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Real estate record and builders' guide: v. 67, no. 1725: April 6, 1901

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^ ESTJkBUSHED^ df^H 21^ 1868. De^ io Rea,l Estate.SuiLDifJb ftifijiKrrECTURE,HaiisE3(ou)DEOT^jiwi Bi/sii/ESS wiDThemes of GEjteR^l Ij^tei^est.. PRICE PER YEAR IN ADVANCE SIX DOLLARS. PuhlUlied everv Baturdav- TELEPHONE, CORTLANDT I37O. ConimuolcailOQs should ba addressed to C. W, SWEET, 14-16 Vesey Street. J, T, LINDSEY, Business Manager. "Entered at ihe Post-Oftice of Tieio York, S. T., as second-class matter." ~ No. 1725. Vol. LXVII. APRIL 6, 1901. PRICES of Thursday compared with those of a week ago reveal the concentration of buying on a limited though varied list usual to very speculative operations. It Is one of those times when the. secret of making money is in discovering the course of imminent speculation and following the stream. Des¬ pite tbe frequent and solemn assertions that tjie movement now in progress is based upon a revolution in our industrial affairs, and that the men who are engineering it are swayed by the patriotic motives in "helping their country by helping them¬ selves," we retain our opinion that what we are witnessing in the stock market is mainly a gigantic speculation, manufactured on ten stories that are false to one that is true, and aided by the scarcity of stocks and a plethora of money, and that it will come to an end when stocks are released to the market by syndi¬ cates and combinations aad money tightens. In this connection the sudden jump of call money to 6(^ on Thursday should be noted as a sign of approaching conditions. If we. are to have the commercial and industrial activity that everyone expects, and with reason, the immediate demands for money from all over the country are likely to be heavy, and must be met mainly by this center. The Government's collections and the European require- inents, the limit of which no one can estimate, will also help to lessen the resources available to the stock market. THE continued activity and advance in Manhattan stock is inexplicable, except on the supposition that an attempt is being made, either by the New York Central or the Metro¬ politan Traction Company, to obtain control of the elevated roads. For certainly the stock of the company is selling high kt 130, on the basis of the earnings and prospects of the present system. Whatever advantage it is likely to get from the introduction of electric motive power wil! be more than off¬ set by the increased competition which it will shortly iiave to meet. It may be assumed, then, that some project of control is under way; and the question is: In what interest is the project being made? Rumor has been giving the New York Central credit for being the interest at work, hut while we should like to believe that this is the case, it scarcely seems credible that it is actually so. If the Central company acquired Manhattan, it would mean a complete reversal of the policy which has domi¬ nated the action of the Vanderbilt lines for many years past. Throughont the whole of this time the management has ob¬ viously and expressly been very much more interested in im¬ proving its long-distance than its local service. It has raade no energetic and successful effort to make its tunnel even a tolerable place in which to spend ten minutes twice a day. It has been oblivious of the manifest advantages which would ac¬ crue to it from securing control of the underground road. It has shown no appreciation of the enormous advantage which its entrance into New York gives it for building up local traf¬ fic and getting a share of the extremely valuable street traffic. It has acted m fact, throughout, as if it were nothing but a Buffalo and Chicago line, and that it had little to gain by developing, as far as possible, its local service and New York terminal. But the only object of acquiring control of Manhattan would be to use the Manhattan franchises and tracks in con¬ nection with its local service. Perhaps the' management have -■ome to the conclusion that it is time something was done for its local patrons, and it is certainly very much to be hoped that this is the case; but in view of the past, one can scarcely believe such a reversal of policy on the strength of a rumor. It is much more prohable that Metropolitan Traction is a system into which the Manhattan will eventually be taken. As a matter of fact, the underground road, with its station at 42d st and its four tracks to City Hall, would be much more useful to the Cen¬ tral than the Manhattan would be. Corporate Ownership of Real Estate. T T is evident that a new period is beginning in the financing of -^ large real estate and building operations in New York. The reorganization of the George A. Fuller Company into a corpora¬ tion with a capital of ?20,000,000, and the close identification of the new'corporation with a prominent group of real estate operators points obviously to radical and signiflcant changes in the ordinary method of raising money for the construction of very expensive buildings, and the subsequent distribution of the value created. We are very much mistaken if the formation of this company does not directly point to the ownership of large blocks of New York property by real estate and building cor¬ porations, which will raise the money necessary for their opera¬ tions by the issue of stock and bonds to the general public. If such corporations are prudently and successfully managed (and there is no reason why they should not be), many millions of dollars, which are now locked up in comparatively permanent forms, can he made as fluid as any form of personal property. Until recently buildings in New York, worth more than a million of dollars, were usually owned either by large capitalists or by flnancial institutions. They represented part of a rich man's, or rich institution's, surplus, and were often erected as much as a permanent and appropriate advertisement—a symbol of financial exuberance—as a mere investment. They were rarely owned by a corporation organized solely for the purpose of building that particular building; and whenever this did happen, the corporation in question was a close corporation with the stock held hy a few insiders and not distributed to the public, as is so often the case in England, Thus far these methods have served their purpose very well; and enough institutions have been found which were ready and able to invest part of their money in this way. New York has certainly never suffered from inability to flnd the capital needed for the construction of big buildings. Recently, however, tendencies have been developing in two separate directions looking toward a different manner of flnan- cing these real estate operations. In the flrst place, they are being undertaken not merely by investors, but by speculators, and have demanded for their successful handling such large blocks of capital, that a number of important operators combined for such purposes into separate groups. The Central Realty Bond and Trust Co. was the outcome of such a syndicate—the idea being that the powers of a trust company in the way of holding mortgages and the like were well adapted to the operations of a building loan syndicate. But this was only one group among several—all of them the natural result of the money to be made in speculating on a large scale in New York real estate. In tha second place, an analogous development was taking place in the flnancing of large building operations. The increased height of the "skyscrapers," and the consequently increased capital needed by the builders who erected them, has resulted also in the organ¬ ization into corporations of concerns undertaking that class of work. Such corporations might have a considerable advantage over their competitors, for since they controlled abundant capi¬ tal, and could count on a large and regular consumption of cer¬ tain standard materials, they could erect "skyscrapers" at a minimum of cost, Moreover, it has heen customary for one of these companies—the one now to be reorganized—to retain inter¬ ests in tbe buildings it erected, and so make it still more ad¬ vantageous for the projectors of such operations to employ them. The new company consolidates the two tendencies we have outlined above. It unites in a single organization one of the largest building corporations in the city, with one of the most im¬ portant and successful group of real estate speculators; and the union is the natural result of the new direction whieh the busi¬ ness of both parties to the "deal" has been taking. On the one hand the construction company was going more and more into the ownership of the buildings it was constructing; on the other hand the real estate operators were undertaking to a constantly increasing extent the improvement of large parcels, which they had purchased. Hence, since the syndicate in question was one of the largest projectors of big buildings, and the building com¬ pany was one of their largest constructors, an alliance was quite in the line of normal development. Furthermore, it is lilcely in the course of time that the advantages which the new company will have, both in the purchase of large blocks of property and their improvements will necessitate a similar organization on the part of competing operators and builders. It is stated that for the present, at all events, the new corpora¬ tion is going to be a close corporation, and that all of its securi¬ ties will be held by insiders. This may well be the case for some years, but it can hardly be permanently the case. The capitalists interested in the company can certainly have no intention of ac¬ cumulating large numbers of desirable parcels and improving