September 27, 1902.
RECORD AND GUIDE.
431
ESTABUSHED WW^RRpHSlii^ IB6S.
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De/oteD io f^L Estate . BlnLDI^'G A;r.cKitecujre ,V(ouso1oll DEGOft^nod.
BusiiJess Alb Themes Of GEtiERAl Ii^ter^si.
PRICE PER YEAR IN ADVANCE SIX DOLLARS
Published eVery Saturdag
Communicntinna shoulil bo addresned to
C. W. SWEET, 14^16 Vesey Street, New YorK
J. T. LINDSEY, Business Manager Telephone, Cortlandt 3157
"Entered ul the P'ist Offirr at New Yorl; N. Y.. as second-class niatter.'
Vol. LXX.
SEPTEMBER 27, 1902.
No. 1802.
MONEY continues, and will continue for some time to come,
to be tlie dominating factor in the Stock Mai'ket. In
epite of the rallies in prices seen on Thursday and yesterday it
is obvious that there are no funds available for the purposes of
ordinary speculation. It may be taken for gi-anted that the
banks this week improved their technical position before the
law, and that the statement to be issued to-day will show the
reserve restored to the legal limit, but it is hardly likely to show
that the banks have gained funds which can be loaned out on
call on the miscellaneous collateral that is received in times of
advancing prices and confidence. The measures taken by the Sec¬
retary of theTreasuryto help the market and prevent fluster were
timely and needed, but not altogether reassuring. The mere fact
that they were necessary at all accentuates the seriousness of the
situation. Then the help the Secretary of the Treasury can af¬
ford is compai-atively small, and for various reasons is not ac¬
cepted to its full extent. This last remark applies particularly to
his offer to anticipate interestmaturing prior to June next. When
this form of aid to a distressed market has been offered by other
Secretaries of the Treasury the response has been slow and
partial. The availment ought on this occasion to be better, be¬
cause there would be money in taking the interest in advance
and paying to the Treasury the rebate demanded for the privil¬
ege, because the prospects for the profitable employment of the
funds so obtained in the open market for months to come are
good. Where the amount is considerable enough to be employed
there, the rates obtained would give the bondholders taking ad¬
vance payments of interest a handsome profit on the operation.
In this connectioiLit will interest readei-s to know that it is be¬
coming more and more the practice of owners of large amounts
of idle money, to loan them in the market through brokers, in¬
stead of leaving them on deposit with trust companies at a small
rate of interest. The broker loans the money and receives the
collateral, of the nature of which he advises the customer; of
course, as he gets only a small commission, he wili not take more
than an agent's or broker's responsibility,
T N the talk, which was current this week, of a possible advance
â– ^ in the Bank of England's comparatively high rate of 3%, an
idea can be obtained of the prospects for the continuation of the
demand for money until the close of the year. Prior to this 3%
was a high rate, except in times of war or disaster and then, of
course., it was a low one. This rate has now been maintained
steadily for more than a year, and it was this week exceeded by
the outside market's rate. Thereby expectations, which will
doubtless be fulfilled before long, of an advance in the Bank's
minimum were accounted for. With a possibility of an advance
in the typical rate, already more than normal for ordinary times
and conditions, it is obvious that in general rates for money
will be high until the New Year is reached, and then as may be.
This state of things does not increase the activity of the bourses
but prices are to a great extent protected hy the liquidation that
has already been forced. The decline in iron, coal and electric
shares in Germany has been so large that a reaction is being
created by the mere mechanical working of supply and demand.
In Great Britain the preference shares of the best railways have
declined from 20 to 24 points from the last recorded maxima.
Not only is this fact patent, but something more telling not so
patent may be stated and that is that the best issues of munic¬
ipal stocks have correspondingly depreciated. But Europe is
working out of its troubles hy the slow but sure processes created
by economic laws. A week or so ago reference was made to the
decline in wages in Great Britain having reached official statis¬
tics. This week reports from Germany show that under a de¬
clining activity the cost of labor is decreasing. This makes the
prospects for the "winter months gloomy, but it is at the same
time encouraging, because the farther this process of reducing
cost of production goes to meet prices reduced by a falling off in
demand, the nearer it brings the time of reaction and rally.
When the fact has become embodied in official statistics it is safe
to say that the process is pretty far advanced.
Taxation and Real Estate.
TN the discussion now being conducted by the newspapers re-
*â– lative to the decision of the administration to assess real
estate at its full value, there is one consideration the importance
of which is generally under-estimated. The fact that with a
lower tax i-ate and a higher assessed valuation of real estate,
the present disproportionately large burden,which is placedupon
real as compared to personal property, wil! be still further in¬
creased is frequently passed over with the statement that under
present conditions the taxation of personal property is almost
a negligible quantity anyway. But a very small calculation will
show that the real estate tax bills will, other things being equal,
bo increased by the change. The present tax rate is in the
neighborhood of 2.31, and th© levy of that rate on the
$550,000,000 of personal property now on the tax rolls yields an
income of about$12,500,000 per annum. But should the tax rate
be reduced to about 1.50 solely 'by the increased assessment
of real property, the levy of that rate upon the $550,000,000 of
personality would bring in only about $8,000,000 a year
and the $4,500,000 a year which was thus lost would
have to be paid almost entirely by the owners of real property.
This would mean that their tax bills, other considerations
apart, would be increased by at least four per cent. Or to put
it in another way, the saving which the city expects to make
from the decreased general tax levy of the state, or from the
readjustment of the Sinking Fund payments, would, as com¬
pared with existing conditions, benefit the lightly taxed owners
of personal property, more than the heavily taxed owners of real
property.
Altogether it can hardly be said that the prospect, frequently
held out to the owners of real estate, that their burdens will be
diminished by the present administration is likely to be fulfilled.
Apparently all expectation of reducing the pay-roll of the city
has been abandoned, and the total saving already made by these
means has not amounted to one-tenth of the increase effected
during the last administration. As we have just pointed out,
the diminution of the general tax levy of the state will under
the present plan be beneficial chiefly to the men who have per¬
sonal property listed on the tax rolls; and the like is true of the
possible economies in Sinking Fund expenditure. At the same
time the announced policy of the administration, and the real
necessities of the eity, point towards largely increased outlays
in many directions. Rapid transit, the additional water supply,
a new municipal building and the like, indeed, may be expected
to pay for themselves, but the new schools, libraries, parks and
the thousand and one minor improvements which have beeu
promised, all mean largely increased expenditures, both for con¬
struction and operation. Thus the prospect of any appre¬
ciable decrease in taxation, either during the current or during
future years, either by the present or by future city govern¬
ments, is small indeed. Doubtless the taxpayers' money is be¬
ing better spent now than ever before; but there seems to be no
chance of an absolute saving. Indeed, the tendency is all in
the other direction. As the population increases aud becomes
more dense, the functions of the eity government also multiply.
New departments, such as that recently organized for the super¬
vision of tenements, are constantly needed; and consequently
an increasing proportion of the total income of the city is
necessarily absorbed by taxation.
The effects of this increase need not, however, necessarily be
disastrous. Four or five years ago, when real estate was dull and
tenants were scarce, increased taxes were a very serious thing for
the owner of real estate, for under such circumstances, he was
forced to pay them out of his own pocket. Ordinarily the owner
of a building expects the rent to 'pay the taxes and fair return
upon the money invested. If the taxes are raised he tries to
raise the rents on his tenants; and since the increase in taxes,
whejiever it occurs, is uniform and the owners of other build¬
ings are in the same box, he can usually succeed. An exception
must be made to this ordinary rule, however, during bad times,
or in case over-building had taken place. When the tax rate
was increased subsequent to consolidation, it was at a period both
of bad times so far as real estate was concerned, and of over¬
building. The owner of real estate, not only failed to increase
the rentals of his property, Uut frequently he was obliged actu-