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February 25, 1905
RECORD AND GUIDE
40J
f^ ^ ESTABUSHED^ ItfJ^aZl^ 1868.
De/oteD td RwL E>r«E. BuiLDif/o if^n-EcruRE .HouseHoid DEOOifnoH,
Bush/ess Alto Themes OF GEfiER^ IKto^st.
PRICE PER YEAR IN ADVANCE SIX DOLLARS
Published eVerp Saturda.v
Communlcationa should be addresBsd to
C. W. SWEET, 14-16 Vesey Street, New Yorli
J. T. LINDSET. Businesa Manaser Tolephono. Cortlandt 3157
"Entered at the Fost Office at New York. JV. T..as second-class matter."
Cop.vright by the Real Estate Record and Builders' Guide Company.
Vol. LXXV. FEBRUARY 25, 1905. No. 1928
THE proposed consolidation of the Southern steel, coal and
iron properties was made tht3 excuse during the week for
a short period of excited speculation, which soon collapsed.
The Stock Market cannot stand at the present time wild and
unsubstantial advances iu prices. When the market value of
Union Pacific goes up until the stock yields less than three per
cent, it is understood that the rise is anticipating an increase in
the rate of dividend distrihiition; and even though the price
seems high, it cannot be said that it is wholly unjustified by the
prospects of the railroad. The time may be several years dis¬
tant before Union Pacific can afford to pay seven per cent; but
what with its profits on the Southern Pacific purchase, and
witb tbe results of the excellent financial management of the
eystem, it will probably pay seven or even moi-e per cent event¬
ually. Certain other western railroads occupy a somewhat sim¬
ilar position, and the increasing values of these securities need
not be put down to a speculation which overreaches itself.
Ou the other band there will be a curious magic about the con¬
solidation of the southern iron companies, in case it can make
so many non-dividend paying stocks as valuable as they now
are. This looks towards a revival of the dubious days of 1901
and 1902, and in the long run will hurt not merely the special
interests engaged, but the whole market.
what laws they will allow lis to have. The stock transfer tax
bill is not apparently meeting with as vigorous a resistance as
one would expect; but then Wall Street has other ways of
opposing bills than by the obvious mechanism of an argument
before a-legislative committee. Besides this tax biiJ, there are
also bills before the Legislature embodying both an annual
and a recording mortgage tax; but cne does not bear very much
about either of them. They are doubtless being held in re¬
serve, to be used at a later date in case they are necessary.
The real estate interests of this city should be prepared to find
themselves at any time with a fight on their hands against an
annual mortgage tax. The outlook for legislation on other mat¬
ters of the first importance is similarly dubious. The prospects
tor Mayor McClellan's Water Commission bill are apparently
pretty good; but on the othei' hand no one can tell what action
will be takeu in reference to rapid transit. The Senate com¬
mittee has reported the Elsberg bill favorably—which may
mean much or nothing at all. However, one thing is certain
Tbe passage of such a bill at the present time would mean a
serious set-back for rapid transit in New York Gity. The bill
contains many excellent provisions, some of which have al¬
ready been adopted by the Commission; but it is based on the
false principle of encouraging general competition in the local
transit service. What the city needs is not a number of in¬
dependent routes, separately operated, but so far as possible a
single system, constructed and managed under rigid municipal
supervision. The best way to reach this result at present is
to encourage competition between the two leading interests; and
to leave with the Rapid Transit Commission the duty of mak¬
ing the best possible bargain for thf public. That Commission,
which began by being radical, has undoubtedly become some¬
what conservative in its middle age; but it still retains the
confidence of the city. No action in reference to rapid transit,
v.'hich is disapproved by the Commission, should be taken, until
public opinion is prepared to dispense altogether with the Com-
THE announcement during the week that th© stock of the
new Lawyer's Mortgage Bond Company has been over¬
subscribed guarantees the trial of this very interesting develop¬
ment of the mortgage business. The new company proposes to
issue its own bonds against the mortgages purchased by it, and
in this way to offer a much more flexible kind of security to the
public. There is no doubt that the idea which lies behind the
formation of this corporation is one of the utmost value, which
will in the long run be of the greatest assistance in encourag¬
ing investors to lend money on real estate. There are several
large classes of investors, whose needs the methods of the
mortgage guarantee companies do not meet, and who
may he reasonably be expected to welcome the opportunity of
making a long term mortgage investment. These classes
would he: (1) Those investors who now purchase 50 to 100
year railroad bonds and municipal bonds, to avoid the annoy-
F.nce of constantly shifting mortgages in investments maturing
in from one to three years; (2) small investors, who at present
have no opportunity to buy mortgages in small amounts, and
(3) European investors, who would not consid_er the purchase ot
Individual mortgages, being accustomed only to mortgage bonds.
The advantages of introducing the European method to the
American investor will be equal security, the mortgages being
the same; longer term to run, and quicker convertibility by
maintaining stock exchange quotations. On the other
l-and, the advantage to the mortgage bond company
over the mortgage guarantee company would be great¬
er stability by obtaining investment funds for twenty
or thirty years instead of two or three years; greater
safety by the direct control which the company would have
over the mortgages by the partial introduction of the amortiza¬
tion principle and by the deferring of the investor's right to call
for the principal, and greater profit due to the longer period
which the bonds would run. The .interests behind the new
company are, of course, well known both for conservatism and
for energy, so that the scheme could not tie introduced under
better auspices.
THE Albany legislative mill has not as yet begun to grind.
All legislation is as usual held up until the last few days
Ol the session, when the Committee on Rules of the Assembly
absolutely control the situation; and it has not developed as yet
Washington Heights Again.
THE speculation in vacant property on Washington Heights
is assuming larger proportions than the corresponding
speculation assumed in the Bronx last fall. The total number
or sales has again broken all records. During the week about
400 transactions have been reported, of which 195 or more con¬
sist of vacant property on the Heights. An even larger num¬
ber of sales were presented in the daily papers; but when
the lists were analyzed and compared, it was found that in
many cases the same transaction was repeatedly reported.
As many as 38 instances of this sort of thing were discovered.
Whenever a speculation of this kind sets in, it has become a
recognized part of the "booming" operation, to increase the ap¬
parent volume of business by announcing some sales which
do not take place at all, and to give other "bona-fide" sales a
multiplied existence. However, there is enough genuine busi¬
ness consummated to occupy almost ali the time of almost all
the operators in the City; and this fact makes the other sec¬
tions of Manhattan look comparatively neglected and dull,
whereas only a few. weeks ago, they were very active.
The result of this speculation has, of course, been a material
advance of prices al! along the line. The speculators are evi¬
dently seeking to establish values as near as possible on the
level of the West Side; and the question immediately arises
as to the effect which the increase will have upon building
operations. That a good deal of building will eventually take
piace is manifest, in spite of the fact that responsible builders
are not buying very much at present; but under the new condi¬
tions the character of this building is likely to change. In
order to secure an expression of well-informed opinion on this
matter, Mi'. Chas. T. Barney was asked during the past week
to give his opinion of the existing outlook. He expressed him¬
self as believing firmly in a future for real estate on the Heights
o^ greater scope than is generally anticipated. He believed also
that nothing had occurred which would prevent a large amount
of new construction during the current year; but in his opinion
this construction would be confined almost entirely to tene¬
ments. Mr. Barney said: "I tried to encourage the construction
of private residences; but I could not stem the tide. The
builders insisted upon tenements and apartments. Between
Broadway and the River on the side streets there may be some
private houses erected; but elsewhere in the section between
135th and 155th streets I can see nothing but apartment houses.
What will be done north of 155th street or at Fort Washington,
I do not care to prophesy. It remains to be seen whether the
restrictions which have been put on the lots in that region
will survive the on-eet of apartment hous? Ipuilders.''