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Real estate record and builders' guide: v. 24, no. 606: October 25, 1879

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Real Estate Record AND BUILDERS' GUIDE. Vol. XXIY. NEW YOBK, SATUEDAY, OCTOBER 25, 1879. No. 006. Published Weekly by Wil^t %ml €Bhk Secorb %%samtxm. TERJIS. ONE YKAR, in ad vance.... SIO.OO. Communications should be addressed to C. MV. SVITEET, Nos. 345 AND 347 Broadway DANGER SIGNALS. It is not pleasant to perform the part of the skeleton at the feast, but the old Egyptian cus¬ tom had its uses. We are in " booming " times. Prices are rising; everybody is hopeful and happy; the "set-backs" of the market are for small amoimts; the advances are for large fig¬ ures, and the wisest and most conservative ad¬ mit that for the rest of this year, at least, we shall have a "bull" market in everything. But it is well even in these flush times to look at the other side of the question—to scan the horizon closely so as to see if there is any cloud over¬ hanging the business community, and this we propose to do, for we are convinced that, tem¬ porarily, there will be some disappointment, especially among builders. From what we hear we judge that the sale of new buildings has not ecpialled the expectations of those who have put their money into ventures of this kind. The speculative demand for lots last spring, upon which to erect houses, put up the market value not only of land on the central zone of the city, but also advanced the price, a.-? we showed last week, of all the materials which enter into the construction of a bouse. Bricks, lumber, lath, hardware, nails, and more especially labor, all command higher figures than they did last spring, so that the builder, who was eager for business, and willing to work on a narrow margin, found that the advance in the price of material and labor put him in debt in all buildings for which he had contracts. Masons and carpenters, that is, the employers, have not found a very large profit in the year's business thus far owing to the advancing tide of prices going beyond their esti¬ mates made last spring. Then there has been another disappointment. While some houses have been sold, undoubtedly a great many remain in the hands of the build¬ ers and promoters, as yet without bidders, much less occupants. The present upward movement is in strong hands and everybody is confident of the future, and hence it is not difificult to obtain money to carry houses for a few months, until they are sold, but the buying movement has hardly commenced as yet, and we apprehend that the demand for houses will not be active until next spring. In their eagerness for business builders have taken low contracts and have, for the present at least, overstocked the market. We judge there are a number of bargains for those who have ready money and who wish to buy new houses. Wo are sure that we are justified iu recommending anybody who wishes a bouse or who wants to put his money where it will be certain of an advance, to buy any of the new houses now in the market in this city. There must be a margin of twenty per cent, within a year's'time But apart from the building trade there are other indications that by next spring we may find that there has been an over-production in many departments of business. It is . ominous that cotton goods are very cheap, that worsted goods have not the ready sale it is supposed they would have. There has been a halt, and the cause is not very diflicult to seek. The people who consume cotton goods are not in a position to purchase. It should be remembered that the great spending class is the working class; it is the people who toil ten hours a day for six day in the week, and who depend upon their weekly wages. This class, while better paid than last year, has not the same income that it had before 1S73. There have been many theories put forward to account for the dull times after the panic of 1873, but the most comprehensive one has been overlooked. The employing class very naturally believe in low wages, but a moment's consideration will show that while low wages is an excellent thing for the individual employers, it is a very bad thing for the employers as a class. The wage- teceiving class comprise the immense bulk of the community. The capitalists and the employing class are, after all, a mere fraction of our total population, U nless wages are high there is little money to spend, and hence no great demand for either the necessaries or luxuries of life. Up to 1S73 it was estimated that there were eight million of workers, men and women, in this country who received on an average fifteen dollars per week. By the years 1S7.5 and 1876 wages had been reduced one-third, and probably more. If the whole of the eight million were kept em¬ ployed, which they were not, it would follow that as wages had been reduced on an average from fifteen to ten dollars per week that the wages fund would be forty million dollars per week less than previous to 1873. Now, forty million dollars a week makes an enormous aggre¬ gate for the year. It is probable that the amount of wages paid out is far less than our figures, and that there was a difference of fifty to sixty million dollars a week received by the working classes proper. This, of course, would mean a smaller consumption of all manufactured articles, both foreign and domestic, and this one fact explains the dulness of trade from 1873 to 1878. We cannot expect a very wide consumption of goods until the great bulk of the community of common people are in receipt of better incomes. There has been some improvement. A great many more are employed than in 1876 or 1877, fOr instance, but the return of better times has been anticipated by the employing classes, and they have set to work [producing goods for which we fear they will find in time there is no immediate market. There being an abundance of money, and prices beginning to rise, all who had the means or credit have rushed at once into producing. They have put up the price, first, of iron, and then of all the other metals. Every article which enters into consumption has steadily appreciated in value, and that in advance of the ability of the country to consume. Substantially, we are on a hopeful or credit basis in all our productions except, perhaps, in the matter of iron, steel and the associated metals, for there is a real demand for railroad iron. But we would not be surprised to find by next April or May that tbe workers in copper, tiu.lead, spelter and ziuc would find that they had over-stocked the market temporarily It should be remembered that our facilities for production are enormous. All the mechanical inventions of the last few years have been in the direction of greater, economy of labor and in¬ creased efticiency. It is not, perhaps, wise to say that there can be an absolute over-production, but it is quite clear that the ability to consume does not keap pace with the modei-n ability to produce manufactured articles. It is idle to say there are too many shoes or too much clothing, when so large a proportion of mankind are com¬ pelled to use but few shoes and little clothing. The problem for the social philosopher is how to increase the ability to consume, and that can only be done, so far as we can see, by the increase in the means of the w-age receiving class. We all are familiar with the stimulus to prices by gov¬ ernment purchases during the civil war, when substitutes were receiving from three hundred to nine hundred dollars apiece; when the govern¬ ment was the great purchaser of materials of war and worsted goods. Then times were indeed flush. Everybody was making money. But the government is not now a largo purchaser, nor has any power in the community equivalent taken its place. It follows that we have got to look forward to the day when the laboring classes —people who are in the habit of receiving wages and salaries—will be in a position to consume more than they do now. Builders judge right in supposing that people who have made money in stocks will want houses and lands. Real estate we regard to-day as among the best of purchases, because the great middle classes who have made money by the rise in prices, and the appreciation of bonds and stocks, will want better residences by and by. Fifty thousand dollars wisely in¬ vested in real estate to-day will probably be worth a hundred thousand by the close of tho year 1880. One cannot very well make a mistake at the present rates, but we do anticipate some disappointment to the manufacturers who are now producing so abundantly, upon the supposi¬ tion that there will be as ready a sale for their goods as there was previous to 1873. This will come in time, when land and labor command higher prices than they do now ; but the real prosperity of the manufacturing clas.s, the pro¬ ducers of all kinds of goods, will come after and not before the movement in land and labor. The farming class, especially at the West, will be our heaviest purchasers this year, and there will be an increased consumption in the East because more people are employed and wages are better, but we must expect to see a "set back," indeed several of them, in trade, until such time as land and labor are worth more than at present. We look for a steady appreciation in all manufactures of metal, wool and cotton goods, leather and the like, but we also expect that at times there will be depression, waiting for a market, and proba¬ bly lower prices, in short, some such experiences as we are now passing through in regard to cotton and woolen goods. It should also be remembered that these times differ from the paper money era, in one very im¬ portant respect. Then the " booms " were exclu¬ sively on fresh issues of paper, while now it is gold and silver, which is the basis of our prosperity