Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 75, no. 1928: February 25, 1905

Text version:

February 25, 1905 RECORD AND GUIDE 40J f^ ^ ESTABUSHED^ ItfJ^aZl^ 1868. De/oteD td RwL E>r«E. BuiLDif/o if^n-EcruRE .HouseHoid DEOOifnoH, Bush/ess Alto Themes OF GEfiER^ IKto^st. PRICE PER YEAR IN ADVANCE SIX DOLLARS Published eVerp Saturda.v Communlcationa should be addresBsd to C. W. SWEET, 14-16 Vesey Street, New Yorli J. T. LINDSET. Businesa Manaser Tolephono. Cortlandt 3157 "Entered at the Fost Office at New York. JV. T..as second-class matter." Cop.vright by the Real Estate Record and Builders' Guide Company. Vol. LXXV. FEBRUARY 25, 1905. No. 1928 THE proposed consolidation of the Southern steel, coal and iron properties was made tht3 excuse during the week for a short period of excited speculation, which soon collapsed. The Stock Market cannot stand at the present time wild and unsubstantial advances iu prices. When the market value of Union Pacific goes up until the stock yields less than three per cent, it is understood that the rise is anticipating an increase in the rate of dividend distrihiition; and even though the price seems high, it cannot be said that it is wholly unjustified by the prospects of the railroad. The time may be several years dis¬ tant before Union Pacific can afford to pay seven per cent; but what with its profits on the Southern Pacific purchase, and witb tbe results of the excellent financial management of the eystem, it will probably pay seven or even moi-e per cent event¬ ually. Certain other western railroads occupy a somewhat sim¬ ilar position, and the increasing values of these securities need not be put down to a speculation which overreaches itself. Ou the other band there will be a curious magic about the con¬ solidation of the southern iron companies, in case it can make so many non-dividend paying stocks as valuable as they now are. This looks towards a revival of the dubious days of 1901 and 1902, and in the long run will hurt not merely the special interests engaged, but the whole market. what laws they will allow lis to have. The stock transfer tax bill is not apparently meeting with as vigorous a resistance as one would expect; but then Wall Street has other ways of opposing bills than by the obvious mechanism of an argument before a-legislative committee. Besides this tax biiJ, there are also bills before the Legislature embodying both an annual and a recording mortgage tax; but cne does not bear very much about either of them. They are doubtless being held in re¬ serve, to be used at a later date in case they are necessary. The real estate interests of this city should be prepared to find themselves at any time with a fight on their hands against an annual mortgage tax. The outlook for legislation on other mat¬ ters of the first importance is similarly dubious. The prospects tor Mayor McClellan's Water Commission bill are apparently pretty good; but on the othei' hand no one can tell what action will be takeu in reference to rapid transit. The Senate com¬ mittee has reported the Elsberg bill favorably—which may mean much or nothing at all. However, one thing is certain Tbe passage of such a bill at the present time would mean a serious set-back for rapid transit in New York Gity. The bill contains many excellent provisions, some of which have al¬ ready been adopted by the Commission; but it is based on the false principle of encouraging general competition in the local transit service. What the city needs is not a number of in¬ dependent routes, separately operated, but so far as possible a single system, constructed and managed under rigid municipal supervision. The best way to reach this result at present is to encourage competition between the two leading interests; and to leave with the Rapid Transit Commission the duty of mak¬ ing the best possible bargain for thf public. That Commission, which began by being radical, has undoubtedly become some¬ what conservative in its middle age; but it still retains the confidence of the city. No action in reference to rapid transit, v.'hich is disapproved by the Commission, should be taken, until public opinion is prepared to dispense altogether with the Com- THE announcement during the week that th© stock of the new Lawyer's Mortgage Bond Company has been over¬ subscribed guarantees the trial of this very interesting develop¬ ment of the mortgage business. The new company proposes to issue its own bonds against the mortgages purchased by it, and in this way to offer a much more flexible kind of security to the public. There is no doubt that the idea which lies behind the formation of this corporation is one of the utmost value, which will in the long run be of the greatest assistance in encourag¬ ing investors to lend money on real estate. There are several large classes of investors, whose needs the methods of the mortgage guarantee companies do not meet, and who may he reasonably be expected to welcome the opportunity of making a long term mortgage investment. These classes would he: (1) Those investors who now purchase 50 to 100 year railroad bonds and municipal bonds, to avoid the annoy- F.nce of constantly shifting mortgages in investments maturing in from one to three years; (2) small investors, who at present have no opportunity to buy mortgages in small amounts, and (3) European investors, who would not consid_er the purchase ot Individual mortgages, being accustomed only to mortgage bonds. The advantages of introducing the European method to the American investor will be equal security, the mortgages being the same; longer term to run, and quicker convertibility by maintaining stock exchange quotations. On the other l-and, the advantage to the mortgage bond company over the mortgage guarantee company would be great¬ er stability by obtaining investment funds for twenty or thirty years instead of two or three years; greater safety by the direct control which the company would have over the mortgages by the partial introduction of the amortiza¬ tion principle and by the deferring of the investor's right to call for the principal, and greater profit due to the longer period which the bonds would run. The .interests behind the new company are, of course, well known both for conservatism and for energy, so that the scheme could not tie introduced under better auspices. THE Albany legislative mill has not as yet begun to grind. All legislation is as usual held up until the last few days Ol the session, when the Committee on Rules of the Assembly absolutely control the situation; and it has not developed as yet Washington Heights Again. THE speculation in vacant property on Washington Heights is assuming larger proportions than the corresponding speculation assumed in the Bronx last fall. The total number or sales has again broken all records. During the week about 400 transactions have been reported, of which 195 or more con¬ sist of vacant property on the Heights. An even larger num¬ ber of sales were presented in the daily papers; but when the lists were analyzed and compared, it was found that in many cases the same transaction was repeatedly reported. As many as 38 instances of this sort of thing were discovered. Whenever a speculation of this kind sets in, it has become a recognized part of the "booming" operation, to increase the ap¬ parent volume of business by announcing some sales which do not take place at all, and to give other "bona-fide" sales a multiplied existence. However, there is enough genuine busi¬ ness consummated to occupy almost ali the time of almost all the operators in the City; and this fact makes the other sec¬ tions of Manhattan look comparatively neglected and dull, whereas only a few. weeks ago, they were very active. The result of this speculation has, of course, been a material advance of prices al! along the line. The speculators are evi¬ dently seeking to establish values as near as possible on the level of the West Side; and the question immediately arises as to the effect which the increase will have upon building operations. That a good deal of building will eventually take piace is manifest, in spite of the fact that responsible builders are not buying very much at present; but under the new condi¬ tions the character of this building is likely to change. In order to secure an expression of well-informed opinion on this matter, Mi'. Chas. T. Barney was asked during the past week to give his opinion of the existing outlook. He expressed him¬ self as believing firmly in a future for real estate on the Heights o^ greater scope than is generally anticipated. He believed also that nothing had occurred which would prevent a large amount of new construction during the current year; but in his opinion this construction would be confined almost entirely to tene¬ ments. Mr. Barney said: "I tried to encourage the construction of private residences; but I could not stem the tide. The builders insisted upon tenements and apartments. Between Broadway and the River on the side streets there may be some private houses erected; but elsewhere in the section between 135th and 155th streets I can see nothing but apartment houses. What will be done north of 155th street or at Fort Washington, I do not care to prophesy. It remains to be seen whether the restrictions which have been put on the lots in that region will survive the on-eet of apartment hous? Ipuilders.''