices never fails to generate, bids
fair to place the cotton and print manufac¬
tories among active and paying industries,
since the newly established scale of values
ensures to the manufacturer and to his factor
margins for moderate gains.

If we study the commercial list and exam¬
ine current prices of the past three years, we
will find the same restlessness of values, the
same gravitation towards a lower scale has
pervaded nearly the entire list, and as each
one has passed down the bevel of deprecia¬
tion and reached its lowest possible point of
declination, the recovery seems inevitably to
follow, and business in that particular branch
is rehabilitated and reinstated. Petroleum
has run the gamut to the lowest key and is
already ascending to the treble. Coal inter¬
ests, the most obstinate and audacious, have
succumbed at last, but have only just begun
to travel down the inclined plane. We have
yet to chronicle their reinstatement.

Real estate, after having soared to the top¬
most pinnacle of inflation, then toppled and
fell with a reeling crash from which it has
scarcely recovered, although it may be said
to be gradually settling upon a solid basis.

Under normal conditions, the intense con¬
servatism of real estate owners makes them
eager to accept and recognize an advance,
while on a decHne the shrinkage of values is
apt to be steadfastly ignored until bitter ex¬
perience forces them to acquiesce in and
adopt the new scale of prices ; and such ac¬
tion on then- part is necessaiy and a condi¬
tion precedent to the establishment of the
new equilibrium of values.

The part of wisdom among real estate
owners decidedly suggests the recognition of
this great transition.'  The   sooner market