Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 47, no. 1210: May 23, 1891

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May 33, 1891 Record and Guide. SJ5 .<^ ^y- >\ ESTABLISHED^NVARCHSI'-i'^iaeS. Dev4)1ED to f^E^L EsrWE SuiLDlf^C A^RT-l^iTECTJI^E ,KobSEi^OLD DEGORATlod. BlIsiiJess aiJd Themef- of GtrJEiV-^ I;vt€i\est PRICE, PER VEAR IN ADVANCE, SIX DOLLARS. Published every Saturday. Telephone, - - . . Cortlandt 1370. CommunicatioDS should be addi-essed to C. W. SWEET, 14 & i6 Vesey St. J. T. LINDSEY, Business Manager. Vol. XLVII MAY 23, 1891. No. 1,210 NOTICE OF REMOVAL. Tne publication offices of The Record and Guide have been removed to Nos. 14 and 16 Vesey street, over The Mechanics' and Traders' Exchange, a few feet ivest of Broadivay. THE stock market iias shown its dependence on European news for ita moving influences. Tlie engagement of gold for export, with accompanying rumors of trouble in one or the other great capitals of tbe Old World, has been tollowed by selling and a decline in values, while yesterday the expectation that the export movement of gold was near its end caujcd an advance which had some of the features of a healthy bull movement. In this connec¬ tion the most encouraging feature probably is the movement of gold from Londou to Russia, as it helps to remove one of the most threatening features of the situation. There couH be no satisfac¬ tory condition of the money market abroad so long as the great centres—especially those belonging to nations upon which the powers at St, Petersburg looked witli disfavor—were the deposi¬ tories of Russia's large gold supply, which could be tised aa a means of disturbing their finances atany moment. Any movement toward the lessening of London's and Berlin's debt to Russia to within reasonable limits is, therefore, as encouraging abroad as is the decline in gold esportations on this side. While the financial atmosphere ia clearing, it must be remembered, however, caution is still a virtue. We have this year shipped over forty millions of dollars gold, and may have to send more this year, and cannot hope for a return movement for some time; meanwhile the home demands are likely to increase, with a tendency to create strin¬ gency in the money centres. This probability will tend to limit the advance, and while there may be in the immediate future a rise in values, consequent upon the more cheerful condition of things at home and abroad, it is not likely to be great. The real bull market everybody hopes to see is doubtless postponed until the effect of our recent auriferous sacrifices has more certainly passed away, to be followed by the more pleasing results of good harvests, or the certainty thereof, accompanied by an increased European demand for American cereals. SINCE the interests involved in the rehabilitation of Argentine finance are so enormous, and the bankers and others represent¬ ing these interests so powerful, it might have been supposed that the action taken to secure the creditors would have been far more energetic and effective than it has been. But those whose business it is to move in the matter have been extraordinarily timid. Months have now passed since tbe failure of the Barings and the constitu¬ tion of a committee to negotiate with the Argentine government; and nothing but chaos still reigns in al! that appertains to Argentine finance. Signs are not wanting that mauy of the creditors are beginning to chafe under this tantahzing and possibly disastrous inaction. Some of them are proposing that a commission of finan¬ cial experts from Europe, duly authorized to investigate all the conditions of the problem and propose a well thought out scheme by which Argentina could be placed in a condition to make a fresh start unencumbered by the worry and annoyance incidental to the tinkering policy which has been adopted. Others, particularly in Germany, advocate a more vigorous hne of action. They want a committee apjiointed to assume charge ot the finances of the Argentine government for the purpose of working them in the interests of the creditors—thus putting the country practically into the hands of the receiver, and they want the European governments, if necessary, to exert their influence in favor of such a plan. Which of these measures will be adopted, if any, it is im¬ possible at this distance to make a plausible surmise; but unless some decided action is taken the Argentines will con¬ tinue to flounder along until such remeslial measures may be too late. It will be remembered that the London Committee did not propose to attempt the adjustment of any part of the debt except the funded debt of the national government. The bonds of the provinces, the Cedulas, the water-works company, the railroad guarantees were all to be left to take care of themselves. If any scheme could be proposed which would help to secure the payment of these obligations also much futm-e trouble will be avoided aud the country will be left far more free to develop without artificial hindrances. rriHERE seems to be, at all events, one practical method of doing -*- this. All contracts with Argentina have been made in gold, and the premium on that metal in the Republic approaches 300 ppr cent. Now, as most of these debts were incuired when there was little or no premium on gold, the calculations of all the borrowers in the Republic have been thrown all awry, and their debts are practically three times as heavy as they were svpected to be wheu the money was borrowed. Thus, suppose a corporation sold $10,000,000 of H per cent bonds in the London market for the purpose of building a railroad. The company had calculated that they were able, when the line was in good operating order, to earn their expenses and some $700,000 a year—euffioieut, that is, to pay their fixed charges. But, tneanwhile, the premium on gold has risen to 300 per cent. If the company can earn the $700,000 that they expected to earn the money they will receive will be, of course, the circulating medium of the country; but since" the interest eliarges must be met in gold, this $700,000 will mean only $330,000 in London. The company would have to secm-e $1,800,000 in Argentine money, or nearly thi-ee times tbat which they counted upon earning, in order to meet its liabilities in gold. The main difficulty of the situation lies obviously in this premium on gold ; and no practical method of removing it has yet heen suggested. The European creditors will certainly force Argentina to the wall if they stick to the letter of the contract and try to coerce the country to pay just what it bargained to pay. ' The Republic cannot do it; the debt must be scaled down in some way. The most practicable method of accomplishing this purpose would be to permit the debtors to pay in silver, which they can obtain much more readily than they, can gold. The demand for silver thus created would so raise its price in the markets of the world that the difference which the creditors would lose would be very small. To this it may be answered that our own experience in borrowing, when gold is at a premium, and repaying it when the premium had partially or wholly disappeared, would seem to testify that the Argentine Republic can do likewise. This analogy is fallacious. The United States is a country of far more varied resources than the Argentine Republic; and its inhabitants possess far more vitality and energy than do the impulsive but lazy and unenterprising South Ameri¬ cans. The latter would become discouraged in endeavoring to cope with their enormous debt; when they find it very onerous, they will be more likely to make efforts to repudiate than to pay their obligations. Since the crash, immigration to the country has almost entu-ely ceased. If it is to begin again, and if the natural resources of Argentina are to be developed, as they must be devel¬ oped in order that the load of debt can be carried, the Argentine government and people must be granted more of a chance and treated more leniently than the creditors as yet seem disposed to treat them. It may be that the delay which has occurred and for which the Rothschild committee is responsible has been allowed to take place in order that weak and small holders might be dis¬ couraged into selling—thus permitting insiders to buy for the purpose of averaging up. However that may be, the large bankers will reckon witbout their host, if the Republic is not treated ten¬ derly. The flnal result of the experience will be to popularize American securities abroad. As one prominent financier puts it, London has practically made an assignment to J., S. Morgan &. Co. Of the largest banking bouses in that city, all or nearly alt, except J. S. Morgan & Co., with their followings, have been involved by the crash ; and they have made their assets over to au American house for it to realize upon the resources as best it can. Hence, it is that Jobn P, Morgan, in spite of the enormous interests demand¬ ing his presence in this country, has been forced to go to London. Tbe prestige of the firm and its followiug will thus be greatly enlarged, while its main interests will still be in this country. American securities will flnd increasing favor on the other side. WHEN we speak of the population of a city we mean, of course, the number of people dwelling within its municipal boundaries. Yet since the municipal boundaries of a city do not OJ any means include all the people who are dependent on its trade for their living, its shops for their goods, its theatres for their amusements, and who contribute to its prosperity aod progress, this musfc always be a very arbitrary method of calculation and one which will surely produce false impressions upon those who take lists and tables afc their face value. To give but a single instance ; a city like Chicago, which has incorporated all of its suburbs aud aome prairie lands besides, obtains in this way a