Columbia University Libraries Digital Collections: The Real Estate Record

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Record and Guid e. June 32,1889 as no substantial or durable repavement of the streets can be effected without tbem, would it not be better for the city to refuse to go extensively into the business of repaving until it has the power to construct these tunnels, and so to spare the pavements? Anew .danger to the pavements has now arisen in the liberty given to tbe street railroads to change their motive power. If the electric motor becomes available this wiU not matter, but if cables are substituted for horses the inti-oduction of them would require new excavations. The companies should be forced to elect whether they will or wiU not introduce a new motive power before any repavement is attempted of the streets through which they run. ------------■------------ The law regulating the lending of money on real estate by sav¬ ings banks certainly needs amending. Aa it stands at present, these institutions are permitted to lend on real estate not more than 50 per cent, of its value, and there is no doubt that those who con¬ scientiously endeavor to live up to the letter of the statute are unnecessarily hampered. The law, instead of working to the advantage of depositors, works to their injury; for on the 50 per cent, basis savings banks will find it either difficult to put out sur¬ plus funds on real estate or wiU have to lower their rate of interest to the lowest point. A 60 per cent, limit would be quite low enough. It would amply meet the intentions of the present law. Indeed, in large cities, where the general course of the value of real estate is upward, the loan limit might with safety be extended sUghtly beyond even 60 per cent., though of course in this matter a great deal depends upon what interpretation is put upon the word "value." This "value" can be arrived at only by appraisement, and there is no doubt that in appraisements for loans the "value" arrived at often faUs very little short of the extravagant. Thus loans on the 60 per cent, limit would average perhaps nearer to 70 than 60 per cent. But even with this the risk upon good city prop¬ erty is very slight, though in certain of the rural sections of the State the 50 per cent, limit is none too low. The law should dis¬ criminate between rural and urban property, and in raising the limit should define more clearly than it does what is meant by "value." The term is wide enough for a coach-and-four to go tbrough. ----------»_-----_ No one would expect that a city that prides itself upon its public school system would have to refuse education to at least 15,000 children for want of sufficient aocommodation. Yet that is the condition of affairs here in New York. Superintendent Jasper says it is due to insufficient appropriations. This is very probably correct, for while the appropriations for the Police Department have increased about 30 per cent, since 1878, for the Health Department 85 per cent, and for election expenses 64 per cent., for the Board of Education the increase has been only 18 per cent. The increase merely of population would necessitate agreater increase than this, and unless great economies have been effected it is difficult to see how the old standard has been even maintained, leaving entirely out of consideration the number of children whose parents have to pay for the education for others' children which they cannot obtain for their own. The Department of Education hi^.s always been supposed to be exceptionaUy weU managed; but if this is the result, what condition are the other departments in ? An analysis of the vote of the Prohibition amendment in Penn¬ sylvania gives significance to the result in more ways than one. On it may be founded arguments almost irrefutable in favor of a local option law. Taking for the purpose the figures printed in the Evening Post on Wednesday afternoon, June 19th, which, if not strictly accurate, are nearly enough correct for the purposes of comparison, it will be found that fully fifteen-sixteenths of the majority against the Prohibition amendment to the Constitution was picked up in Philadelphia, Alleghany, Berks, Lancaster and Schuylkill coimties, which contain most of the large cities in the State, while about seven-ninths of it came from PhUadelphia and AUeghany counties alone, containing the three largest cities. Or, looking at the question from another point of view, it was in the argricultural regions, as distinct from the mining and manufact¬ uring, which gave Prohibition its support. If the counties, instead of voting on a general amendment, had voted each separ¬ ately on their wish to wipeout indiscriminate liquor seUing within their borders, thirty out of sixty-six, covering in area nearly if not quite half the State, would have declared in favor of the change. These figures bring out clearly the essentiaUy local bearings of the question. It would be as ridiculous to pass a general law for¬ cing one county to submit arbitrarily to the will of another as it would for a father to make his girls climb trees and his boys play with doUs. Matthew Marshall, in the Sun, has sounded an alarm against the increase of speculation in the "Trust" stocks, which lately has been so prominent a feature of the stock market. He rightly con¬ siders them to be one of the most dangerous class of secm-ities on the market, Iu the first place the public really knows notlupg about them. They render no reports. If they pay dividends, nobody can tell how far they are earned ; if they do not pay dividends, no one can tell how far the certificate holders may not have been swindled. In other words, tbe investor is completely in the hands of the managers of the combination, and there is no more reason for assuming that these gentlemen will ignore this advantage than we have for assuming that a cow will ignore cow- feed. The experience of the buyers of railway securities in the Northwest does not encourage a would-be investor to place any too much confldence in the conductors of great business enterprises. How very blind the buying and selling of these securities is may be illustrated by the case of cotton-seed oU, which has fluctuated from over 60 to under 30 without anything certain having been known meanwhile as to any change in value of the security. But there ai'e other objections equally weighty against this too indis¬ criminate speculation in trust stocks. These combinations are simply business experiments. Tliey have not only against them all the ordinary perUs of a business venture, but these perUs are com¬ plicated by the fact that they are always in danger of adverse legis¬ lation. The proper position for a conservative investor to take, for the present at all events, is " hands off." Two Popular Errors, The Commercial Advertiser, of Buffalo, is surprised that the French " could sink " $300,000,000 in the Panama Canal and neai-ly $100,000,000 in the copper syndicate, and yet not suffer from a widespread panic and commercial paralysis. This surprise is due to a misconception. The Commercial Advertiser evidently shares the popular idea that every financial disaster destroys wealth that previously existed ; that when, for instance, a large cotton or iron mill faUs, say for three or four miUions, there is so much less of some¬ thing in the country. Nothing of the kind occurs. The "loss" which is spoken of in connection with such affairs is relative, not absolute; personal, not national. The price of the pig ii-on owned by the mill maj' suddenly decline several cents and thus involve the company in financial difficulties. Their "loss" may run up into the hundreds of thousands of dollars; but there will be jiist as much material wealth in the country, just as many tons of iron, possessing the same degree of utUity as when the company was considered solvent and prosperous. It may pass into the haads of otber people, but it exists. Tbe liabilities involved in the failures in the United States last year amounted to $123,829,000 ; but that amount cf wealth was not destroyed. Or, to show tliis matter in another light, suppose new coal fields so marvellously rich and accessible were discovered to-morrow that the price of coal should decline one-half, the probabihties are that many of the present mine-owners would be financially "embar¬ rassed," and we should hear of theu- immense " losses ;" but it is easy to see that in such a case the real wealth of the country would be unaffected by these losses to individuals. So it is in the case of France. There has been no commercial paralysis in that country; it is as prosperous to-day as it was yesterday, despite the " loss" of $400,000,000—because the coimtiy has suffered no such real loss whatever may have happened to certain individuals. ParaUel to this error—the reverse of it—is the belief that an advance" in prices means an increase in wealth. It is true some individuals are advantaged; but the nation is no better off. If the price of every commodity were to be doubled to-morrow, would there be twice as much wealth in the country as there is to-day? No one will maintain this. Stated in this way the fallacy of the idea becomes clearly apparent. The advance in the price of wheat last summer did not increase the wealth of the country, for if the contrary is held it must be admitted that it is in the power of a non-producing class, such aa Exchange speculators are, to double and quadruple the national wealth ; and a man like " Old Hutch" becomes a more importaut factor in creating wealth than thousands of toUers in farm and field. A decline in prices is often regarded as a calamity, whereas it is often a blessing. Low prices usually mean ease of production, abundance, and consequent increase of wealth. If the corn acreage should yield double this year the wealth of the country would be increased by the equivalent of about §900,000,000; but corn would be very much cheaper than it is, and so would meat, poultry, eggs, lard, alcohol and other provisions. Every discovery or new invention that increases or cheapens pro¬ duction tends to lower prices. The ideally wealthy state is the one in which the object of every human desire is as plentiful and as easily obtained as the air breathed, and consequently is without i price. Yet the pubhc usuaUy hail every advance tn prices as a gain M^ to the nation, as an indication of gi-eater prosperity I ■ We shall have truer ideas of wealth and prospei'ity when we cease to estimate them by a monetary standai-d, and instead measure them with the yard-stick and the scales. When a nation J8 produging aad using mwe tpns of wheat, iron, cottonj more food