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Real estate record and builders' guide: v. 16, no. 403: December 4, 1875

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Real Estate Record AND BUILDERS' GUIDE. Vol. XVI. NEW yOEK, SATUEDAY, DECEMBEK 4, 1875. No. 403. Published Weekly by THE REAL ESTATE RECORD ASSOCIATION. 0. W. SWEET...............Pbesident and Teeasukeb PEESTON I. SWEET...........Sechetaby. L. ISEAELS.,.......................Business Ma,nageb TEEMS. ONE YEAR, in adT'ance....$10 00. Communications should be addressed to C TV. ©TV-'BET, Nos. 345 AND 347 Bboadway. Next week we shall print several communica¬ tions received from subscribers in relation to the article which appeared lastweek on the "Crisis in Eeal Estate," among others one from Mr. Simeon E. Church. We shall publish Mr. Church's letter without any comments, so that every person reading may judge for himself, and no one wiU have any reason to complain in re¬ lation to the openness or fairness of the columns of The Eecoed. We welcome the fullest dis¬ cussion on this topic, which now so intensely in¬ terests all real estate holders, confident that so important an interest cannot but be benefited by the truth. THE CRISIS IN REAL ESTATE. n. The Eeal Estate Eecoed has heretofore for¬ borne to comment upon "the noiseless panic" that has pervaded the market for the past two years, hoping, along with a respectable minor¬ ity, that this panic might, in the nature of things, check itself, and that a healthy re¬ action might set in, which would at least give stable values, if not a rising market. Such hopes seeiQ futile, however, each week's trans¬ actions indicating unmistakably the collapse of the great speculation and the beginning of the end; therefore, our duty as journalists compels us, however . disagreeable, to record the cun'ent facts in the history of real es¬ tate. Last week we glanced cursorily at tho situation, which now has become sharply and clearly defined, and which every sensible man must regard as a momentous and unprecedented crisis in the history of New York real estate. It iS:4he function of this journal to study these phenomena, to investigate, their causes, their conditions, and their future results. Directly or indirectly,' the subject matter concerns our en¬ tire population, and in the, .light of our repre¬ sentative character as the Ipadiug American city must interest the country .-at; large. Leaving to statesmen- and to their philosophy the further treatment of the currencyTquestion as affecting real estate, we propose- in- the course of this article to addrass ourselves'to the consideration of topical and remote causes, which come more properly within our purview, and which we will call the lesser cauBes. HISXOaiCAL. The panic of 1857 occurred in the midst of an activity in the building trade until then unparal- led, and, as a consequent in the midst of an era of land speculation, only rivalled by the greater epoch of 1837. The gold production of Califor¬ nia, then in its infancy, the enlarged volume of commerce, the rapid growth of our city and the then recent introduction of the horse-car system, famished the incentives for the memorable land and building speculations of that eventful period. Then, as now, builders failed, land speculators succumbed to foreclosure suits, and a period of seemingly indefinite duration was put to the material growth of the city. Block after block of new and untenanted buildings of aU classes—tenements, stores and dwellings— were relinquished to the tender mercies of mort¬ gagees, and the prices of land fell from the then current high prices—low as c-^mpared -with those of later development—50,-75 and 90 per cent. From this period, public interest in real estate languished, and prostration of the build¬ ing trade was complete. The surplus of im¬ proved property was barely absorbed when the Civil War commenced, in 1861. The period of the war, from 1861 to 1865, was utterly barren of building productions, not-withstanding cur population for the time being was enormously increased. During the same period, unimproved speculative property was entirely neglected, and sank in value to its minimum of the pre¬ ceding decade, although the rental value of im¬ proved property had largely increased in sym¬ pathy -with inflation and the extravagance of war expenditures. The dawn of peace in 1865 found a large population with\ plethoric purses demanding places of business and residence which could not be supplied. At the same time the entire area of vacant land afforded the most tempting field for investment and speculation which our new-fledged capitalists of the war period could possibly desire. Speculation had rung its changes on the gamut of every material and immaterial product excepting, real estate. The doubts and uncertainties- which en¬ shrouded the financial administration of the Government had deteixed even the boldest in- ,yestors from placing their capital in fixed forms. Thus, upon the sound and solid basis of low in¬ trinsic values of land, reasonable prices of labor and moderate cost of materials, coupled -with the real scarcity of and active inquiry for stores and dwellings by a population flushed with the factitious prosperity of the war period —upon such broad groundwork^ or foundation, was erected that towering and splendid edifice—^the land and building speculation of 1865-1874— whose tottering and downfall it is now our duty to chronicle. We assign, therefore, as one of the lesser causes the prolonged torpor of real estate interests succeeding the panic of 1857, ex¬ tending practically through a period ' of eight years, until 1865, and then followed by a sharp reaction which continued, with trifling checks, tmabated for nine years, reaching its acme in the intense activity, fabulous prices and over¬ production of 1872, 1873 and 1874, and finally culminating in the summer of 1874, after having gallantly borne the brunt and defied the pres¬ sure of the financial panic of September, 1873. THE Central pabk. In its incipiency even, as far back as 1853, the Central Park gave zest to and entered largely into the exuberant speculation which culminat¬ ed in 1857. In each successive step of its pro¬ gress and development it has been the brilliant but false beacon that has lured to destruction. The Central Park was originally projected as a scheme of land speculation, to absorb acres of lots and create a scarcity of outlying land, by men of a former period, many of whom have passed from the stage -with large profits. The enthusiasm engendered by the Park has never ceased until now to act as a powerful lever in the enhancing of speculative values. The ideas of but one Central Park with one margin thereto, of but one grand boule¬ vard, of but one Fifth avenue, have been the watchwords of nearly a generation of land speculators, and notably during our last era of inflation has this infatuation taken pos¬ session of our capitalists, large and small. Alas, for the fatuity of human imaginations! The dream of $50,000 and S100,000 lots has passed into history. When subjected to the test of money stringency and hard times, boule¬ vard and Central Park lots have been .shown to possess less intrinsic value than any other prop¬ erty, hardly commanding the amount of mort¬ gages secured by them, clearly demonstrating that their former values were purely specu¬ lative, ranking them in a financial sense with the unproductive fancy stocks of Wall street, and leaving their intrinsic value to be definitely settled in that still far-off period when actual demand for improvement and the growth of our city shall create a market. The fleeting, and unstable values of these fancy lots during the present crisis is in striking contrast with the relative stability of values on our improved avenues and thoroughfares. We refer for ex¬ ample to the sales since the panic of Mr. Soher's and ]yir. Sloane's apartment blocks on Sixth aye¬ nue, of Mr. Loew's block on Third avenue, of Mr. C. L. Anthony's house on Fifth avenue and Thirty-eighth street, of the comer of Eighteenth street and Broadway, bought by Mr. Cunard, of the corner of Nineteenth street and Fifth ave¬ nue, and the lots on Forty-second street, oppo¬ site the Depot, all showing well-sustained values. In the Fifth, Seventh, and Fifteenth Waids, conservative or obsolete localities unkno-wn to the modem speculator, values have scarcely changed in twenty years. In our fashionable, residence quarter property is saleable to-day,