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September 24, 1898.
Record and Lruide
BlTsiWess a)A)Theues Of GEi^Eit^ IrfTD^T^
PRICE PER YEAR IN ADVANCE SIX DOLLARS.
JPublishM every Saturday.
Telephone, Cortlandt 1370.
Communications should be addressed to
C. W. SWEET, 14^16 Vesey Street.
/. 1. LHfDSEY, Busmess Ma/nager.
"Entered at the Post-Office atNeto Tork, A'. T., as second-class matter."
SEPTEMBER 24, 1898.
THERE has heen a contraction of speculative activity in the
stock market tbis week, and some progress made toward
bringing sufficiently low prices to induce new operations
on the long side. Consummation of tbis movement is, however,
still far away. The fight in tbe sugar trade, which is likely to be
most influential in shaping the market for some time, may easily
become a bitter one, both sides being well equipped with money
and experience. In the sugar trade, where the respective merits of
the combatants are best appreciated, great respect is expressed
for the American Sugar Company's opponents, though in the
Street it is confidently belifeved that the former will finally come
out on top. This belief is due mainly to the company's very strong
financial position. Besides a surplus probably equal to its an¬
tagonists' collective resources, it has had $10,000,000 of bonds in
its treasury for some years, of which it has not issued a dollar's
worth. Still it is a fight in which much damage can come to all
concerned, and as long as it is prolonged will be adverse to prices.
In the final outcome sugar will undoubtedly be a great purchase:
but who is to say when the outcome will be and what figure the
stock will reach before the contestants will be ready to give up
the fight? The changed condition of the money market has
naturally a tendency to limit speculation. The rise in the Bank
of England's rate to 3% will check the westward flow of gold—
if it does not another advance may be expected—and this re¬
source will be curtailed. The necessity the banks are under to
keep their reserves good will, of course, mean a calling of loans
and the dispersion of the collateral by means of the market. On
the whole the situation, as well as the merits of the speculative
issues, call for still lower prices. As to the outside business sit¬
uation there is no reason to recall the cheerful views of it pre¬
sented recently, there being no abatement of either confidence
EUROPE concerns itself very much with the problems now be¬
fore our and the Spanish peace commissioners, and we are
given to understand that the Madrid government intends to make
out that Spain is entitled to ask the United States to assume part
of the Cuban debt, on the ground, firstly, that the money had not
been raised exclusively for Imperial and national purposes, but
also for colonial objects; secondly, that a considerable part of the
loans had been spent on colonial public works, defences and
buildings that will naturally remain; and thirdly, that cession of
territory and of sovereignty has often in international pre¬
cedents entailed the transfer of part of the debt. At the same
time, we are also informed that the Spanish press is preparing
the public mind for a reorganization of the State debt, involving
reductions in both principal and interest, as soon as the peace
agreement has been drawn up and the basis for this liquidation
can be ascertained. Japan is expected to come into the market as
a borrower of from $40,000,000 to $50,000,000. Mexico publishes
a highly satisfactory foreign trade statement for 1897; tbe excess
export balance was nearly double what it was in 1896, and higher
than for many preceding years. The daily developments in the
Dreyfus ease form tbe political and commercial history of France
to-day. In Germany the reports from all branches of industry are
very satisfactory, especially those from the iron and steel trade.
A project for the construction of a canal to connect the Rhine,
the Weser and the Elbe, to be submitted at the next
session of the Prussian House of Deputies. Austria-Hungary
has resumed activity under the stimulus of good harvests and the
prospect of the satisfactory renewal of the fiscal agreement be¬
tween the two countries. Electrical development is proceeding on
with rapid strides, nearly ali the cities of any importance con¬
templating the laying of electrical railroads and the installation
of electric power for lighting and industrial purposes. Rates for
money are hardening in London and all over the Continent as a
result of fhe widespread activity and tbe demand for gold from
the United StafeB.
THE COURSE OF REALTY INTEREST RATES.
DURING the past five years money has been in limited de¬
mand for commercial purposes and rates have been low.
It is, therefore, an interesting and opportune question how far
this has benefited New York realty? The panic of 1893, dis¬
astrous as it was in many respects and directions, brought to
light the fact that the wealth of the country had grown enor¬
mously; and, by their gathering in the financial centres, that the
reserves of capital were greater than anyone had previously any
idea of. These reserves coming to the depositories in the large
cities, as a result of lost confidence and a limited commercial de¬
mand throughout the country, and having to be employed in some
way and in part permanently, have sought the security of city
realty. The consequence has been a readjustment of rates of real
estate loans upon a lower basis. That this conclusion is just, we
intend to show by an examination of the mortgage statistics of
New York City, or as we should now perhaps say, Manhattan and
The Bronx, since the beginning of 1893. For this purpose we
would flrst draw attention to the volume of mortgage loans made
in the several years since that date and the first half of this, as
shown by the following table, from which, as from the tables
that follow, we have omitted mortgages to corporations that are
not strictly mortgages on real estate, covering as they do per¬
sonalty, franchises, etc.:
MORTG.A.GES FOR THE YEARS 1S93-'9S.
r-----■—I ncre as e.---------1
Year. Total. Amount. Per cent.
1893...................... li;n2.51S,G3S ...........
189-1...................... 1.57,771,149 '.i; 14,747,489 "8.5
1S95...................... 2U0,216,741 42,44ii.592 27.0
1896...................... 212,710,593 12,493,8a2 6.4
1897...................... 214,715.080 2,004,487 0.9
1897 (first half)............. 112,033,631 .........
1S98 " '■ ............. 120,351,478 8,317,847 7.4
We see here that the panic year, 1893, was followed by one of
considerable contraction, though the percentage of decrease, 8.5,
will not appear a large one to those who have a vivid recollection
of tbe state of business generally in 1894 and, more particularly,
the utter lack of confidence in all business enterprises that then
prevailed. It was while tbis feeling was most apparent that money
flowed in large volume to New York, and this irruption of idle
money in turn'explains the large increase in mortgage loans in
the succeeding year of $42,445,592, or 27%. Compared with 1893,
this increase is about $28,000,000, or 17%. A considerable portion
of this increase, it may be suggested as lessening the satisfac-
toriiiess of the showing, is accounted for by an unusually large
number of renewals of mortgages made in 1895, a process that
also contributes to a continuation of the increases of totals in the
succeeding years. But these renewals themselves were made be¬
cause the times were propitious and money could be obtained at
easier i-ates than when the original mortgages were executed, as
a further consideration of our subject will reveal. The volume of
loans made in the flrst half of this year compared with the cor¬
responding portion of last year, shows that conditions are still
favorable and the process of rearranging loans to, as we think,
reduce interest charges, is still going on, accompanied by a good
business in new loans. Whether these views are sound or not
will be seen when we distribute these totals according to the in¬
terest rates obtained. Take then the mortgages at 5%, as given
in the followiug table:
MORTGAGES AT FIVE PER CENT.
,-----Increase.-----, of total
Year. Amount. Amount. Percent, morieages.
1893.................. $88,022,260 .............. 51.1
1894.................. 80,954,169 *ii;7,068.091 +8.0 51.4
1895.................. 93,034.842 12,080,673 15.0 46.5
1S96.................. 101,435,861 8.401,019 9.0 47.7
tS9T ..... 100.182,96:^ »1.252.89a *1.2 46.6
1897 (firat half)......... .^0,:«)ii,SS:i ..... ..... .... 44.6
1898 " ■' ......... 4S,ri'14,5fifl *1,851,297 3.7 40.4
These five per cent, loans were unaffected by the conditions of
the market in 1893 and 1894, or only slightly so, the decline in
volume in the latter year being not proportionately so great as
the decline in the total given in the first table for that year, the
percentage being about 8. as compared with 8.5. In the following
years tbey failed to hold their own; not only do they show a
small decrease of 1.29;, in 1897, while the total made an increase
of 0.9%., but their percentage of the total has never since reached
the figures of 1893 and 1894, and in the first half of this year
they make some further decline. Five per cent, is the me¬
dium rate at which most of the real estate loans are made, and it
will follow that, if they decline in proportion, it must be either
because money has become dearer or cheaper and that more loans
are being made at a higher or lower rate. That the latter is the
case the next table, giving the loans made at less than 5% tenda