Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 62, no. 1593: September 24, 1898

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September 24, 1898. Record and Lruide 413 BlTsiWess a)A)Theues Of GEi^Eit^ IrfTD^T^ PRICE PER YEAR IN ADVANCE SIX DOLLARS. JPublishM every Saturday. Telephone, Cortlandt 1370. Communications should be addressed to C. W. SWEET, 14^16 Vesey Street. /. 1. LHfDSEY, Busmess Ma/nager. "Entered at the Post-Office atNeto Tork, A'. T., as second-class matter." Vol. LXII. SEPTEMBER 24, 1898. 1,59^ THERE has heen a contraction of speculative activity in the stock market tbis week, and some progress made toward bringing sufficiently low prices to induce new operations on the long side. Consummation of tbis movement is, however, still far away. The fight in tbe sugar trade, which is likely to be most influential in shaping the market for some time, may easily become a bitter one, both sides being well equipped with money and experience. In the sugar trade, where the respective merits of the combatants are best appreciated, great respect is expressed for the American Sugar Company's opponents, though in the Street it is confidently belifeved that the former will finally come out on top. This belief is due mainly to the company's very strong financial position. Besides a surplus probably equal to its an¬ tagonists' collective resources, it has had $10,000,000 of bonds in its treasury for some years, of which it has not issued a dollar's worth. Still it is a fight in which much damage can come to all concerned, and as long as it is prolonged will be adverse to prices. In the final outcome sugar will undoubtedly be a great purchase: but who is to say when the outcome will be and what figure the stock will reach before the contestants will be ready to give up the fight? The changed condition of the money market has naturally a tendency to limit speculation. The rise in the Bank of England's rate to 3% will check the westward flow of gold— if it does not another advance may be expected—and this re¬ source will be curtailed. The necessity the banks are under to keep their reserves good will, of course, mean a calling of loans and the dispersion of the collateral by means of the market. On the whole the situation, as well as the merits of the speculative issues, call for still lower prices. As to the outside business sit¬ uation there is no reason to recall the cheerful views of it pre¬ sented recently, there being no abatement of either confidence or activity. ----------*---------- EUROPE concerns itself very much with the problems now be¬ fore our and the Spanish peace commissioners, and we are given to understand that the Madrid government intends to make out that Spain is entitled to ask the United States to assume part of the Cuban debt, on the ground, firstly, that the money had not been raised exclusively for Imperial and national purposes, but also for colonial objects; secondly, that a considerable part of the loans had been spent on colonial public works, defences and buildings that will naturally remain; and thirdly, that cession of territory and of sovereignty has often in international pre¬ cedents entailed the transfer of part of the debt. At the same time, we are also informed that the Spanish press is preparing the public mind for a reorganization of the State debt, involving reductions in both principal and interest, as soon as the peace agreement has been drawn up and the basis for this liquidation can be ascertained. Japan is expected to come into the market as a borrower of from $40,000,000 to $50,000,000. Mexico publishes a highly satisfactory foreign trade statement for 1897; tbe excess export balance was nearly double what it was in 1896, and higher than for many preceding years. The daily developments in the Dreyfus ease form tbe political and commercial history of France to-day. In Germany the reports from all branches of industry are very satisfactory, especially those from the iron and steel trade. A project for the construction of a canal to connect the Rhine, the Weser and the Elbe, to be submitted at the next session of the Prussian House of Deputies. Austria-Hungary has resumed activity under the stimulus of good harvests and the prospect of the satisfactory renewal of the fiscal agreement be¬ tween the two countries. Electrical development is proceeding on with rapid strides, nearly ali the cities of any importance con¬ templating the laying of electrical railroads and the installation of electric power for lighting and industrial purposes. Rates for money are hardening in London and all over the Continent as a result of fhe widespread activity and tbe demand for gold from the United StafeB. THE COURSE OF REALTY INTEREST RATES. DURING the past five years money has been in limited de¬ mand for commercial purposes and rates have been low. It is, therefore, an interesting and opportune question how far this has benefited New York realty? The panic of 1893, dis¬ astrous as it was in many respects and directions, brought to light the fact that the wealth of the country had grown enor¬ mously; and, by their gathering in the financial centres, that the reserves of capital were greater than anyone had previously any idea of. These reserves coming to the depositories in the large cities, as a result of lost confidence and a limited commercial de¬ mand throughout the country, and having to be employed in some way and in part permanently, have sought the security of city realty. The consequence has been a readjustment of rates of real estate loans upon a lower basis. That this conclusion is just, we intend to show by an examination of the mortgage statistics of New York City, or as we should now perhaps say, Manhattan and The Bronx, since the beginning of 1893. For this purpose we would flrst draw attention to the volume of mortgage loans made in the several years since that date and the first half of this, as shown by the following table, from which, as from the tables that follow, we have omitted mortgages to corporations that are not strictly mortgages on real estate, covering as they do per¬ sonalty, franchises, etc.: MORTG.A.GES FOR THE YEARS 1S93-'9S. r-----■—I ncre as e.---------1 Year. Total. Amount. Per cent. 1893...................... li;n2.51S,G3S ........... 189-1...................... 1.57,771,149 '.i; 14,747,489 "8.5 1S95...................... 2U0,216,741 42,44ii.592 27.0 1896...................... 212,710,593 12,493,8a2 6.4 1897...................... 214,715.080 2,004,487 0.9 1897 (first half)............. 112,033,631 ......... 1S98 " '■ ............. 120,351,478 8,317,847 7.4 •Decrease. We see here that the panic year, 1893, was followed by one of considerable contraction, though the percentage of decrease, 8.5, will not appear a large one to those who have a vivid recollection of tbe state of business generally in 1894 and, more particularly, the utter lack of confidence in all business enterprises that then prevailed. It was while tbis feeling was most apparent that money flowed in large volume to New York, and this irruption of idle money in turn'explains the large increase in mortgage loans in the succeeding year of $42,445,592, or 27%. Compared with 1893, this increase is about $28,000,000, or 17%. A considerable portion of this increase, it may be suggested as lessening the satisfac- toriiiess of the showing, is accounted for by an unusually large number of renewals of mortgages made in 1895, a process that also contributes to a continuation of the increases of totals in the succeeding years. But these renewals themselves were made be¬ cause the times were propitious and money could be obtained at easier i-ates than when the original mortgages were executed, as a further consideration of our subject will reveal. The volume of loans made in the flrst half of this year compared with the cor¬ responding portion of last year, shows that conditions are still favorable and the process of rearranging loans to, as we think, reduce interest charges, is still going on, accompanied by a good business in new loans. Whether these views are sound or not will be seen when we distribute these totals according to the in¬ terest rates obtained. Take then the mortgages at 5%, as given in the followiug table: MORTGAGES AT FIVE PER CENT. Per cent. ,-----Increase.-----, of total Year. Amount. Amount. Percent, morieages. 1893.................. $88,022,260 .............. 51.1 1894.................. 80,954,169 *ii;7,068.091 +8.0 51.4 1895.................. 93,034.842 12,080,673 15.0 46.5 1S96.................. 101,435,861 8.401,019 9.0 47.7 tS9T ..... 100.182,96:^ »1.252.89a *1.2 46.6 1897 (firat half)......... .^0,:«)ii,SS:i ..... ..... .... 44.6 1898 " ■' ......... 4S,ri'14,5fifl *1,851,297 3.7 40.4 "Decrease. These five per cent, loans were unaffected by the conditions of the market in 1893 and 1894, or only slightly so, the decline in volume in the latter year being not proportionately so great as the decline in the total given in the first table for that year, the percentage being about 8. as compared with 8.5. In the following years tbey failed to hold their own; not only do they show a small decrease of 1.29;, in 1897, while the total made an increase of 0.9%., but their percentage of the total has never since reached the figures of 1893 and 1894, and in the first half of this year they make some further decline. Five per cent, is the me¬ dium rate at which most of the real estate loans are made, and it will follow that, if they decline in proportion, it must be either because money has become dearer or cheaper and that more loans are being made at a higher or lower rate. That the latter is the case the next table, giving the loans made at less than 5% tenda to prove: