July 22, 1899.





RECORD  AND  GUIDE.





125





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Vol. LXIV.





JULT 22, 1899.





No. 1,636.





UNDER the circumstances of the week the Stock Market has
acted very well. An outsider might be excused for ask¬
ing why a strike on the local street raiiroads should affect the
securities of enterprises spread over the whole country, and it
would not be easy to answer him, except to say that the prices
of the various securities always move more or less sympatheti-
caliy, and that this is more apparent in proportion to the estent
that the market is a spéculative one. That prices stood so flrm,
not excepting even those of the stocks most directiy affected by
the strike. or strikes, is a very encouraging feature and makes
aa advance early in the fall, if not before, extremely probable.
It is pretty sure that the large railroad earnings reported will
Induce spéculation sooner or later, especially in the direction of
bringing those railroad stocks and bonds that held back in the
last advance up to the line of quotations représentative of cur¬
rent prosperity. Besides the excellence of the railroad earnings
and the reflection they afford of the wide-spread commercial ac¬
tivity of the country, the agricultural situation is clearing and
dîsplaylng probabilities of better results than were looked fo-r
«arlier in the year. The poorer acreage results in wheat are
likely to be more than compensated by the larger area sown, and
the partial or total failure in other wheat growing countries.
Moreover, with such enormous crops as we hâve had for several
years prior to this, it has not been possible to measure them in
bushels, so that aîl calculations are upset by an apparently in-
«xhaustible supply remaining in farmers' hands. This is proved
hy the business now being done by raiiroads moving grain in
territories where harvesting will not begin for some time yet.
The apearance of thèse reserves may hold grain prices down, but
they keep the raiiroads fully employed. A similar fact explains
the heaviness of cotton prices, and the prosperity of the cotton
raiiroads, notwithstanding the greatest consumption ever known.
The market is kept fully supplied from the plantations no matter
how fast consumption goes on, While popular favor rests upon
the raiiroads for the time being, the industrial shares will bear
■watching, especially those related to the iron and steel industry,
ihe activity in which maintains its phénoménal proportions.





T X 7 HILE practical European financiers are trying to make up
X It their minds whether the outlook for money endangera
the people who hâve business commitments based on the lower
discount rates that prevailed only a short time ago, the school
eeonomists are beginning to discuss the probable duration of the
■existing period of business prosperity. At a récent meeting in
London of the National Libérai Club—Political Economy Circle,
which was presided over by Dr. J. H. Hollander, of Johns Hop-
Jiins University, a paper entitled: "Are we on the road to a Com¬
mercial Crisis," was read by Prof. N. C. Frederikson, late pro¬
fesser of Economies and Finance at Copenhagen University. The
author of the paper answered his own question with a decided
affirmative, taking the ground that the activity in business was
based upon extensive crédits, the inhérent dangers of which made
a crash inévitable at some time or other. He, however, thought the
situation good for another eighteen months. This fall will fur¬
nish a test whether there is any ground for a gloomy view of the
situation. If money becomes stringent it is bound to produce
■curtailment of commercial opérations. Next spring will furnish
another still more important. If the British and other European
governments, as ia not unlikely, materially, reduce their expen-
■ditures for warships and other défensive agents, they will take
away an important support from trade and, consequently, lessen
the circulation of money. It was the large naval expenditures
that started the British business boom in 1893, and it is reasona¬
ble to conclude that their cessation will be the sign of the com¬
ing of a period of comparative gênerai inactivlty. Money for the
lime belng is easier and gold moved toward London in- sufficient
fluantity to make a further advance of the Bank of England's





rate of discount unnecessary this week. Berlin and Vienna both
report improvements in their local situations. From the former
it is stated, in référence to the check given to the advance of tha
quotations for industrial shares, that any marked and perma¬
nent décline seems to be excluded by the phénoménal prosperity
in ail lines of business. The Creditanstalt of Vienna proposes to
increase its'capital and this is understood to siguify that Aus-
tria's industrial stagnation is over and that the security market
will aiso improve. France has legislatively accepted the view
that the value of money has been lowered permanently by the
events of the past twenty-flve years by reducing the légal rates
of interest, fixed in 1S07, from 5 to 4% in civil matters and from
6 to 5% in commercial. The British Parliament does not seem
to be in a burry to take up the report on Indian. eurrency and, as
the session is now near its close, it almost looks as if the public
is to hâve half-a-year in which to consider the proposais made
therein, unless the government expects to rush a bili, giving them
effect, through at the last moment.





MONEY   AND   REALTY.





^* HE half year just ciosed was one in which there was much
^ buying and selling of real estate and much concomitant
borrowing of money, on mortgage and the re-adjustîng of mort-
gage loans, and the interest thereon. Thèse things imply a settled
state of the money market, for that time at least, as well as. of
other things, such as terms of tenancy, existing and prospective
demands for the various classes of housing and so-forth. The
most important of thèse, it being essentially fundamental, ia the
money market, and it is worth while spending a little time to as-
sertain how far real estate has benefited by the easy conditions
that hâve prevailed there. For reasons which need not be stated,
real estate, notwithstanding the excellence of the security it af-
fords to loanable funds never obtains the beat terms of the money
market for any particular time. That is to say that, while real
estate may be found which, with margin of value and perma¬
nence of profitable use considered, has equal qualities of security
as a government, or a municipal or railroad bond of the best class,
at the same time the rate of interest on the loan it can secure
will be higher than on either one of the other three. An inquiry
into the causes' of this apparent discrimination against the rea]
estate loan would probably resuit in finding that it waa not so
much a matter of relative security as of difflculty of handling
that made the one loan more expensive than the others. The
fact that rates for real estate loans are, clasa for class, higher
than those for government, municipal and railroad loans, will
explain why our mortgage records do not show any such made at
3% and only one, and that for a moderate amount, at 3^^% during
the long period, beginning early in 1894, when money was abun-
dant and hard to place satisfactorily. Still real estate has felt
to a substantial degree the bénéficiai effects of the plethoric con¬
dition of capital reserves which was maintained until recently.

In support of this statement we ask the attention of our read¬
ers to the following table in which will be found the totals of the
mortgages made at less than 5%, in Manhattan and the Bronx,
during the first half of this year compared with similar totals for
corresponding periods in the six preceeding years. In the cases
of the loans made at 4 and 41/0% there are given the percentagea
they severally and jointly form of the totals of mortgages flled
in the respective periods to which they apply. Owing to the com¬
paratively small bulk of loans made at what may be called ir¬
regular rates their percentages of the totals hâve not been worked
out, as nothing material could be proved thereby. The flgures
for the Bronx given show what allowances should be made for
that borough and aiso that it is becoming easier to place loans
there owing to the fact that the loaning public are being edu-
cated up to the value of the security. The growth of the loans
made in the two boroughs together at 4% from $1,893,839 to ?32,-
427,750 and from 1.79 to 24.6% of the total of ail loans, from 1893
to 1899 is quite remarkable and has a very important bearing
upon the future of realty in this city. The 41/3% loans while
making aome progress do not show anything like so large an in¬
crease either in bulk or proportions; but, taking the loans at the
two rates together and flnding that they make nearly one-half of
ail the money loaned on- real estate in the flrst half of the year,
it may be concluded that 4% and 41^% bave become the standard
rates for investment loans, with the prospect of the lower rate
absorbing that class of business in the reasonably near future.
It will be noted that it was only in the first half of this year that
the 4% loans were proportionately greater than the 41^% loans,
and, it should be further noted, that this period is the one of ail
those given in which the activity in real estate has been greatest,
the one fact having a direct relation to the other, In other worda,
the activity of the past six months was predicted upon a money
market that met the changed conditions that had come upon the
commodity dealt In.   The table referred to Isthe following: