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March 16. 1912 RECORD AND GUIDE 541 they seem to be. Such properties are frequontly carried at a loss for many years before they can be sold at a profit, and if the profits are sometimes large, the risks and deductions are also very large. Here again the successful speculator is the man who has the* wit and judgment to buy just at the right time. Such prop¬ erty, when it is held for many years, often eats its own head off and leaves the speculator with a small part of the in¬ crease in price. The truth is that .the pre¬ vailing system of land taxation rests heavily upon the speculator in land val¬ ues and forces property on the market with sufficient rapidity for all practical purposes. As a rule a city like New Tork is always being over-supplied wilh nevv buildings rather than under-supplied. The increased taxation of land values would not in the long run increase the supply of buildings or encourage improve¬ ments; it would 'merely confiscate a cer¬ tain proportion of the existing price of real estate. Buildings are now being sup¬ plied faster than they oan be used, be¬ cause every property-owner is given a hearty interest in converting the latent value of his properly into actual earning po.wer. The Week in Real Estate. For some weeks past the Manhattan real estale markel has appeared to be in a convalescent slate, with prospects for an entire recovery in sight. This week it suffered somewhat of a relapse and fell back to a condition similar to the one it was in at the opening of the year. A con¬ siderably small number of sales was re¬ ported and the ciuality of business closed did not measure up to recent standards, Laek of confidence rather than a short¬ age of money is apparently the main difR- oulty, and this trouble is likely lo be ac¬ centuated rather than relieved by the un¬ settled political outlook and the world¬ wide industrial uni-est manifested by ex¬ isting and prospective strikes in this and other countries. Another leature whieh prevents any great volume of selling, es¬ pecially in the midtown section, is the dis¬ inclination of owners to reduce their ask¬ ing prices to any material extent. Most of them seem .to feel that they will eventu¬ ally obtain the figures placed on their holdings and are willing to wait for a more active season. The subway pi-ob- lem seems nearer a satisfactory conclusion than ever before, but there is still much to be done, and il will probably be several months before any plans are definitely settled upon. Not till this occurs will any real activity develop along the proposed routes, as operators and investors are not disposed to lake things on trust any long¬ er and the business man is even more wary. Altogether, the prospects for an active spring are not as 'bright as they were some weeks ago, but it does seem probable that several important questions will be settled in the next few months and that the coming fall will see the start of a more active real estale market than we have had in several years. Spectacular deals were not much in evi¬ dence this week. Only one or two trans¬ actions reached the $1,000,000 mark, and these were exchanges of equities that had no particular bearing on the market. South ot 14th street there were very few^ sales, and these were commonplace in character. The midtown section was not as active as usual, but succeeding in pro¬ ducing a few transactions of fair propor¬ tion. The Sage Foundation completed ne¬ gotiations for acquiring a new home on Lexington avenue, just north of Gramercy Park, the northwest corner of Fourth ave¬ nue and 29th slreel was purchased by an operator and a speculative lease was made for a long term of years on the new mer¬ cantile building and 39 and 41 West 32d street. Another interesting lease was that of 520 Fifth avenue, taken by A. G. Spald¬ ing & Bros., who recently sold their lease on 29 to 3;'. Wesl 42d slreet, so that the property could be used as a part of the site for Stern Eros, new store. At present Fifth avenue boasts of only one other sporting goods store on its entire length. The preseni lessee of No. 520, has taken a lease of 10 and 12 West o7th street, and a new building will be erected tiiere for his accommodation. No transactions of any size were closed on the East Side above 59th street, and there was no ap¬ parent demand for private houses any¬ where. A few apartment house exchangas were made on the West Side and a plot on 72d street, between Broadway and Riverside Drive, was taken by a building company as the site for an a.partment house. The largest deal in this part of the cily was the one by whieh the Norwood Park Co. acquired the Glen Cairn apartment house at Riverside Drive and OOth slreet, in ex- ehango for its holdings in the West End section o^f Long Branch, N. J. Money for mortgage purposes is still plentiful at 4^,^ and 5 per cent, and the in¬ surance companies are making quite a number of permanent and building loans at 5 and 6 per eent, A loan of $2,000,000 was obtained this weelv by the Montana Consti'Lietion Co. for a new twelve story apartment on the old Steinway Piano fac¬ tory _site on Park avenue, between 52d and ■j3d streets. This will be the flrst apartment house on Park avenue north of the Grand Central station, and is to 'be one of the largest buildings anywhere on the avenue. Plans are being prepared for a tall structure for the site of Mendelssohn Hall at 113 lo 119 West 40th street, and work will probably be starte^d next month. Plans were also flled for a twenly-flve .=!tory loft building at 110 and J12 West 40lh street. A .few vacant plots in the Bronx were sold to builders, but miscellaneous selling in that borough continues only in small volume. It is expected that considerable building work will be started in the next few weeks, and several large tracts held by development companies -will be opened in the near future. The bill providing for the creation of a new county out of tbe borough was advanced somewhat this week, and it seems likely that it will pass with a referendum provision. In Brooklyn conditions fail to show very much improvement. The district around the Atlantie avenue subway station is the only one to display any apparent life, and bi'okers in all parts are complaining of the laek of inquiries. Renting conditions are not good, and this, of course, accounts in large measure for.the poor selling mai-- ket. Continued cold weather has had a bad effect on the suburban sections, and has to a certain extent killed the prospects for an active spring. Queens is showing a steady gain in lot selling and building operations, and all indications now point to an aetive season. Building operations .for the past two weeks have totaled about ■$1,250,000 in estimated value. The Woodhaven district seems to be more active than any other, and the Corona section is also looking up. Property in and around Jamaica is in good demand, and the Rockaways are begin¬ ning to show signs of life. Another large faclory building is planned for Long Isl¬ and Cily, and a block of dwellings is pro¬ jected for Douglas Manor. The flrst sign of the expected stiffening in 'building material prices came this week when with sales of more than 175,000 tons of Bessemer and basic pig iron the price of the latter began lo advance. Heavy melting steel scrap advanced fifty cents to seventy-five cents a ton and Connellsville coke for furnace use was bought freely, even at $2.10, an advance of twenty-five cents in a little more than a week. Inasmuch as basic iron is used for steel making, the significance of this advance is appjfrent to ultimate consumers of finished sleel products. That the strengthening is not confined to one department only, is shown in the fact that all raw materials used in building metals are also stiffening. Another significant faet is that appar¬ ently very few buyers are making eon- tracts for second quarter delivery in bars, plates, shapes, etc., in any part of the country except in the Metropolitan dis¬ trict. 11 shows that equipi-nent companies are making their supplies go as far as pos¬ sible to prevent undue alarm spreading to prospective builders. The State Department of Publio Works succeeded in breaking through the ice as far as Newburgh this week, which relieves the tension in the common brick market. No report of an advance in Portland ce¬ ment was made, although it was generally expected yesterday. Most of the mills now have only two months' supply of coal and. in the event of a strike at the mines, it may mean a curtailment of manufac¬ ture. Spring prices have not been announced yet in any building materials, as the de¬ mand has not been sufficient to permit an estimate of probable spring requii'ements. Wholesalers, however, declare that they are not as worried over the volume of business as over their ability to supply demands, and they are awaiting further mill advices as to stocks on hand and the outlook in the event of a general shortage of fuel, before they announce their lists to customers. Consumers may take it that prices will not be free from fluctuations belween now and the middle of August and. if anything, the movement probably will be almost continuously upward. Despite this probability, dealers are still continuing the hand-to-mouth policy of buying, although Dodge Reports show a. greater volume of prospective building operations this year than last, and the plan fllings in the various building departments are equal, if not in excess, of those of the same period last year. Effects of Over Taxation. iL'ililor of the Record and Guide: Here is a short memorandum on the effects of over-taxation illustrating the points brought out in your leader entitled "A Metropolitan Tax" in your issue of March 0. The effects of heavy taxation in the reduction of actual values are not al¬ ways clearly discernible, but the fact is well known that undue 'assessed valua¬ tions do operate to destroy the value they apparently indicajte. An illustration is afforded by an analysis of the figures of a "loft" build¬ ing recently constructed, one of t'he now numerous class of mercantile buildings whieh has been largely developed through the lower portion of the Fifth avenue section of Manhattan, and which appear to appeal to some classes of tenants and investors. A 12-story mercantile building on a plot 02 feet by 100 feet deep is leased for a long period at a rental of $22,000 per annum. Tho price is $3oO,000, of which $2liO,0OO is placed on mortgage at -the rate of interest of 5 per cent, per annum. This rental does not include taxes and insur¬ ance. Taxation on the basis of 70 per cent, assessed valuation would be at rate in 1911...................$4,440 Insurance ........................ 629 Total ..........................$5,009 This leaves out of total rental___$16,931 Interest on mortgage............ 13,000 Net revenue to investor........$ 3,931 Being a return on the equity of $90,000 of 4,37 per cent. As such an equity should produce at least 5 per cent, the real value of the property on this basis, is less than $90,000, or $7S,000, If the assessed value be moved up 10 per cent, the net return would be reduced to .^3,531, which capitalized at 5 per cent, results in a reduction of the equity to $7O,GO0. So that for each 10 per cent, addition 'to the assessed valuation, this property would decline $S,O0O. A similar decrease of capitalized value Would result frO'm an equal increase of the tax rate without change in the as¬ sessed valuation. IC the principle of as¬ sessment to full value be applied to such conditions, the result w-ould be a reduc¬ tion of the equity, by more than 50 per cent, to $42,000. So that an increase in annual taxation of $1,S30 would decrease t'he actual in- veslment by no less than $30,000 a.nd would reduce the entire value of the property more than 10 per cent. REGINALD PELHAM BOLTON. New York, March 11. ———.----^----.-------. ^ Legislative Notes. The Assembly passed the bill of Assem¬ blyman Caughlan, giving the New York Board of Estimate and Apportionment the right to permit the extension of a surface railway line across Pelham Eay Park, in The Bronx. By a vote of 29 'to 0, the Senate passed the bill of Senator Black providing for the appointment in the First and Second Judicial departments of official referees, who should be Supreme Court justices who had served a full term of fourteen years. A committee representing the Under¬ writers' Association of Brooklyn and the Brooklyn Brokers Association attended a hearing on Tuesday before the Senate In¬ surance Committee on a number of bills affecting insurance brokers and under¬ writers. One of the bills provides that the Superintendent of Insurance may re¬ voke a broker's license for incompetency. The brokers favor this bill, in part, but they do not wish to give the Superinten¬ dent too much arbitrary power. John W. Paris, the Long Island real estate developer, has come out strongly in favor of the Griffin bills to put the business of selling real estate bonds un¬ der the supervision of the State Banking Department. Mr. Paris is president of the Long Island Real Estate Exchange. He told a committee of the Legislature at Albany that the only objection he had to the bills was that they did not go .far enough: '"We wouid like the measures to include companies that offer mining stocks and bonds, oil stocks arid bonds and other securities that are sold in great numbers and whieh 'have no sub¬ stantial value." The Stilwell bill creating the Coun^ty of The Bronx was passed in the Senate to-day. The vote was .34 to 0. The meas¬ ure now goes to the lower bouse. The bill is not to take effect until approved at a referendum of the citizens of the proposed Bronx County. Senator New-