Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 16, no. 402: November 27, 1875

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Estate Record AND BUILDERS' GUIDE. Vol. XVI. NEW YOEK, SATURDAY, NOVEMBER 27, 1875. No. 402. Published Weekly by THE REAL ESTATE RECORD ASSOClATiON. C. W. SWEET...............PfiESiBENT AND Tbeasureh PRESTON I. SWEET...........Seoketaby. L. ISRAELS...............;.........Business Ma.>(ager TERMS. ONE YEAR, in advance... .§10 00. Communications should be addressed to C. "W. STVliJET, Nos. 345 AND 347 Broadway. THE CRISIS IN REAL ESTATE. It must have been surprising to a large num¬ ber of real estate owners to find that, during tuc past few weeks, the daily press of this city has awoke to the fact that something unusual is going on in the real estate market. While for months past fortunes have been swept away, bringing untold—we speak deliberately when saying "untold"—^miseries to the first families in New York, not a-word was uttered ini the columns of the daily press beyond the doleful accounts of the market reporters, whose flgui-es spoke volumes, but were apparently hiero¬ glyphics to the editors iu charge. They were passed over without comment, and nothing was said. Had Western Union dropjied, say from 93 to 48, and dragged down Lake Shore, Union Pacific and all the rest of the stock list, sweep¬ ing away in a day or a week fortunes not half as large as have been" dragged down by what the lETeraZd felicitously calls "the noiseless panic" in "real estate," columns upon columns with startling head lines would have filled our great dailies every morning. And still, it is perhaps or the best that the panic has been permitted to spread itself noiselessly, as if in accord with the silent but, nevertheless, poignant grief it has created among the very best of New York's citi¬ zens. Now that this silehce has been broken, however, by the press of this city, and real es¬ tate has suddenly become to them a timely topic for comment, it behooves The Eeal Estate Eecobd to notice the causes which have led to the present state of affairs, and to speak in be¬ half of OUT city and its people—^in behalf of New York's prospective growth, and its present importance as a metropolis—words that may be safely placed on record for future reference. Iu doing so, however, we express no sympathy with the class of people who have brought the present misery upon the real estate market, and who haye by their wild speculations driven the well-to-do middle classes to seek homes in ad¬ jacent towns and villages, notably in New Jer¬ sey, to the detriment of our own city. In order to correctly gauge the present con¬ dition of real estate in New York, we must go back and trace its rise and iallj the circum- - stances attending and causes. creatinj< the same. It will not do to say, like some excitable brok¬ ers: "Oh, we have seen this before, and aU wiU right itself shortly again." To-day's history, we say.it deliberately and defying con tradiction, has no precedent whatever. It stands alone, and must be judged by its causes and its attending circumstances only. Every one will remember that, in 1861 and 1862, Fifth avenue lots were considered high at from $5,000 to $8,000, and that this continued even after Secre¬ tary Chase had introduced the greenback, the opinion then being general that gold and silver would again be our circulating-medium the mo¬ ment the war v/as over. No one tben dreamt that this countiy would continue to live under a paper currency after the re-establishment of peace. If we remember those years, and follow therii up steadily to the present, we will find that the rise and fall of the greenback is virtually cotemporaneous with the rise and fall of real estate. Other causes, to which we will pres¬ ently allude, have aided that rise and fall; but it is safe to trace the greenback history, and mc.asu': e by it the values of real estate. When the war was over, and people suddenly discov¬ ered Ihat gold and silver did not come back, and that the greenback was still all-powerfiil; when the various measures of Congress and the de¬ cisions of Courts all combined to infuse the theory that the greenback was to be a perma¬ nent institution, speculation set in, values rose to an unprecedented degree, and a Eifth-avenue lot was the El Dorado for many an investor. This speculation was aided by the unscrupu¬ lous manipuiatiou-; of brokers, whose minds led them to build castles (in the air) on every vacant lot of Manhattan Island, and their advice was followed by many a man, who finds himself virtually penniless to-day. It was also aided by the grasping tendencies of loaning institutions, and spread to such an ex¬ tent that the entire unimproved part of the city commanded a price for lots not attainable by the prudent merchant, who was desirous of liv¬ ing in a 25,000 or 30,000 dollar house, but could hardly get a lot-for that figtire, and hence em¬ igrated to New Jersey. Any one standing at the ferries ia the morning can see these merchants come, over from Brooklyn, from Jersey City, and from all sections within a radius of thirty miles. They would have gladly remained in New York City, occupying their modest homes, but they have all been driven out by the specu¬ lators of 1868, 1869, 1870 and 1871. Had not the insuratice companies and savings banks then encouraged these speculators by loaning them money on vacant property at valuations which, read by to-day's light of the market, are simply scandalous, even the oily-tongued Pine street broker would only have done half the mis¬ chief that he has. A loan of twenty, thirty and forty thousand dollars on a vacant lot by insurance companies and savings banks was a great temptation for speculators to go on w^ith theti' nefarious trade. And they did it. While on one side of the town they bought whole tracts on a small margin, they went fo the other side and obtained some enormous loan from this or that insurance company or savings bank—the money of widows, orphans, and la¬ boring men. Finally the panic of 1873 set in. Amid the ruin of 'Wall street. Pine street, more than any other interest, held a stiff upper lip. We used to hear then that "real estate is in the hands of strong holders; they can afiord to look on." So they could, as long as money could be borrowed to pay the interest on the mortgages. But there comes through fhe severe laws of trade an end to a great many things, and especiaUy to the borrowing of money. While the speculators of 1870, 1871 and 1872 were running in and out of the money-brokers' offices, and in and ont of the insurance oflaces, to attend to their mort¬ gages, the financial condition of the country be¬ came an uppermost topic in men's minds. The Congress of 1874 kept alive the hopes of specula¬ tors. The currency bill of that year induced many timid capitalists to invest their spare funds even in yet high-priced lots and high-priced houses of that time, as everything indicated that the era of inflation was to be prolonged. The Presi¬ dent's veto finally put a stop to this, and from that period dates the actual cessation of activity in the real estate market. Still the speculators died hard. On they fought, with a perseverance worthy of a better cause, and caught hold like drowning men of every straw that came in their way. This very year, while trade and com¬ merce were languishing and capital was lying idle all around, they rebuilt all their hopes on Ohio. That State was to pronounce for infla». tion, sure; so would Pennsylvania, so finally would the entire Union in 1876. But it so happened that the people of Ohio, as well as the people of Pennsylvania and the people of the entire Union, at the first opportu¬ nity given them, pronounced emphatically against inflation, declared in unmistakable tones that the greenback should not be a per¬ manent institution, and decreed that a sound system of finance should control the affairs of this nation. This declaration by the people of all the States was the last feather on the camel's back. The speculators' last hope was gone. The first'of November found the Exchange Salesrooms filled by auctioneers and referees, en¬ forcing the decrees of courts against those who had defaulted on their interests. While for two years previous that room bad been fhe scene of all sorts of transactions, the mysteries of which no man could unravel, the mortga¬ gees fmally took possession, and they are hold¬ ing it now pretty steadily, with a fair chance of fighting it out on that line, even if it takes all winter. Some of the choicest pieces of property have been offered, especially during tho past two weeks, but nobody appears anxious to invest, though aU sorts of opportu¬ nities are offered to bidders, and in nearly everv instance the plaintiff or mortgagee is nermitted to purchase the property at his own figures, and