Real  Estate   Record





AND BUILDERS' GUIDE.





Vol. XXIY.





NEW YORK, SATUEDAY, NOVEMBER 15, 1879.





No. 609





Published Weekly by

TERMS.
ONK VKAK, in advance.. ..SIO.OO.

Couiinunications should be addressed to

C.   W.   SWKKT,

Nos. Vib AND 137 Broahwat





WHY MONEY IS DEAR.

The liiuincial writers on the daily press are at
a loss to account for the recent high rates for
inoiiej-. Day after day they keep writing on this
subject without suspecting that the matter is as
"plain as a pike stall'," and could easilj'have
been predicted by any ordinary business man.
Money is dear becau.se it is in demand, nor will
it become cheap until there is some reduction in
the business of the country. It was to have been
expected that when the dead lock produced by the
fear of resumption was over—when the business
community reali'zed that bed rock in prices had
been reached—that there would be an increased
demand for monej-. It was wanted for every
department of business, and in increasing quan¬
tities. The chances for making "big" money were
while tbe latter was exceptionally cheap, and
when prices were extraordinarlj- low. We are
so accustomed to the low figures which prevailed
during the so-called hard times, that sober men
are alTrigbted when they note the advances which
one short year has brought about. But it should
be remembered that every product of human
industrj"- was reduced to the minimum .price; that
in endeavoring to gain tho markets of the world,
we produced cheaplj-; to get out of debt w-e
worked upon a verj- small margin of profit, and
the result was that from '7.5 to '78 the price of
overj'thing produced bj' human hands, including
tho labor of those hands, was phenomenally low.
Our reward has come in the increased demand for
all the products of our industry, for labor and for
land. There is yet a large margin for a rise, but
the immense increa.se in prices is naturally ac¬
companied by a demand for larger and still
larger sums of money.

A well-known banker from Sj'racuse was re¬
marking, about three months since, what an ex-
ti-aordinary fact it was that the bankers were uot
then called on for monej' accommodation. There
seemed to be an abundance of money in the
hands of the people for the increased business.
He w-ould doubtless tell a different story now,
for, all of a sudden, as it were, the banking in¬
terest has been called on for money, at very
higli rates. Money is high priced simply because
everything else is getting to be high-priced. It
requires a larger volume of currency to handle
the business of the community when prices have
advanced 20 and 30 per cent. Nor do we look
for very cheap money again for some j-ears.   "We





will not have that until there is a sharp reaction
in tho present upward tendencj- of prices, or
until the time comes when we shall have had
another panic. Yfie look, therefore, for high rates
for monej' from this time forth, and we advise
builders, mortgagors, and others interested in
real estate, to make up their minds that thej' can¬
not get money at the rates which were obtained
for the past few yeai's, and that they must expect
to cliargo for their lands and houses an additional
ligure, to make u]i for the rates which they will
be forced hereafter to paj- for the use of money.

Dear monej', after all, is not an unmixed evil.
It checks overproduction; it puts a curb upon
speculation; it prevents extravagance. In coun¬
tries where there is a national bank, the endeavor
is miide bj' raising the interest on monej' to put a
stop to wild commercial ventures. But in our
countrj-, where we have no such regulation, the
natural check to extravagance is the rates de¬
manded by the monej--lenders.

There is one aspect to dear monej', however,
w-hich is of the most serious moment to holders
of real estate and to persons who are heavily
mortgaged. They hoiie their troubles will be
over on the return of good times, and it reallj-
seems as if we were about to see some of the bur¬
dens on real estate lifted. The Legislature passed
a law limiting interest to G per cent., but already,
we understand, some of the savings banks and
many of tlie insurmice companies are consider¬
ing the wisdom of calling in some of their six per
cent, loans. Thej' find that money is worth seven
per cent., and that it is not the part of wisdom
for them to accept the legal rate on real e.state
w-hen they can get much higher figures in other
departments of trade. As yet, tho heads of the
financial institutions are not quite sure that
money is going to be permanentlj- dear. As
soon as they are satislied of that, we look for
some trouble in the real esL-ite market. Loans
will be called in, mortgages will be foreclosed,
and lands tind houses, perhaps, thrown upon the
market. There is a good feeling in real estate,
and alreadj' large investments are being made in
houses and lots; but there miij- be a "set
back,' due to any sudden deinand for inonej-
from persons who arc carrying real estate upon
a margin.

We wish to caution speculative dealei-s who
think of extending their lines to beware of tight
monej-; to be prepared for some such contingency
as the calling in of mortgages and loans bearing
six per cent. AVe advise purchasers to get long
time mortgages or bonds at six per cent, when
they can. The recent decision in the case of the
Knickerbocker Life Insurance Company, where-
bj' it lost its claim on the mortgaees made
by it in excess of the legal rate is a warning
to all banks, insurance and trust companies, not
to attempt to lend on real estate above the legal
rate.

It is somewhat anomalous that the list of fore¬
closure sales is steadily increasing. This
means that persons who have held mortgages are
anxious now to get their money to be used
speculatively on the Stock Exchange or in the
purchase of articles which are rising in value.
This is a matter of very grave importance, not
only to the coimtry at large but to our local real
estate dealers of the speculative tendencj'.





AS A FINANCIAL CENTRE.

It is surprising how little some Nexv Yorkers
know respecting the great loss ot trade wo have
.suffered bj- the " Immediate Transportation Act,"
passed in 1S7.~>. A well-known broker recently
visited one of the largest drygoods stores iu
Chicago, and expres-sed his amazement to the
proprietors at the business they were doing.
Thej- replied, " You Rnow, we no longer depend
upon the citj' of New York for our goods. We
import directly from Europe, and the customs
are levied, not in New York, but in Chicago.
New York is to us merelj' a jiort through which
we get our wares, but j'our city benefits bj' the
trade no more than does Albanj' or Buffalo,
through which the trains pass which bring them,
to our w-arehouses."

And so it is in all the great cities of the coun¬
trj', St. Louis, Cincinnati, and even fourth-rate
towns import directly from Europe, and hence
New York has lost a great deal of its jobbing
trade. Had we had vigilant and active members
of Congress when the law- of 1875 w-as proposed,
this would not have happened, and the enormous
business which has left us would still be transact¬
ed in the metropolis. But it is useless to cry
over spilled milk. It will be found that the collec¬
tion of customs all over the country is costlj- and
the appraisers inefficient, if not dishonest, and
this will lead to quarrels about the tariff, which
will localize the trade, in time, in a few large
cities.

New York can never get back all the jobbing
trade. That much is clear. To make good her
loss she must now become the financial, manufact¬
uring and mining centre of the countrj'. The
taking up of the Canadian loan recently was
scarcely noticed bj' the press, but it is significant
of what will happen in the not distant future.
During the next great war in Europe we expect
to see a Russian loan taken up in the citj' of New
York. Other international loans will follow,
and, in time, New York will contest with Eng¬
land the supremacj' In the money markets of the
world. It is to be regretted that loans for great
industrial enterprises, involving other nations, are
not more often brought to the attention of our
capitalists. We have not j-et rescued from Great
Britain the carrjMng ti-ade of the world, which
we lost during the war of the Rebellion, and our
progress seaward, it must be admitted, has been
painfullj- slow. Almost everj' ship found in our
docks bears a foreign flag. It is English, French
and German marine companies which get the
profits from carrj'ing American goods. If Con¬
gress should adopt some wi.se measure, looking
towards the extension of our foreign trade; if we
should do what England and Germany do for
their ocean commerce, and offer substantial aid
to prospective lines, our flag w-ould again soon
be seen upon foreign seas. The not distant
future will doubtless witness a great war between
England and Russia. Perhaps then will be our
opportunity to recover some of our former
prestige upon the ocean. New York is already a
very great city; it is adding to its population
and business year bj- year, and it cannot be, but
that in the fullness of time, the ocean traffic
w-ill again be turned towards this citj' to augment
its population, increase its wealth and add to its
importance.    The person lives who will see New