July i8, 190S





RECORD  AND  GUIDE





121





^                  ^              ESTABUSHED-^tfiWVCH2iy^l868.

DlVo-jED TO Re\L EsTAIE . §U1LDI^''C T^^FiCKlTECT JRE .KoUSEHOU) DEGQRjnorf,

BUsit^ESs Alio Themes OF GEfJER,Al IKterest.

PRICE   PER   YEAR   IN   ADVANCE   EIGHT   DOLLARS

CoDamunications   should   be  addressed  to

C   W, SWEET

Published EVery ySaturday

By THE RECORD AND GUIDE  CO.

President.   CLINTON  W,   S'WEET                         Treasurer,  F.  'W.  DODGB

■yice-Pres. & Genl, Mgr., H. W- DESMOND          Secretary, F. T. MILLER

Nos.  II  to  Io East 24tli  Street,  i\vw  Vorl£  Cllr

(Telephone,   Madison   Square,  4430  to  4433.)

"Entered at the Post  Office al New Tork. X.   Y.,   ns scoixl-class  matter."
Copyrighted.   1908.   by  The   Record   &   Guide   Co-





Vol.  LXXXII.





JULT IS, 190S-





No. :2105.





THE nature and limits of the business revival tliat is
now under way are written on the face of tlie returns.
Peoiile who expect a sudden and rapid resumption of tlie
conditions which prevailed in 1906 and early in 1907 will he
deceived. The conditions which prevailed in 1906 were not
normal. They represented "an expansion of business activity
wliich strained the resources of the country, botli in tabor
and capital, and which encouraged extravagance both in
business methods and in personal expenditure. To expect,
consequently, that business will at an early date become as
active as it was eighteen months ago is to expect something
which cannot and should not occur. A return to normal con¬
ditions will mean rather the transaction of an amount of
business nearer the level of 1905 than that of 1906 aiid
these comparatively normal conditions should prevail at least
for another year or more. During this time capital can be
slowly accumulated, labor can be disciplined and improved
and business methods can, whenever necessary, be thoroughly
reorganized. The severe deprivation and the rigid economy
which were forced upon so many employers and employees
last winter will not be necessary, but on the other hand,
there will be no excuse for basing an excessive expansion of
credit U'pon an unwholesomely large volume of business.
The sort of confidence characteristic of periods of e.Ktraordin-
ary prosperity is of slow growth, and it will hardly be re¬
stored during 1909. Mr. John W, Gates, when he predicted
the postponement of the next "boom" in the iron and steel
business until 1910 was probably not far wrong. The finan¬
cial situation of the railroads alone would be sufficient to
prevent the earlier occurrence of such an event. Railway
earnings are improving, but they are improving very slowly;
and as they improve the railroads will find abundant use for
their increased receipts 'without spending them upon per¬
manent improvements- The drastic reductions in operating
expenses which has been characteristic of railway reports
since March has been accomplished in many cases at the
expense of the proper maintenance of railroad property; and
as the earnings increase, operating expenses will have to
be increased to even a larger extent. The consequence will
be that no substantial improvement in net earnings, without
■which the credit of the railways cannot materially improve,
is to be expected for a long time- to come.





THE improvement in the net earnings of the railroads is
irnquestionably a condition, not merely of a revival
of great prosperity, but even of the permanent restoration
of substantially normal conditions. The financial reverses
of 1903 were most acute in the case of the industrial cor¬
porations. The reverse of 1907, on the other hand, laid the
heaviest tax upon the holders of railroad securities; and
the effect has been decidedly to injure the credit even of
the largest and best managed systems in the country. Their
credit has of late been in some measure restored, but it has
not been restored to any sufficient extent. It is impossible
for the railroads to prepare for a revival of business by
adopting a policy of liberal improvements because it is still
impossible for them to obtain money on really economical
terms. Moreover, even a plethoric condition of the money
marl;et will not help the railroads very much, because ju«t
at present they have not the security to offer. Tbey are not
m a position to increase their net earnings, even if they are
able to transact an increasing voltime of business, and in case
tiiey  made  large  issues  of  bonds  under  such  conditions,  it





loolrs as if the stockholders would have to pay the interest
on such securities. It is reasons of this kind which give
strength to the claims of the railroads for an increase of
rates, and the arguments in favor of such an increase can
be boiled down into a comparatively few sentences. An
improvement in the credit of the railroads is a condition of
any permanent or substantial business recovery for two
reasons. In the first place, unless the railroads are liberal
in their expenditures, no considerable prosperity in the great
basic metal industries of the country is possible. In the
second place, the railroads could not handle the business
created by another and greater period of prosperity unless
they are in a position to make liberal provision for more
double-track, more sidings, more equipment and better ter¬
minals. If their credit remains bad a revival of business
M'ould find them unprepared, and there would be the same
complaints about shortages of cars, delays of shipments and
general inadequacy of service as arose in 1906 aud 1907,
In spite of the enormous capital expenditures of recent years
the railroads are really not in a position to handle the vol¬
ume of business created in periods of prosperity, and they
cannot raise the money necessary to a policy of liberal im¬
provement without some increase in net income. The best
way to obtain such an increase in income is by an increase
in freight lates. Such an increase would distribute the
burden over the largest possible area, whereas a successful
attempt to reduce wages would concentrate the burden upon
one class—viz.: upon the railroad employees. It is much
to be hoped, consequently, that public opinion will be suffi¬
ciently fair-minded  to approve a moderate increase of rates.





OUR COURTS have decided that.no appropriation can be
made for the Fourth Avenue subway in South Brook¬
lyn until some judicial determination has been reached as
to the precis'e debt limit of the city on .Tune 30 of the current
year, and so long as this legal prohibition holds, the question
about the advisability of the immediate construction of this
transit improvement can rest in peace. It will take some
six months for the referee to hear the testimony and pass
upon it; and during the next six months something may
occur, which may place a different complexion on the whole
matter. In the meantime the people of the city are to be
congratulated upon the prospect of a judicial determination
of the precise amount of the debt margin. Tb-ere is no rea¬
son to suppose that the comptroller's office has made a false
calculation, but the financial officials themselves are in doubt
whether certain items sho"ld or should not be iuc.l,iued.
Such questions are enormously complicated and extremely
technical, "'^"J a court review of the whole matter will be
of tbe utmost benefit. All disputes as to what the city can
or cannot afford to do will then be set at rest, and the men
responsible for its financial policy will know precisely what
resources they have at their disposal. We are much afraid
that, in this, as in so many other cases, the fruits of knowl¬
edge will be pain and disappointment- Nothing is plainer
than that the financial resources of the city are wholly inade¬
quate to its responsibilities in the way of really necessary
Improvements; and the sooner this fact is demonstrated and
its consequences realized, the better,





■p VIDENCES accumulate that capital is going to take
■'--' advantage of tbe comparative economy of building
in this city to erect a large number of expensive structures.
While the number of relatively inexpensive improvements
projected during the first half of 190S is much smaller than
they were during tbe corresponding period of 190 7, the
number of expensive improvements, for which plans have
been filed, is considerably larger. Substantial decreases are
shown in the figures for dwellings, tenement houses and the
like, whereas large increases may be remarked in the totals
for office buildings and hotels. Indeed, if the new Equitable
Building is begun during the year, the year 190S will be
second to none in the history of the city in its expenditure
on skyscrapers. The latest important improvement for
which plans have been filed is the new Ritz-Carlton Hotel.
There seems to be some doubt whether this building will
be erected, or in case it is erected, it will be called the
■■Ritz-Carlton"; but if it should be built in 190S and 1909
its owners would have the advantage of getting a much
cheaper building than they could have obtained a year ago
or are likely to obtain a year or more hence. Moreover,
the proposed site has certain peculiar advantages for an
exclusive fashionable hotel. The block front on Madison
Avenue,   between   Forty-sixth   and   Forty-seventh   Streets,  is