April 29, 1911





RECORD   AND   GUIDE





785









^                 ^^         ESTABDSHED-W M.IIRCH 2V^ 1868.

De/oteD 10 I^L Estate. BmLtujJb AR,GifiTEeTijR.E .t{ousErioiD DEeai^Tiorf,
Bifsit/ess Alto Themes of GEfteR&l !;/TEREs-f,^

PRICE   PER   YEAR   IN   ADVANCE    EIGHT    DOLLARS

Communications  should  be  addressed  to

C. W. SWEET

Published Every Saturday

By THE RECORD AND GUIDE CO.

President,   CLINTON  W.   SWEET                      Treasurer,  F.  W.  DODGE

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

Nob.  11 to  15 Eaat 34th  Street, New Tork  City

(Telephone,   Madison   Square,   4430  to  4133.)

"Entered at the Post Office at Ncto York, N. Y., as sccond-elass matter."
Copjriehted,   1911.   hy   The   Record   &   GuiJo   Co.





Vol. LXXXVL





APRIL 29,  1911.





No. 2250





CONSERVATION OF REAL ESTATE VALUES,

PERHAPS the most important lesson to be drawn from
the train of consequences set in motion by the Triangle
factory flre is the fact that real estate values are extremely
sensitive to changes in public opinion. They may he pro¬
foundly affected at any time by a change of attitude on the
part of the public towards a variety of matters oE general
concern—-fire prevention, sanitation, distribution of popula¬
tion, the standard of living among working men, taxation and
so on. Heretofore, social questions have reacted hut slightly
upon real estate values, except through rising taxes and
through tenement house legislation. However, the recommen¬
dations contained in the report of the City Commission on
Congestion of Population indicate tbat social questions must
hereafter exercise a growing influence upon real estate
values. In a general way, these recommendations typify
the same body of opinion as is represented by the Citizens'
Committee of Safety, organized after the Triangle flre. It
is altogether likely that the reform measures which that com¬
mittee will propose will be far more radical than those which
the Joint Committee of the New York Chapter of the Amer¬
ican Institute of Architects and the Building Trades Employ¬
ers' Association will recommend. The two committees are
bound to view the question of public safety from different
standpoints. Social reform is certain to be more strongly
emphasized by social reformers than by architects and build¬
ers. In saying this, there is no intention of disparaging in
advance the work of either committee. On the contrary, the
purpose is to bring out the fact that if we are to conserve
real estate values our laws, in so lar as they bear on real
property, must be in harmony with enlightened public opin¬
ion; they must conform to the true interests of the com¬
munity as a whole. Real estate brokers and operators should
place tlieir technical knowledge at the service of social
progress, with a view to seeing that equal justice is done to
the property owner and the factory operative. If the fram¬
ers of the present building code had given proper attention
to sanitation and fire prevention, there would not be in exis¬
tence to-day scores of modern steel buildings which public
sentiment regards as unsafe, and which have, consequently,
depreciated heavily in value. The bulk of the value of im¬
proved city real estate is represented nowadays by the build¬
ing rather than by its site. The time has come when the
problem of conserving capital invested in real property is
quite as insistent as is the problem of conserving onr natural
resources; and hoth are inseparably connected with social
reform.





FINANCIAL HESITANCY.

DURING the last few months the amount of business trans¬
acted by the com.mission houses in Wail Street has
been smaller than at any time since 1S98, and that in spite
of the fact of the enormous growth in the meantime of the
volume of securitie's. Coincident with this extreme dullness
in the financial center of the country, general business has
proved to be disappointing. The symptoms of a revival which
took place in January have disappeared, A process of slow
contraction is apparently taking place. The railroads are
economizing and have cut down their renewals and improve¬
ments to the lowest possible point. Business in the West is
following the example set by the East, and is steadily dimin¬
ishing. No one has any idea how far this contraction will go
and when it will stop.    The increasing business depression





is usually attributed to the succession of blows which have
been dealt to security values from political or governmental
sources, and these blows have undoubtedly been very severe.
The long agony over the anti-trust cases which has lasted
for almost a year and a half, the refusal of the Interstate
Commerce Commission to permit an increase in railroad
rates, tbe danger of a disconcerting reduction in certain
tariff schedules, and the persistent hostility to propertied
interests exhibited by the State Legislatures—all these ad¬
verse political conditions have undoubtedly contributed to
the financial uncertainty and the business depression. There
can he no doubt, also, that politics will continue to have a
depressing effect for some time to come. The business world
knows or will soon know the worst that can happen to it
through the action of the Supreme Court or the Interstate
Commerce Commission; but the agitation for lower tariff
duties has come to stay, and the hostility to corporate in¬
terests on the part of the State Legislatures has not yet run
its course. During 1!)12 business will have to face the em¬
barrassment of a Presidential campaign, and a campaign in
which the two parties will compete for eminence in radical¬
ism rather than eminence in conservatism. Altogether, the
outlook for business recovery, in so far as it depends on an
improvement of political conditions, is uot very reassuring.





GENERAL BUSINESS CONDITIONS.

WHILE adverse political conditions aud polities have un¬
doubtedly contributed to the increasing contraction of
business, their influence may easily be exaggerated. The
fundamental difliculty with the flnancial and business situa¬
tion lies deeper than that. It is becoming generally recog¬
nized that the recovery from the panic of 1907, which took
place in 1909, was too sudden and too complete. It took
place before the business of the country had really repaired
the mistakes which had caused the financial earthquake of
1907. The consequence was that early in 1910 the business
of the country was rapidly drifting into a condition of over-
expansion similar to that of 1907; and it was only saved from
another earthquake by the policy of forced liquidation
adopted hy the banks. Since then Americau business has
heen slowly readjusting itself to the new conditions which
have become dominant during the last few years. It has been
economizing in certain directions in order to meet necessarily
increased expenditures in other directions. A hnge expan¬
sion in real estate values, particularly in the West, had to he
flnanced and assimilated, aud a generally higher standard of
wages had also to be faced as a permanent fact. How far
this process of reorganization has gone, and how long it will
have to be continued, could he ascertained only after an ex¬
haustive investigation; but there is every indication that it
is proceeding steadily and prosperously. The eventual re-
suit will be a considerable increase in productive efficiency.
The dangerous symptoms which caused so much alarm in
1910 are disappearing. Imports are diminishing, and exports,
particularly of manufactured goods, are increasing. The cost
of living is lower than it has been for some years. Loanable
capital is accumulating, and there is no danger of a squeeze
in the money market for ah indefinitely long time. Finally,
crop prospects are unusually favorable. These conditions may
not bring about a revival of business, but they are likely to
prevent any further contraction. The great fact is that the
country has returned to a condition of more general economy
and is accumulating capital. A larger surplus of loanable
money has been and continues to be its great necessity. For
the last ten years it has suffered from its inability to accumu¬
late as much capital as its business expansion and the in¬
crease in prices made necessary; and in all probability a
general revival of business will be postponed until there is
some assurance of ease in the money market for a really
long ueriod. A reform in the currency system would con¬
tribute enormously to such an assurance; hut, unfortunately,
there is small chance of urging any such a reform from the

present Congress.

-.♦   ■ ■'■   ■■■ ■

MONEY RATES.

r-ry ME ease in the money market has not availed as yet to
1 reduce the rates of interest at which money can be
borrowed on New York real estate. During the first four
months of the year, the amount of money loaned on Man¬
hattan property has diminished from about $125,000,000 in
1910 to a little over $81,000,000 in 1911. The diminution
in Brooklyn has been almost as large, proportionally. A
large fraction of this decrease must be traced to the diminu¬
tion in speculative building operation, but a still larger
fraction is due to the fact that the prevailing rate of interest