Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 24, no. 607: November 1, 1879

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Real Estate Record AND BUILDERS' GUIDE. Vol. XXIV. NEW YORK, SATUEDAY, NOVEMBER I, 1879. No. 607. Putdutlied IVitekly by TER3IS. OVE YEAR., in advance.. ..SIO.OO. Communications should be addres-sed to C. \V. SWEET, Nos. -345 AND :i47 Broadway THE RECORD'S NEW OFFICES. On and after this day the oflices of The Real Estate Record will be at 135 and 137 Broadway, corner of Cedar street. This removal to the immediate vicinity of the real estate market, has been nece.ssitated by a de¬ sire to accommodate our numerous friends and subscribers, for whom The Recoud has now be¬ come an all important adjunct for tbe proper transaction of business. Whatever new spirit and energy may be de¬ veloped iu tho real estate and building market will, in the future, as it has been in tho past, be care¬ fully reflected in these columns, and in its new quarters e.'jpeciaUy it will continue to be a faithful Record and safe Guide to all those interested in real property, whether located in New York or in any part of tbe United States. IN WHAT SHALL WE I>n*EST. As nearly everybody in legitimate business is making monej', tbe (piestion comes up in a thou sjind ways as to wliut are the most desirable in- vestment.s. Of cour.so, all conservative capital¬ ists will ans%vf?r that high interest means poor security, aud that government bonds and lirst mortgages on real estsite are tho only i^rudent in¬ vestments for those who wish to be sure of a re¬ turn upon tho money invested. Next after gov¬ ernments and first mortgages, the conservative capitalist will say, come good railway bonds and the stock of roads which now command high figures, such as the New York Central, the Chi¬ cago & Rock Island, the Chicago, Burlington & Quincy, aud the like. Of cour.se, nothing that could be said here would alter the opinions of the great mass of conservative investors. They loill continue to buy high priced securities which pay sniall dividends. And yet the experience of the past seven years has not been such as to conlirm their views. Investors in governments have lost money from 1S76 down to the present time; that is, the market price of the national securities have steadily declined in value. The most serious losses of the National Banks were in their govern¬ ments. Now the investors in the better class of railway stocks have done much better, because these have risen in value; but we warn those who have money whieh thej' wish to em¬ ploy profitably, to beware of the current notions as to what are the best railway properties in the country. On the return of national prosperity, the great rich railway companies have entered upon a career of leasing and extending their lines; of charging themselves with tho complications of minor connecting roads iu a way that will finally strip them of all the advantages wluch thej' now have over the so-called fancy securities. Take the case of the New York Central. For pruden¬ tial reasons, the Vanderbilts do not think it wise to increase the business of their great road. They could easily add to their profits four-fold, for it (s demonstrable that the eight tracks of the Central road could take all the pas.sengers and all the freight which now comes to the seaboard by all the other trunk lines. In other words, the full capacity of this road would be competent to do all the bu.sine.ss of the Baltimoie Sc Ohio, the Penn.sylvania and the Erie loads. Naj-, more, it could render the Erie Canal ureless in the carrj- ing of heavj' freight. But the Vanderbilts do not want to ruin the other roads, as it would bring competitors in the field who would carry freight and passengere at verj' low rates. The Central does not care tojncrease its earning ca¬ pacitj', iiecause it does not know what to do with the money. A ten per cent, dividend would cre¬ ate a h().st of enemie.^, and the crj' against high freights and monopolies might create awkward complications, and lead to legislative restrictions that would put the railroads practicallj' under the control of the State. But the Vanderbilts are eager to make more money. Instead of doing an immense business and reducing the lolls, com¬ binations are entered into to nmke a i)rofit out of other and competing road.s. Hence, the rise in Ihe stocks of the Lake Shore and Erie Railroads. The Vanderbilts will get their extra dividends bj' the purchase and practical leasing of the Lake Shore road and the control of the Erie road. Bj- their connections. West, Southwest and North¬ west, the vast seaboard freight business of the Luke Shore will bo run over the Erie road, so as to raise the price of the securities of that prop¬ ertj'—a majoritj- of the shares of which are al¬ ready in the hands of the Vanderbilts. In other words, there is a practicable consolidation of the Central road with the baidcrupt Erie road and the debt encumbered Lake Shore, and to make the matter still worse, a lot of bankrupt connect¬ ing roads, extending to all .sections of thejcoun- try, are being bought up to form part of the great combination. Then take the Rock Island road. Tho stock of this company has ruled very high, and it has been paying for some time past ten per cent, dividends; but now we find it leasing a number of connecting and heretofore worthless roads. The Cedar Rapids & Burlington for one, the Des aioines & Keokuk for another. Then the Pekin, Peoria & Warsaw, a road, the securities of which were considered worthless a j-ear since, has also been practiaiUy secured by tho Rock Island, so as to head ofT possible competition on the part of the Chicago, Burlington & Quincy. The result will be that while the roads thus leased, or purchased, or guaranteed by tho Rock Island road will be very greatly enhanced, in value, the Rock Island securities, proper, will be worth far loss than they have been in the past, and ifc is safe to predict that this stock which is now held at 150 will, iu a few years time, be worth less than par. The Chicago, Burlington & Quincy road, the stock of which has ruled very high, is owned principally in Boston, and is undergoing the same transform¬ ation. It has been trying to lease the Missouri, Kansas & Texas road, but may bo outbid by the Union Pacific and Wabash combination. But every now and then, it will be noticed, there appears in the Wall street news the statement of some new properties \vhich the Chicago, Burling¬ ton & Quincj' is trj'ing to secure. The Wabash combination is another case in point. This may connect with some ot the bank¬ rupt Canada roads and the securities of the old Midland road, the bonds of which were down to four cents on the dollar a conple of j-ears since, are now selling in the neighborhood of thirty, upon the supposition that they will be bought up bj' some great combination which wants an out¬ let to the ocean. In short, the railwaj' sj-stem of the countrj- is being rapidlj- unified. The great and prosperous companies are buying up and controlling the cheaper and what have been deemed the more worthless railway properties. In other words, the solvent concerns are forming partiiershiDS with the insolvent concerns to the great advantage of the latter, and particularly to the emolument of the ollicers, promoters and manipulators of the leading trunk lines of tho countrj-. It has been remarked in the press that the fools are making all the monej- in this recent rise of stocks, while the wise n;en have so far made none. In other words, the pnulent, cautiou.s, capitalist who has plumed himself upon his conservatism in declining to deal in " wild cats "—in such securities as Iron Mountain, Missouri, Kansas & Texas. Hannibal & St. Jo, Erie, and the various stocks and bonds which have been selling all the waj- from two to ten cents on the dollar, has found, to his amazement, that the reckless, foolish, hopeful speculator who luis dealt exciusivelj- in " wild cats " has made inunense sums of money, while he has nmde nothing .at all. Nor is this the whole of the storj-. The re.