Real  Estate   Recor





AND BUILDERS^ GUIDE.





Yol. XX.





NEW YOEK, SATUEDAT, DECEMBEE 22, 1877.





No.  510.





Publislied Weekly by

TERMS.
ONE YEAR, in advance....$10.00.

Communications should be addressed to

C.  MV.  SWEET,

Nos. 345 and 347 Broadway

BANKS AND BUILDERS.
Responsive to the universal shrinkage of val¬
ues, banks of discounfc and deposifc have lafcely
underfcaken, volunfcarily, to relinquish their re¬
dundant and unprofitable capifcal, and in some
cases to decUne business alfcogether.   In this city,
the pretext assigned for fchis course is fche specious
one of desiring fco escape the burden of excessive
taxation, although a little surprising that it is the
only instance in the history of these insfcifcufcions
■where'-such complainfc has been urged, and fche
prefcexfc must be aceepfced by fche pubUc with dis¬
crimination.   Of the exisfcing-monefcary inflafcion,
bank deposifcs and issues represenfc fche major share;
and fche contraction of these already initiated
may more properly be construed as necessary and
indispensable sfceps in fche gravifcafcion of business
infceresfcs fco the solid and rational basis of specie
paymenfcs.   Probably no financial or commercial
interesfc of the counfcry has been so confcinuously
and  uniformly profifcable  as fchafc  of banking.
The abiUfcy to afcfcraefc deposifcs of money, which
in reaUfcy are caU loans by fche public, fco fchese in¬
stitutions,   and  fche power of   relending  fchese
amounfcs afc maximum rafces  of  infceresfc  afford
fche  nucleus  and mafcerials  of    an  immensely
profifcable business.   Conducfced wifch discretion
and experience, no business can be .more exempt
from ordinary hazai-ds.   The sfcabUifcy and success
of the gi-eafc majorifcy of banks, during the try¬
ing period of fche last few years, fully justifies
this conclusion.   Next to the railroad interests,
whether above or below it poUtical economists
must  defcermine, no greafcer  franchise  can  be
granfced by the people than fche privilege of lend¬
ing fco the pubUc its own money at the highest
rafces of interest.     Ifc lies wifchin fche power of
these institutions to cripple or foster business in¬
terests, according to the narrovsmess or breadth of
the policy which governs them; and it is no hy¬
perbole of speech to say that fche welfare of the
business community hangs upon the fiat of fche
banks.   The disposifcion fco consoUdafce and unify
this giganfcic infceresfc has been too appai*ent of
lafce years, and the force of fcheir united momen¬
tum was never more strikingly shown than in
- then- determined action during the panic of 1873.
Whafc further developments await the future uni¬
fied acfcion of fche banks, time -wLU disclose: but
no more fitting or saUenfc theme of contempla¬
tion could engage the serious thought of com¬
mercial  or  financial philosophers.     There are
good reasons for beUeving thafc banking infceresfcs
have   parfcicipafced to   some   degree in the re¬
verses of the pasfc few^ years; and experienced
men beUeve fchafc our greafc nafcional banking sys¬
tem, though sustained by the -vast accumulafcions
of an earUer period, has been prejudiced if not
impaired by indiscreet policies and inju^cioua





uses of money. The coming five years, pregnanfc
wifch fche issues of specie paymenfcs and the estab¬
lishment of a stable cm-rency, must subjecfc fchese
insfcifcufcions fco a serious crucial test. How they
will emerge from it will be the anxious problem
of the future.

Ifc is, however, reassuring fco the pubUc mind to
find so many banks not only -wUling but able to
withdraw from unprofitable fields of labor, and to
TolunfcarUysm-render deposits and capital before
the point of insolvency or impairment has been
reached.    Ifc indicafces fche exisfcence of a spirifc of
conservatism   in  administration  which augurs
weU for general soundness.   It cannot be denied
that, so far as the banks of this city are con¬
cerned, a large proporfcion of  fchem owe fcheir
very existence, as weU as the profitable prosecu¬
tion of their business, to fcransacfcions growing oufc
of stock speculation.   The operation of lending
money upon caU loans, as ifc is fcermed, or, in
ofcher words, upon fche hypofchecafcion of sfcocks
having a current  and negofciable value on the
Sfcock Exchange, has been so aUuring in fche pasfc
as fco diverfc the inoney of fchese banks from legifci¬
mate mercantUe operafcions such as fche discounfc-
ing of commercial paper fco fche more hazardous
one  of   invoking   the   chances   of    fche   sfcock
inarket.   The tempfcafcion fco this class of business
is  well nigh  irresistible.    The  large  sums of
money caUed for by sfcock brokers and  specula¬
tors have aflEorded a prompfc and ready oufclefc for
fche   sm'plus   accumulafcions of banks, and  the
quick  negofciabUifcy  of   fche  securifcies   pledged
serves fco endow fchem wifch fche highesfc clemenfcs
of  popularity for banking purposes.     But the
risks incurred in this class of lending are aU but
equivalent fco fchose of direcfc speculafcion in sfcocks,
and doubfcless many a bank officer afc the present
fcime is lamenfcing his foolhardiness in infcrusfcing
corporafce funds upon  securifcies  so  mercurial.
Cerfcainly fche experience of  the panic  of  1873
and of subsequent years has created a disfcasfce on
fche parfc of fche more prudent bank officers for
indulging in this class of business.   The specula¬
tion in stocks has shrunk to such a smaU volume
and   inoney   on   call in the   streefc   has ruled
unfcU recenfcly at so low a rate as nofc only fco cur-
fcaU fche opporfcimifcies for invesfcing bank funds in
fchis manner, bufc fco whoUy fail fco offer a refcm-n,
in the way of infceresfc, commensurafce wifch fche
risks incurred.   This movement on fche parfc of
banks in reducing fcheu' capifcal is no doubfc cofcem-
poraneous wifch an honesfc desire on their part fco
secure a safer and more reUable line of business.
There is reason fco beUeve that, dm-ing the pasfc
fchree  years, the banks  have  exfcended to the
mercanfcile cbmmunifcy  more  Uberal  assisfcance
than had previously been fcheir wonfc.   It is too
much the case, parfcicularly with fche smaUer banks,
fchafc fchey are run as pockefc institutions for the
benefit of a Umited few, immediate friends of the
du-ectors and the du-ecfcors themselves, whUe the
oufcside business pubUc are allowed fco parfcicipate
very sparsely in their advanfcages.   Even among
fche larger banks ifc is weU knovm that lending,
Uke kissing, goes by favor; and fche power and
influence of  a, few leading names were aptly
shown by the readiness wifch which GrUman secm-ed
his loans upon fraudulent coUaterals.   If a uni¬





form sysfcem of sfcricfc scrufciny and active vigi¬
lance was adopted by fche banks, insfcead of that
of favoritism, the resulfc would be far befcfcer for
the community and for the banks themselves.

In advocating the claims of buUders, as a class,
to the consideration of bank officials, we have no
irrational scheme of bank expansion to propose;
we design merely to champion the rights of a
meritorious and indusfcrious class of business men
who have herefcofore enjoyed lifcfcle or no accom-
modafcion from fche banks, having scarcely
known the benefits of bank credit. As a rule
buUders have no recognized standing in bank
parlors. Their occupation is so technical and in¬
volved, so subservient bo fche special sfcafcufces and
laws govei-ning real esfcafce, and fcheir producfcs so
sfcoUd, immovable and unnegofciable fchat they
have never. been regarded as eUgible bank cus¬
tomers. This discrimination is founded largely
upon ignorance, and is pei-petuated fchrough par-
fcialifcy for ofcher and more responsive classes of
dealers. There are buUders in the community,
few in number fco be sure, bufc weU known, and
of such high sfcanding that they are readUy able
to command the benefits of ba,nk accommodation
from certain insfcifcufcions. The Mechanics' and
Traders', the Bowery, the Butchers' and Drovers,
and fche BuU's Head Banks are the representative
buUders' banks, and have no occasion fco re-
grefc their experience wifch this class of business
men.

Bufc there is anofcher and large class, of buUders,
who represent fche very besfc fcypes of thriffc and
sfcabUifcy in their affairs, wno have capitalized
their earnings in smaU estates, and are regu¬
larly prosecuting their caUing in the erection of
buUdings. Such buUders are apt fco underesfci-
mate fche impoi-fcance of a reserve of ready money,
or of negofciable securifcies on which fchey can
prompfcly effecfc a loan. Sfcarfcing fco build -wifch
a certain modicum of capital theyare apt fco rely,
when fchis is expended, upon fche proceeds of a
permanenfc mortgage fco be negofciafced upon the
property at the complefcion of ifcs improvement.
Any sudden and unexpected demand afc a cerfcain
sfcage of their work is pretfcy sure fco place them
in an unpleasanfc predicamenfc. The abiUfcy to caU
upon a bank for a temporary loan of a few
thousand doUars would be an inestimable benefit
to fchem. Bufc from this resource fchey are almost
invariably shut off, eifcher fchrough lack of ac-
quainfcance or experience, and are forced, in con¬
sequence, to contend with usurious lenders of
money for even a slight accommodation.

The bases on which we would m-ge fche claims of
this class of builders for bank accommodation
may be clearly and briefly stated. It is a com¬
mon circumstance for such men to own one or
more pieces of property, free and clear from en¬
cumbrance, and it is a parfc of their business pol¬
icy to avoid entangling such property -with mort¬
gages. In such cases, ifc seems fco us, it would be
consistent with both the interests of the bank and
the poUcy of fche buUder to deUver to a bank
officer a trust mortgage on such properfcy infcended
to serve as coUafceral secm-ity for any temporary
loan which the buUder may requu-e. This would
indemnify the bank vrtth such security as they
are seldom accustomed to receive, and would pro-