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Real estate record and builders' guide: v. 18, no. 447: October 7, 1876

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Real Estate Record AND BUILDERS' GUIDE. Vol. XVIII. NEW YORK, SATURDAY, OCTOBER 7, 1876. No. 447 Published Weekly by TERMS. ONE YEAR, in advance... .§10.00. (,'ominunications should he addressed to C. sv. S\%EET, Nos. 315 AXD 347 Broadway. THE TRANSITION. At the i^resent time the questions upper¬ most in the minds of business men are: Have values touched bottom ? have the vapors and gases of inflation been entirely combusted ? liave the muck and rubbish, on wliich we have hitherto had to build, been cleared away ? is the bed rock at last laid bare where¬ on the walls of solid prosperity may be surely built V Upon the solution of such questions hang the fortunes of many a man, and with¬ in their scoiie is embraced the future weal or woe of our financial and commercial systems. The present revulsion will be distinguished above all preceding ones for its prolonged aud far-reaching effects, as well as for the persistent resistance which on every side has beeu offered to it. The panic of 1873 flashed like a meteor across the sky of apparent pros¬ perity, and after its explosion in brilliant coruscations, the entire country was electri¬ fied by the spectacle, and the gloomy ashes of its path fell blightingly on every business iaterest or financial venture. The long and seemingly invulnerable perpetuation of arti¬ ficial values and conditions allured even the most conservative natures into the belief that at length the country had entered upon a career of prosjaerity which was to know no period. The most sober minded and shrewd¬ est business men of the country, though they had mentally reserved the possibility of such aa event, were caught in the supreme crisis with embarcations "of great pith and mo¬ ment," mostly undertakings and investments which at their best estate under natural con¬ ditions would be deemed of dou.btful pro¬ priety, and which in the light of subsequent events have proved lamentably disastrous. Grown accustomed to speculative fluctua¬ tions in prices, merchants and financiers were wont to regard these frequently recur¬ ring panics as fitful and sporadic, and hurtful only to the most reckless. In all. previous crises, beginning with the memorable one of 1857, patient waiting and brave resistance were the sufficient antidotes to such financial I maladies, and by holding on with a stout heart tlie man of invested property, whether of I stocks, merchandise or real estate, felt a i leasonable confidence of realizing intact the I capital sum of his investment. Perhaps the i Pievaihng optimism of our Anglo-Saxon nature has fostered this peculiar frame of mind, and, in consequence, Ave see men to¬ day bravely asserting that the present evils are but temiioraiy, will soon jdeld to better influences and pass away, and that safety from loss consists in biding one's time. When the history of the latest era of infla¬ tion comes to be written from its inception in 1862 to its disastrous climax in the sum¬ mer of 1874, its critical ijhilosophy will teach us many valuable and instructive lessons in financial aud commercial polity. The most interesting phase of that history will be found in its sequel—in its gi'and culmination and close, showing the various kinds and de¬ grees of stresigth which opjiosed the force of revulsion when the natural law finally and fairly asserted itself. The dry I'ot of the past three years, as the press felicitously terms this natural reaction from over expanded and artificial conditions, lias gradually told upon the sailing qualities of our financial and commercial craft from smallest to greatest, and according to their variou.s degrees of resistance. In looking back, we can see how quickly many a bark was foundered in the first moments of disas¬ ter, like the unfortunate " Mohawk," simply for the want of time to take in sail; how many another, as sturdy and well manned, but closer reefed, swept cheerily along, drift¬ ing unconsciously but surely on the shoals and quicksands of bankruptcy; how the tougher craft, strong men-of-war, iron-clad and nobly rigged, essayed to weather out the storm only to founder at last under a clear sky ! These figures fitly denote the various classes of enterprises which have succumbed one after another to the irresistible forces of reaction and revulsion. The banking houses of railroad fame felt the first fuiy of the gale and after a slight resistance succumbed. The various mercantile houses with expanded credit were next laid low. The stock list, vrhich yielded to the first sliock of the panic only to recover under the first breath of in¬ flation, now yields along its whole line—the weaker first, the stronger last, but none the less hopelessly. The speculators in the great commodities of petroleum, cotton and wheat, the manufacturers of great staples, the miners of coal and the raih-oads connected therewith have each in turn been shriven and wrecked; last but not least the real estate interests, colossal, stately and calm, with flying pen¬ nants disappear from laublic view, and are lost amid the wreck of foreclosure suits. In all this turmoil and commotion we can¬ not fail to discern the signs of a great tran¬ sition of values, the most momentous and radical our country has ever known; the disintegration of inflated and forced systems through the application of that stern resol¬ vent, "hard times," and the reorganization of values, justly equated and related, upon the basis of natural laws and sound and healthy conditions. "Vahies are unsettled and unstable in every market except in those which have already passed tlirough tlie ordeal of revulsion, declining for a time below the level of natural values, and then slowly re¬ cuperating, in an effort to regain their places in the new equililsrium that is about to be established. This is aptly illustrated in the case of cot¬ ton and print cloths ; from the highest pos¬ sible elevation they have i^assed through all the degrees of depreciation until near the zero i)oint in prices ; far below their natural values and below the lowest possible cost of Ijroduction. The stoppage of mills, and the legitimate consumption of the country at length reduced existing stocks almost to scarcity and thus tended to revive this crip¬ pled industry, and now an active demand, which low prices never fails to generate, bids fair to place the cotton and print manufac¬ tories among active and paying industries, since the newly established scale of values ensures to the manufacturer and to his factor margins for moderate gains. If we study the commercial list and exam¬ ine current prices of the past three years, we will find the same restlessness of values, the same gravitation towards a lower scale has pervaded nearly the entire list, and as each one has passed down the bevel of deprecia¬ tion and reached its lowest possible point of declination, the recovery seems inevitably to follow, and business in that particular branch is rehabilitated and reinstated. Petroleum has run the gamut to the lowest key and is already ascending to the treble. Coal inter¬ ests, the most obstinate and audacious, have succumbed at last, but have only just begun to travel down the inclined plane. We have yet to chronicle their reinstatement. Real estate, after having soared to the top¬ most pinnacle of inflation, then toppled and fell with a reeling crash from which it has scarcely recovered, although it may be said to be gradually settling upon a solid basis. Under normal conditions, the intense con¬ servatism of real estate owners makes them eager to accept and recognize an advance, while on a decHne the shrinkage of values is apt to be steadfastly ignored until bitter ex¬ perience forces them to acquiesce in and adopt the new scale of prices ; and such ac¬ tion on then- part is necessaiy and a condi¬ tion precedent to the establishment of the new equilibrium of values. The part of wisdom among real estate owners decidedly suggests the recognition of this great transition.' The sooner market