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Real estate record and builders' guide: v. 64, no. 1636: July 22, 1899

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July 22, 1899. RECORD AND GUIDE. 125 >dr* BirSDfESSAlblHEKBSOrCEltol^lKTCqFSI, PRICE PER YEAR IN ADVANCE SIX DOLLARS. Published every Saturday. TELEPHONE, CORTI.ANDT 1370. Gommi:nlcations should be addressed to G. W. SWEET. 14-16 Vesey Street. J. 1. LINBSËY, Business Manar/tr. " Entered at the Post-O^ïoe at Ifew Iork,N. I„ asseeonA-elass matter." Vol. LXIV. JULT 22, 1899. No. 1,636. UNDER the circumstances of the week the Stock Market has acted very well. An outsider might be excused for ask¬ ing why a strike on the local street raiiroads should affect the securities of enterprises spread over the whole country, and it would not be easy to answer him, except to say that the prices of the various securities always move more or less sympatheti- caliy, and that this is more apparent in proportion to the estent that the market is a spéculative one. That prices stood so flrm, not excepting even those of the stocks most directiy affected by the strike. or strikes, is a very encouraging feature and makes aa advance early in the fall, if not before, extremely probable. It is pretty sure that the large railroad earnings reported will Induce spéculation sooner or later, especially in the direction of bringing those railroad stocks and bonds that held back in the last advance up to the line of quotations représentative of cur¬ rent prosperity. Besides the excellence of the railroad earnings and the reflection they afford of the wide-spread commercial ac¬ tivity of the country, the agricultural situation is clearing and dîsplaylng probabilities of better results than were looked fo-r «arlier in the year. The poorer acreage results in wheat are likely to be more than compensated by the larger area sown, and the partial or total failure in other wheat growing countries. Moreover, with such enormous crops as we hâve had for several years prior to this, it has not been possible to measure them in bushels, so that aîl calculations are upset by an apparently in- «xhaustible supply remaining in farmers' hands. This is proved hy the business now being done by raiiroads moving grain in territories where harvesting will not begin for some time yet. The apearance of thèse reserves may hold grain prices down, but they keep the raiiroads fully employed. A similar fact explains the heaviness of cotton prices, and the prosperity of the cotton raiiroads, notwithstanding the greatest consumption ever known. The market is kept fully supplied from the plantations no matter how fast consumption goes on, While popular favor rests upon the raiiroads for the time being, the industrial shares will bear ■watching, especially those related to the iron and steel industry, ihe activity in which maintains its phénoménal proportions. T X 7 HILE practical European financiers are trying to make up X It their minds whether the outlook for money endangera the people who hâve business commitments based on the lower discount rates that prevailed only a short time ago, the school eeonomists are beginning to discuss the probable duration of the ■existing period of business prosperity. At a récent meeting in London of the National Libérai Club—Political Economy Circle, which was presided over by Dr. J. H. Hollander, of Johns Hop- Jiins University, a paper entitled: "Are we on the road to a Com¬ mercial Crisis," was read by Prof. N. C. Frederikson, late pro¬ fesser of Economies and Finance at Copenhagen University. The author of the paper answered his own question with a decided affirmative, taking the ground that the activity in business was based upon extensive crédits, the inhérent dangers of which made a crash inévitable at some time or other. He, however, thought the situation good for another eighteen months. This fall will fur¬ nish a test whether there is any ground for a gloomy view of the situation. If money becomes stringent it is bound to produce ■curtailment of commercial opérations. Next spring will furnish another still more important. If the British and other European governments, as ia not unlikely, materially, reduce their expen- ■ditures for warships and other défensive agents, they will take away an important support from trade and, consequently, lessen the circulation of money. It was the large naval expenditures that started the British business boom in 1893, and it is reasona¬ ble to conclude that their cessation will be the sign of the com¬ ing of a period of comparative gênerai inactivlty. Money for the lime belng is easier and gold moved toward London in- sufficient fluantity to make a further advance of the Bank of England's rate of discount unnecessary this week. Berlin and Vienna both report improvements in their local situations. From the former it is stated, in référence to the check given to the advance of tha quotations for industrial shares, that any marked and perma¬ nent décline seems to be excluded by the phénoménal prosperity in ail lines of business. The Creditanstalt of Vienna proposes to increase its'capital and this is understood to siguify that Aus- tria's industrial stagnation is over and that the security market will aiso improve. France has legislatively accepted the view that the value of money has been lowered permanently by the events of the past twenty-flve years by reducing the légal rates of interest, fixed in 1S07, from 5 to 4% in civil matters and from 6 to 5% in commercial. The British Parliament does not seem to be in a burry to take up the report on Indian. eurrency and, as the session is now near its close, it almost looks as if the public is to hâve half-a-year in which to consider the proposais made therein, unless the government expects to rush a bili, giving them effect, through at the last moment. MONEY AND REALTY. ^* HE half year just ciosed was one in which there was much ^ buying and selling of real estate and much concomitant borrowing of money, on mortgage and the re-adjustîng of mort- gage loans, and the interest thereon. Thèse things imply a settled state of the money market, for that time at least, as well as. of other things, such as terms of tenancy, existing and prospective demands for the various classes of housing and so-forth. The most important of thèse, it being essentially fundamental, ia the money market, and it is worth while spending a little time to as- sertain how far real estate has benefited by the easy conditions that hâve prevailed there. For reasons which need not be stated, real estate, notwithstanding the excellence of the security it af- fords to loanable funds never obtains the beat terms of the money market for any particular time. That is to say that, while real estate may be found which, with margin of value and perma¬ nence of profitable use considered, has equal qualities of security as a government, or a municipal or railroad bond of the best class, at the same time the rate of interest on the loan it can secure will be higher than on either one of the other three. An inquiry into the causes' of this apparent discrimination against the rea] estate loan would probably resuit in finding that it waa not so much a matter of relative security as of difflculty of handling that made the one loan more expensive than the others. The fact that rates for real estate loans are, clasa for class, higher than those for government, municipal and railroad loans, will explain why our mortgage records do not show any such made at 3% and only one, and that for a moderate amount, at 3^^% during the long period, beginning early in 1894, when money was abun- dant and hard to place satisfactorily. Still real estate has felt to a substantial degree the bénéficiai effects of the plethoric con¬ dition of capital reserves which was maintained until recently. In support of this statement we ask the attention of our read¬ ers to the following table in which will be found the totals of the mortgages made at less than 5%, in Manhattan and the Bronx, during the first half of this year compared with similar totals for corresponding periods in the six preceeding years. In the cases of the loans made at 4 and 41/0% there are given the percentagea they severally and jointly form of the totals of mortgages flled in the respective periods to which they apply. Owing to the com¬ paratively small bulk of loans made at what may be called ir¬ regular rates their percentages of the totals hâve not been worked out, as nothing material could be proved thereby. The flgures for the Bronx given show what allowances should be made for that borough and aiso that it is becoming easier to place loans there owing to the fact that the loaning public are being edu- cated up to the value of the security. The growth of the loans made in the two boroughs together at 4% from $1,893,839 to ?32,- 427,750 and from 1.79 to 24.6% of the total of ail loans, from 1893 to 1899 is quite remarkable and has a very important bearing upon the future of realty in this city. The 41/3% loans while making aome progress do not show anything like so large an in¬ crease either in bulk or proportions; but, taking the loans at the two rates together and flnding that they make nearly one-half of ail the money loaned on- real estate in the flrst half of the year, it may be concluded that 4% and 41^% bave become the standard rates for investment loans, with the prospect of the lower rate absorbing that class of business in the reasonably near future. It will be noted that it was only in the first half of this year that the 4% loans were proportionately greater than the 41^% loans, and, it should be further noted, that this period is the one of ail those given in which the activity in real estate has been greatest, the one fact having a direct relation to the other, In other worda, the activity of the past six months was predicted upon a money market that met the changed conditions that had come upon the commodity dealt In. The table referred to Isthe following: