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Real estate record and builders' guide: v. 70, no. 1802: September 27, 1902

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September 27, 1902. RECORD AND GUIDE. 431 ESTABUSHED WW^RRpHSlii^ IB6S. ©©11 De/oteD io f^L Estate . BlnLDI^'G A;r.cKitecujre ,V(ouso1oll DEGOft^nod. BusiiJess Alb Themes Of GEtiERAl Ii^ter^si. PRICE PER YEAR IN ADVANCE SIX DOLLARS Published eVery Saturdag Communicntinna shoulil bo addresned to C. W. SWEET, 14^16 Vesey Street, New YorK J. T. LINDSEY, Business Manager Telephone, Cortlandt 3157 "Entered ul the P'ist Offirr at New Yorl; N. Y.. as second-class niatter.' Vol. LXX. SEPTEMBER 27, 1902. No. 1802. MONEY continues, and will continue for some time to come, to be tlie dominating factor in the Stock Mai'ket. In epite of the rallies in prices seen on Thursday and yesterday it is obvious that there are no funds available for the purposes of ordinary speculation. It may be taken for gi-anted that the banks this week improved their technical position before the law, and that the statement to be issued to-day will show the reserve restored to the legal limit, but it is hardly likely to show that the banks have gained funds which can be loaned out on call on the miscellaneous collateral that is received in times of advancing prices and confidence. The measures taken by the Sec¬ retary of theTreasuryto help the market and prevent fluster were timely and needed, but not altogether reassuring. The mere fact that they were necessary at all accentuates the seriousness of the situation. Then the help the Secretary of the Treasury can af¬ ford is compai-atively small, and for various reasons is not ac¬ cepted to its full extent. This last remark applies particularly to his offer to anticipate interestmaturing prior to June next. When this form of aid to a distressed market has been offered by other Secretaries of the Treasury the response has been slow and partial. The availment ought on this occasion to be better, be¬ cause there would be money in taking the interest in advance and paying to the Treasury the rebate demanded for the privil¬ ege, because the prospects for the profitable employment of the funds so obtained in the open market for months to come are good. Where the amount is considerable enough to be employed there, the rates obtained would give the bondholders taking ad¬ vance payments of interest a handsome profit on the operation. In this connectioiLit will interest readei-s to know that it is be¬ coming more and more the practice of owners of large amounts of idle money, to loan them in the market through brokers, in¬ stead of leaving them on deposit with trust companies at a small rate of interest. The broker loans the money and receives the collateral, of the nature of which he advises the customer; of course, as he gets only a small commission, he wili not take more than an agent's or broker's responsibility, T N the talk, which was current this week, of a possible advance ■^ in the Bank of England's comparatively high rate of 3%, an idea can be obtained of the prospects for the continuation of the demand for money until the close of the year. Prior to this 3% was a high rate, except in times of war or disaster and then, of course., it was a low one. This rate has now been maintained steadily for more than a year, and it was this week exceeded by the outside market's rate. Thereby expectations, which will doubtless be fulfilled before long, of an advance in the Bank's minimum were accounted for. With a possibility of an advance in the typical rate, already more than normal for ordinary times and conditions, it is obvious that in general rates for money will be high until the New Year is reached, and then as may be. This state of things does not increase the activity of the bourses but prices are to a great extent protected hy the liquidation that has already been forced. The decline in iron, coal and electric shares in Germany has been so large that a reaction is being created by the mere mechanical working of supply and demand. In Great Britain the preference shares of the best railways have declined from 20 to 24 points from the last recorded maxima. Not only is this fact patent, but something more telling not so patent may be stated and that is that the best issues of munic¬ ipal stocks have correspondingly depreciated. But Europe is working out of its troubles hy the slow but sure processes created by economic laws. A week or so ago reference was made to the decline in wages in Great Britain having reached official statis¬ tics. This week reports from Germany show that under a de¬ clining activity the cost of labor is decreasing. This makes the prospects for the "winter months gloomy, but it is at the same time encouraging, because the farther this process of reducing cost of production goes to meet prices reduced by a falling off in demand, the nearer it brings the time of reaction and rally. When the fact has become embodied in official statistics it is safe to say that the process is pretty far advanced. Taxation and Real Estate. TN the discussion now being conducted by the newspapers re- *■ lative to the decision of the administration to assess real estate at its full value, there is one consideration the importance of which is generally under-estimated. The fact that with a lower tax i-ate and a higher assessed valuation of real estate, the present disproportionately large burden,which is placedupon real as compared to personal property, wil! be still further in¬ creased is frequently passed over with the statement that under present conditions the taxation of personal property is almost a negligible quantity anyway. But a very small calculation will show that the real estate tax bills will, other things being equal, bo increased by the change. The present tax rate is in the neighborhood of 2.31, and th© levy of that rate on the $550,000,000 of personal property now on the tax rolls yields an income of about$12,500,000 per annum. But should the tax rate be reduced to about 1.50 solely 'by the increased assessment of real property, the levy of that rate upon the $550,000,000 of personality would bring in only about $8,000,000 a year and the $4,500,000 a year which was thus lost would have to be paid almost entirely by the owners of real property. This would mean that their tax bills, other considerations apart, would be increased by at least four per cent. Or to put it in another way, the saving which the city expects to make from the decreased general tax levy of the state, or from the readjustment of the Sinking Fund payments, would, as com¬ pared with existing conditions, benefit the lightly taxed owners of personal property, more than the heavily taxed owners of real property. Altogether it can hardly be said that the prospect, frequently held out to the owners of real estate, that their burdens will be diminished by the present administration is likely to be fulfilled. Apparently all expectation of reducing the pay-roll of the city has been abandoned, and the total saving already made by these means has not amounted to one-tenth of the increase effected during the last administration. As we have just pointed out, the diminution of the general tax levy of the state will under the present plan be beneficial chiefly to the men who have per¬ sonal property listed on the tax rolls; and the like is true of the possible economies in Sinking Fund expenditure. At the same time the announced policy of the administration, and the real necessities of the eity, point towards largely increased outlays in many directions. Rapid transit, the additional water supply, a new municipal building and the like, indeed, may be expected to pay for themselves, but the new schools, libraries, parks and the thousand and one minor improvements which have beeu promised, all mean largely increased expenditures, both for con¬ struction and operation. Thus the prospect of any appre¬ ciable decrease in taxation, either during the current or during future years, either by the present or by future city govern¬ ments, is small indeed. Doubtless the taxpayers' money is be¬ ing better spent now than ever before; but there seems to be no chance of an absolute saving. Indeed, the tendency is all in the other direction. As the population increases aud becomes more dense, the functions of the eity government also multiply. New departments, such as that recently organized for the super¬ vision of tenements, are constantly needed; and consequently an increasing proportion of the total income of the city is necessarily absorbed by taxation. The effects of this increase need not, however, necessarily be disastrous. Four or five years ago, when real estate was dull and tenants were scarce, increased taxes were a very serious thing for the owner of real estate, for under such circumstances, he was forced to pay them out of his own pocket. Ordinarily the owner of a building expects the rent to 'pay the taxes and fair return upon the money invested. If the taxes are raised he tries to raise the rents on his tenants; and since the increase in taxes, whejiever it occurs, is uniform and the owners of other build¬ ings are in the same box, he can usually succeed. An exception must be made to this ordinary rule, however, during bad times, or in case over-building had taken place. When the tax rate was increased subsequent to consolidation, it was at a period both of bad times so far as real estate was concerned, and of over¬ building. The owner of real estate, not only failed to increase the rentals of his property, Uut frequently he was obliged actu-