July 27, 1901.





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Vol. LXVIII.





JULY 27, 1901.





No. 1741.





The Index to Volume LXVII. of fhe Record and Guide, cover¬
ing the period betivecn Jainiary isl and June 30th, 1901, is now
ready for delivery. Price. $1.00. This Index in its enlarged
form is nozv recognized as indispensable to every one engaged or
interested in real estate and building operations. It covers all trans¬
actions—deeds, mortgages, leases, auction sales, building plans Hied, etc.
Orders for the Index should be sent at once to Ihe office of publication,
14 and 16 Vesey Street.





X XT ITH the more favorable home news, and the existence of
* ^ a considerable short interest, an upward reaction in the
Stock Market would not be surprising or unreasonable. Crop
damage reports have probably had all the influence they can as¬
sert and that feature of the situation has been discounted for the
time being. Call money is cheap and there are visible signs that
the general situation is still a strong one. The decline from the
latest high points of prices has been quite considerable and there
is always hope for a turn on the long side from the fact that
shorts have recovered confidence and are apt to overdo things,
forgetting that stocks may at any moment become scarce
through the temporary suspension of liquidations and realiza¬
tions. The diminished supply of speculative securities through
absorptions and cash purchases must remain for a long time a
factor and temper any campaign against quotations. At the same
time the movement of prices will in the long run be down¬
ward. The actual effects on railroad earnings and business gen¬
erally, of the heavy damage crops have undoubtedly sustained,
have yet to be seen. If there ai"e reduced earnings and lessened
activity, which is the natural inference, prices of quoted se¬
curities must fall. It must be remembered, too, that neither
crop damage nor strike, nor both together, was the primary
cause of the recent decline; it was inflated prices aad the con¬
sequent deflation has not been completed. Europe still offers us
no support. 'There seems to be a fear of something serious about
to appear in the political sky to increase the depression caused
by poor business and financial distrust. What this is no one
se«ms to want to say, though hints are given of a new turn of
affairs in the Far Bast as soon as the military difficulty in South
Africa becomes one of simply policing the country.





IN perusing the story of the alleged irregularities in the filing
of tenement plans, which has had so much attention in the
daily press this week and which is briefly given in another col¬
umn of this issue, it ought not to be forgotten that the volun¬
tary organizations of reform in our midst are just now indus¬
triously piling fuel under the popular virtue, so that it may boil
with sufficient indignancy about November. From the manner
of its presentation this story seems to be regarded as good fuel
for this purpose. We are not attempting to decide upon the
merits of the story or claiming that it is right or excusable for
an architect to file an obviously unfit set of plans as a stop¬
gap and in order to avail himself of a special time privilege and
later, when the privilege had expired, to substitute them by an
appropriate set, but we think too much of a sensation has heen
made of the matter, and that if it had not been for the political
vertisement, the remedies for irregularities, if there were any,
could and would have been obtained in milder ways. It is partic¬
ularly noticeable that the charge of corruption in the Department
of Buildings is conjectured merely and not speciflc. There is dan¬
ger that by exaggerating the matter, it may lead to a serious
curtailment of the architect's privilege of amending his original
plans after approval and the issue of a permit; or a revival of
that literal and impracticable reading of law that cannot be lit¬
erally enforced, which made more than one city department ob¬
noxious during the Strong administration, as well as of putting
excessive penalties upon owners who may be so unfortunate as to





have architects who are imprudent or in error. The Department
of Buildings should weigh the whole matter judicially and
strictly uphold the law, but interpreting it liberally as they are
authorized to do, and without heeding outside clamor.





The F^uture o^ Realty Corporations.     ^

T AST week the Record and Guide published a list, which had
■^^ Ijeen made as complete as possible, of the realty compa¬
nies whose rapid multiplication is one. of the most important-
facts in the real estate market of the present day. With this list
was a brief account of a few of the causes, which bad contributed
to the formation of these companies. What these causes are it
is not necessary to repeat in the present connection. It is suf¬
ficient to point out that the larger and larger capital, which is
constantly being required for operations in New York i-eal estate
have made it desirable both for speculators and in some in¬
stances, investors to obtain for their own purposes the use of
other people's money and in this way to distribute both their
responsibilities and their profits.

The really interesting question, however, which these realty
companies suggest may be stated as follows: Is this corporate
organization of certain New York real estate interests only astep
to the same sort of organization and consolidation, which is go¬
ing on in other departments of business? Will the introduction
of corporate ownership into real estate have any tendency to ef¬
fect radical changes in the way certain classes of real property
are held and managed?

These questions must be answered differently in the case of
different companies. A great many of the small corporations
which have recently been organized do not possess probably
more than a half a dozen stockholders. They merely represent
under a new name some small group of speculators or building
loan operators, who have found it convenient to transact their
business in the name of a company. Probably a large majority
of realty corporations organized partake of this character. Some
have small capitalizations, and some iiave large; some deal in
tenements and small flats, and some make loans on apartment
hotels or business buildings; hut they are all alike in that their
purposes are entirely speculative. They purchase a parcel of
real estate, because they think it is cheap, or because they see
a good chance of selling it again to a builder with a loan. They
are, that is, mere intermediaries, like any other speculator. They
do not propose to accumulate any real estate if they can help it;
their business is not such that they can offer their stock to the
public, and probably tliey would not want to, even were they
able, for their operations must almost necessarily be conducted
secretly. They are economically in the same position as those
mortgage companies which lend money on bond and mortgages
and then sell the security to investors, and their presence in the
real estate market does not mean any departure from the ordi¬
nary methods of financing investments in New York real estate.

But some of these companies are proprietary and not specula¬
tive, and there does seem to be a chance that these companies
may eventually bring about important and interesting changes
in the way certain large properties in New York are owned.
Many of the recent sky-scrapers have been erected, not as for¬
merly by rich capitalists, or institutions,but bycompanies. These
companies are, indeed, privately organized, and their stock is not
as is so often the case in England publicly quoted; but the mere
fact that these buildings are permanently owned in this manner
strongly suggests that in the end means will be found of mak¬
ing a public market for this stock. The chief obstacle in the way
of so doing at the pi'esent time is the relatively small capitaliza¬
tion of such buildings, for there can be no general market for a
company whose capital stock amounts to only a million or two
of dollars. The one way in which this difficulty can be obviated
is by the consolidation'of several of these companies under one
management, and it seems very likely that in time such consoli¬
dations will take place, for American investors do not like to
have their capital locked up in an inconvertible form. A com¬
pany whose stock i-e-presented a number of office buildings
would be such a corporate innovation that it might take some
time for them to win their way into public favor; but there could
not he a safer security than a well-planned and well-situated
office building in New York. It might never offer large returns;
but after it is once established it should be as safe as a munic¬
ipal bond.

What makes the outcome we have suggested the more prob¬
able is the manner in which a number of these large buildings
have already been financed. There are at least two large build¬
ing corporations in New York, who frequently advance money
themselves toward the cost of the buildings which they erect,