Real Estate Record

AND     BUILDERS'    GUIDE.





Vol. XVI.





NEW yOEK, SATUEDAY, DECEMBEK 4, 1875.





No. 403.





Published Weekly by

THE REAL ESTATE RECORD ASSOCIATION.

0. W. SWEET...............Pbesident and Teeasukeb

PEESTON I. SWEET...........Sechetaby.

L. ISEAELS.,.......................Business Ma,nageb

TEEMS.
ONE YEAR, in adT'ance....$10 00.

Communications should be addressed to

C   TV.   ©TV-'BET,

Nos. 345 AND 347 Bboadway.





Next week we shall print several communica¬
tions received from subscribers in relation to the
article which appeared lastweek on the "Crisis
in Eeal Estate," among others one from Mr.
Simeon E. Church. We shall publish Mr.
Church's letter without any comments, so that
every person reading may judge for himself, and
no one wiU have any reason to complain in re¬
lation to the openness or fairness of the columns
of The Eecoed. We welcome the fullest dis¬
cussion on this topic, which now so intensely in¬
terests all real estate holders, confident that so
important an interest cannot but be benefited by
the truth.





THE CRISIS IN REAL ESTATE.





n.

The Eeal Estate Eecoed has heretofore for¬
borne to comment upon "the noiseless panic"
that has pervaded the market for the past two
years, hoping, along with a respectable minor¬
ity, that this panic might, in the nature of
things, check itself, and that a healthy re¬
action might set in, which would at least give
stable values, if not a rising market. Such
hopes seeiQ futile, however, each week's trans¬
actions indicating unmistakably the collapse of
the great speculation and the beginning of
the end; therefore, our duty as journalists
compels us, however . disagreeable, to record
the cun'ent facts in the history of real es¬
tate. Last week we glanced cursorily at tho
situation, which now has become sharply and
clearly defined, and which every sensible man
must regard as a momentous and unprecedented
crisis in the history of New York real estate. It
iS:4he function of this journal to study these
phenomena, to investigate, their causes, their
conditions, and their future results. Directly or
indirectly,' the subject matter concerns our en¬
tire population, and in the, .light of our repre¬
sentative character as the Ipadiug American city
must interest the country .-at; large. Leaving to
statesmen- and to their philosophy the further
treatment of the currencyTquestion as affecting
real estate, we propose- in- the course of this
article to addrass ourselves'to the consideration
of topical and remote causes, which come more
properly within our purview, and which we will
call the lesser cauBes.





HISXOaiCAL.

The panic of 1857 occurred in the midst of an
activity in the building trade until then unparal-
led, and, as a consequent in the midst of an era of
land speculation, only rivalled by the greater
epoch of 1837.    The gold production of Califor¬
nia, then in its infancy, the enlarged volume of
commerce, the rapid growth of our city and the
then recent introduction of the horse-car system,
famished the incentives for the memorable land
and  building  speculations   of   that   eventful
period.    Then, as now, builders failed,  land
speculators   succumbed   to   foreclosure   suits,
and a period of seemingly indefinite duration
was put to the material growth of the city. Block
after block of new and untenanted  buildings
of aU classes—tenements, stores and dwellings—
were relinquished to the tender mercies of mort¬
gagees, and the prices of land fell from the then
current  high   prices—low  as   c-^mpared -with
those of later development—50,-75 and 90 per
cent.   From this period, public interest in real
estate languished, and prostration of the build¬
ing trade was complete.    The surplus of im¬
proved property was barely absorbed when the
Civil War commenced, in 1861.    The period of
the war, from 1861 to 1865, was utterly barren
of building productions, not-withstanding cur
population for the time being was enormously
increased.   During the same period, unimproved
speculative  property  was   entirely  neglected,
and sank in value to its minimum of the pre¬
ceding decade, although the rental value of im¬
proved property had largely increased in sym¬
pathy -with inflation  and the extravagance of
war expenditures.    The dawn of peace in 1865
found a large population with\ plethoric purses
demanding  places of business and residence
which could not be supplied.    At the same time
the entire area of vacant land afforded the most
tempting field for investment and speculation
which our new-fledged capitalists of the war
period could possibly desire.    Speculation had
rung its changes on the gamut of every material
and immaterial product excepting, real estate.
The   doubts    and    uncertainties- which   en¬
shrouded the financial  administration of the
Government had deteixed even the boldest in-
,yestors from placing their capital in fixed forms.
Thus, upon the sound and solid basis of low in¬
trinsic values of land, reasonable prices of labor
and moderate cost of materials, coupled -with
the real scarcity of and active inquiry for stores
and dwellings by a population flushed with the
factitious prosperity of the war period —upon
such broad  groundwork^ or  foundation,   was
erected that towering and splendid edifice—^the
land and building speculation of 1865-1874—
whose tottering and downfall it is now our duty
to chronicle.    We assign, therefore,  as one of
the lesser causes the prolonged torpor of real
estate interests succeeding the panic of 1857, ex¬
tending practically through a period ' of eight





years, until 1865, and then followed by a sharp
reaction which continued, with trifling checks,
tmabated for nine years, reaching its acme in
the intense activity, fabulous prices and over¬
production of 1872, 1873 and 1874, and finally
culminating in the summer of 1874, after having
gallantly borne the brunt and defied the pres¬
sure of the financial panic of September, 1873.
THE Central pabk.
In its incipiency even, as far back as 1853, the
Central Park gave zest to and entered largely
into the exuberant speculation which culminat¬
ed in 1857.   In each successive step of its pro¬
gress and development it has been the brilliant
but false beacon that has lured to destruction.
The Central Park was originally projected as a
scheme of land speculation, to absorb acres of
lots and create a scarcity of outlying land, by
men of a former period, many of whom have
passed from the stage -with large profits.    The
enthusiasm engendered by the Park has never
ceased until now to  act  as a powerful lever
in the enhancing  of speculative values.   The
ideas   of   but   one   Central   Park   with   one
margin   thereto,    of   but   one grand   boule¬
vard, of but one Fifth avenue, have been the
watchwords of nearly  a   generation  of   land
speculators,  and notably during  our last era
of inflation   has  this  infatuation taken  pos¬
session   of  our  capitalists,  large  and   small.
Alas,  for the fatuity of human imaginations!
The dream of $50,000 and S100,000 lots has
passed into history.   When subjected to   the
test of money stringency and hard times, boule¬
vard and Central Park lots have been .shown to
possess less intrinsic value than any other prop¬
erty, hardly commanding the amount of mort¬
gages secured by them,  clearly demonstrating
that   their former values were purely specu¬
lative,   ranking   them   in   a  financial   sense
with   the unproductive fancy stocks of Wall
street,  and leaving their intrinsic value to be
definitely settled in that still far-off period when
actual demand for improvement and the growth
of our city shall create a market.   The fleeting,
and unstable values of these fancy lots during
the present crisis is in striking contrast with
the relative stability of values on our improved
avenues and thoroughfares.    We refer for ex¬
ample to the sales since the panic of Mr. Soher's
and ]yir. Sloane's apartment blocks on Sixth aye¬
nue, of Mr. Loew's block on Third avenue, of
Mr. C. L. Anthony's house on Fifth avenue and
Thirty-eighth street, of the comer of Eighteenth
street and Broadway, bought by Mr. Cunard, of
the corner of Nineteenth street and Fifth ave¬
nue, and the lots on Forty-second street, oppo¬
site the Depot, all showing well-sustained values.
In the Fifth,  Seventh, and Fifteenth  Waids,
conservative or obsolete localities unkno-wn to
the  modem speculator, values have scarcely
changed in twenty years.   In our fashionable,
residence quarter property is saleable to-day,