Please note: this text may be incomplete. For more information about this OCR, view
About OCR text.
Real Estate Record
AND BUILDERS' GUIDE.
Vol. XXVII.
NEW TOEK, SATUEDAY, JANUARY 29, 1881.
No. 672.
Published Weekly by
TERMS.
ONE YEAR,, in advance___SIO.OU.
Communications sbould be addressed to
C. W. SIVEET,
No. 137 BaoAnwAV
DANGER AHEAD.
There is a legend to the effect that a
prophet, in days gone by, foresavs' that at a
certain season a rain would fall which would
have the effect of making all who were ex
posed to its influence insane. The prophet
warned the people, but his voice was un¬
heard. As the fatal day approached he re¬
tired to his cave, while the world outside
paid no heed to the descending rain. As he
had predicted every one became insane who
was exposed to the shower. The wise prophet
remained in his cell, knowing that the out-
aide world was full of crazy people. At
length his isolation became unendurable,
and he said to himself, "Of what use is it
to be sane in a world of mad men ? " So he
plunged into the crowd and became happy
by being as insane as the rest.
Who can doubt but that the investing
public at this moment are practically insane ?
Look at the figures of stocks in Wall street
and compare them with what they were but
three years since. It is true there is reason
for much higher prices for stocks. It is
needless here to recapitulate them, but, of
course, the most iiotent factor in the case is
the great money inflation. Before 1879 we
had, as an exclusive currency, some seven
hundred million of paper money, counting
greenbacks and national bank notes. In
addition to the paper money then afloat, we
have added some six hundred and twenty
million dollars of gold and silver, which is
either coinad or available for coinage. In
other words,we have to-day from thirteen to
fourteen hundred million of currency as
against half that amount of paper money
ouly two years since. At that time business
was dull because people were apprehensive,
aud such money as was used was carefully
guarded. Now confidence has taken the
place of distrust, and credit as well as money
is used to the uttermost, and what do we
see ? A huge stock speculation repeating the
experiences of las!, year; a vast increase in
the population of all the large cities; five
thousand miles of new railways under way,
and twenty-five thousand miles additional
projected. We are rapidly putting all our
spare cash into new enterprises, and con¬
verting our floating into fixed capital. Every
new enterprise, no matter how risky, is no
sooner on the market than the money pours
in to fill up the subscription list.
There is danger in all this. It is true that
the hopeful, sanguine and adventurous are
?3iakiiig paoii^. Jn<ieed, it i^ tji^ pp^jserya-
tive and the cautious who have not profited
during the past two years, and the market is
now led, and will be led, by the most adven¬
turous and reckless speculators. We all
know what became of the men who made
sudden wealth during the paper money era,
the Jay Cookes, the Clews, and the other
mushroom bankers. It is they who were
the first to go by the board when trouble
came. We are developing new financial
leaders similar to those who first fell in 1873.
We do not say that higher prices will not be
reached. We believe stocks will finally go
higher, but we warn investors that the time
has come when stocks should be left alone.
There is danger in trying I'urther to inflate
prices. It will be the part of wisdom now to
seek other investments which have not been
stimulated unduly. Real estate is as certain
to go up as is the sun to rise to-morrow
morning. It is the one property which, as
yet, has felt little of the stimulus of this
great superabundance of money. Pmdent
people will take their profits in speculation,
and hereafter invest it in real property. The
fortunes being made to-day in real estate
are the permanent fortunes; ones which
will last the longest. In this we know we
are giving good advice, and the whole real
estate interest ought to warn investors
against th"? danger of continued stock specu¬
lation.
THB IDEAL CURRENCY.
Mr. John Thompson, president of the
Chase National Bank, in a letter to the
Tribune, urges the adoption of a currency
scheme, which certainly is worth consider¬
ing, if not adopting. It is not original with
Mr. Thompson, as it has often come up in
the interminable debates on the best cur¬
rency for a civilized community. Mr.
Thompson wants the Government to base all
currency upon coin or bullion actually in the
Treasury of the United States; that is to say,
to issue no paper money except upon an ac¬
tual deposit of gold or silver, but to issue
currency without limit to those who have
the bullion or coin to make it good. This
would at once satisfy the bullionists and the
greenbackers. It would give us a paper
money absolutely secure. It would make
the United States the greatest user or con¬
sumer of bullion in the world, and hence
would have a tendency not only to retain aU
the gold and silver we produce, but to con¬
tinue drawing it from other nations. Mr.
George S. Coe and other bankers, as was ev¬
idenced at the Saratoga Banking Conven¬
tion, are warm advocates of this scheme,
while it has been, in a measure, endorsed by
Congress, for to-day it is legal to deposit
silver for notes of not less than |10 denomi¬
nation, and of gold of not less than |20 de¬
nomination. The silver certificates are be¬
ing. wid§)lj cii-cijilate4s ^i;it Seppgt^ Sher¬
man has shut down upon the gold certificates,
for the law is permissive and not mandatory.
Among the advantages which this scheme
would afford, are the following:
I. It would give us the most perfect and
safe paper money ever issued, a currency
literally as good as gold and far handier.
II. It would immensely encourage the
mining of gold and silver in the United
States, by affording an immediate market
for it in every treasury and bank.
III. It would do away with the objection
of the newspapers and smaU traders to the
forced withdrawal of small notes. In
France, Great Britain and Germany, paper
money of small denominations is not per¬
mitted ; hence, gold and silver coin are in
universal use. In this country, although we
produce bullion and Europe does not, all the
channels of retail trade are gorged with
small notes, to the exclusion of gold and sil¬
ver coin. But there is such an immense
business done m packages, audit is so handy
to send one and two dollar bills for subscrip¬
tions to newspapers and in payment, by
mail, for small wares, that the small notes
are jjopular. These could be kept afloat,
under this new scheme, as the depositor of
bullion could command one's and two's, as
well as fives, ten's and twenties.
IV. It would preserve us from the possi¬
bility of currency panics, to which we are
now, with our mixed currency, very liable.
It is in the power of the national banks, to"
day, by selling their bonds and withdrawing
their notes, to cause a contraction that
would ruin every business interest in the
country. It is not safe to lodge guch tre¬
mendous power in the hands of any institu¬
tion or institutions which profit by the fluc¬
tuations in the price of money. It is certain
to be abused, some day or other. A curren¬
cy based on bullion would insure us against
any panic due to the issuance of a circulat¬
ing medium.
Y. While staple, the currency proposed
would be elastic. If there was a demand
for more money, we would sell our products
abroad, and draw gold and silver from any
part of the world. If there was a redund¬
ancy of currency, that would soon correct
itself by the demand for gold and silver in
the arts.
VI. Ti.en. see the immense prestige of the
United States among the nations of the
earth if it had stored in its treasury vaults
the vast sums of buUion which would
represent the paper money afloat. We would
sood hold more bullion than all the banks of
Europe combined. The adoption of such a
currency would make New York at once a
centre for the exchanges of the vyorld.
VII. The machinery for making this
change already exists in the provision made
by Congress for issuing gold and silver
certificates. Let the law be so amended
raakingit mandatory pn the Secretary ot thQ