Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 75, no. 1943: June 10, 1905

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June ID, 1905 RECORD AND GUIDE 1265 ^ ^ ^ESTABIJSHED^HWPH21«>1868. DP&iatIO RfJ^LEsTWE.BuiLDIjJG A,RCKlTE(rUIKE.H0HSEli01DDEQaHJTlMl,) Bi/sittess Atfo Themes of Giitoi^t JHter.es] .j PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Publisfied every Satardas Communications should no addressed to C. W. SWEET, 14-16 Vesey Street. New York Tolephono. Cortlandt 3157 "Entered at the J e at Ji'ew York, .W, J"., as second-class matler." Copyrieht by the Eeal Eatate Record and Builders' Gclde Compiiny. ■Vol. LXXV. JUNE :0, 190.3. No, 194.X INDEX TO DEPARTMENTS. CeraenL............. Clay ProducLs ........ Contractors and Builders Fireprooflng .......... Granile .............. Iron and Steel......... Machinery , . Metal Work., Real Estate . ■which has of late somewhat subsided. The causes which aroused that speculation have lost none of their force. There continues to be an undersupply of new residential accommo¬ dation of all kinds; and the current construction of new flats and tenements, large as it is, is not large enough to do more than supply the current increase in the population of New York, (t is pi-ohahle that about $80,000,000 will be invested in new tenements in Manhattan and the Bronx in 1905, and in 190G there are good reasons to anticipate that the amotm't will be even larger. It is entirely possible, also, that the latter part of this year and 'the whole of next year will witness some re¬ vival of the speculative building of private residences. The f.:xisting demand for dwellings is such as to encourage these en¬ terprises, and the few builders who have had brick private houses on Washington Heights and in fne Bronx for sale have come out very well and ave beginning new operations. We do no't believe, however, that at most more than a few million dollars will find its way into this class of construction. The general movement continues to be overwhelmingly in favor of tenements and flats; and the number of plans filed for new construction of this kind on Washington Heights is becoming larger every week, and will aggregate between $20,000,000 and $25,000,000 in the course of the year. Wood Products SPECULATION in stocks still refuses to show any particu¬ lar animation; and there is no good reason why it should. Investors naturally do not care to buy even good railroad stocks on a four per cent basis; and until there is an assurance of larger earnings or increased dividends they naturally hold aloof. Moreover, it is noticeable that the stock market does not receive any artificial stimulus, as it did during 1901 and 1902, In those years one large consolidation followed another; and the big railroad companies, when they were not absorbing com¬ peting and connecting lines, were purchasing large amounts of stock in them, so as to secure "community of interest," It was a period of organiaation and of the introduction of new and fruitful ideas into the management aod operation of rail¬ road and industrial companies. Nothing corresponding to this has been taking place recently. The Sherman anti-trust law, the popular dislike of large combinations, and the doubtful suc¬ cess of some of the largest consolidations, have all served to prevent a renewed application of the organization idea, while so far as "community of interest" is concerned, that principle has fallen into even greater disfavor. It depended essentially upon the notion that the large divisions of the railway map of the United States were fixed and that it was possible for the companies and the groups of capitalists who controlled each of these divisions, to cooperate for the purpose of securing a fair and permanent distribution of trathc. The Northern Pacific fight was the flrst indication that any community of interest among the large railroad systems was still far from complete; and since then the aggressive policy of the different Gould rail¬ roads and several similar causes of difference have made any gen¬ eral commimity of interest among the various railroad systems seem still more remote. Indeed oue of the dangerous contingencies of the present situation is the possibility that a period of active warfare among the large railway companies and financial groups may succeed the existing condition of armed peace- Just how serious the danger is, only an insider can judge; but at any rate, so long as the existing uncertainty lasts the stock , market must depend for any stimulation of activity or increase in prices upon a prospective increase in actual values. The investing public does not want stocks wbich pay four per cent, or less, and at present there is no chance of artificially awakening his interest. THERE are no signs of any noticeable abatement in the volume of real estate transactions. The number of transfers recorded during the flrst week in Jime in the New York County oflices were 944, against GTO for the corresponding week last year, an increase of about 40 per cent. From January 1st to June 1st, a period of five months, the total number 01 transfers were almost 7,000 gi-eater than they were during the corresponding flve months of 1904, the percentage of increasa being about 65, while the flgures for IVIay alone, indicate about the same rate of increase. Business will not maintain its pres¬ ent volume very much longer; but there is no reason to sup¬ pose that the total number of transactions will not continue to be about fifty per cent larger than they were during the same months of 1904, No reason can be found for any diminution of activity. On the contrary it looks very much as if iu the fall there would be a revival pf the speculation in vacant land, 'T^HE long memorandum which the Governor attached to ■■■ bis signature of the Mortgage Tax bill shows how much self-persuasion he needed to confirm his decision to approve the measure; and the arguments he uses are a curious illustration of the way in which a man can draw a wrong conclusion from sound premises. Of course, the taxation of mortgages under the general property tax has been a crying injustice, which would have been done away with long since in any state which was really trying to make its system of taxation eqnitable aud efficient. But the taxation of mortgages at the rate of one- half of one per cent, instead of the rate of two per cent, or less, merely universalizes an act of injustice which waa formerly occasional and temporary. It was undoubtedly out¬ rageous to force, trustees to surrender to the state anywhere from one-third to one-half the income derived from a mort¬ gage; but this meant, of course, that the money would be called in as soon as the mortgage expired. Now, however, the state takes less of the income, but leaves no method of escape. The tax, instead of being paid by the lender, will necessarily be paid by the borrower, and will become a tax upon business. Every argument which the Governor can urge in its favor ap¬ plies with much greater force either to the entire exemption of mortgages from taxation or at least to a mortgage recording tax. However, there is no use crying over spilt milk. The mortgage tax is on the statute books, and the question is what its effect will be. Governor Higgins evidently believes that it will encourage the investment of money in mortgages to such an extent that it will lower the prevailing rates of interest on mortgages. In some few instances such may be the case; but we do not believe that on the whole the borrower -will have any escape considering the necessary disadvantages of mort¬ gages as an investment, we do not believe that the money loaned hitherto at flve per cent v.'ill hereafter be loaned at four and one-half per cent, or that the money loaned at four and one- half per cent will hereafter be loaned at four per cent. The money so loaned is worth all that it brings at present. As for the money loaned at six per cent., which at present constitutes almost one-half of the money loaned in this city, the tax on these mortgages will inevitably be paid by the borrower. Even at present he almost always has to pay a bonus in order to get his money; and hereafter the bonus will be still biggsr. Doubtless the proflts derived from building operations will stand this additional drain, but that does not affect either the injustice or the inexpediency of the tax. THE mortgage tax is on the statute books, but that is no reason why it should remain there. It will undoubtedly be extremely unpopular; and its unpopularity will provide an excellent opportunity to arouse a more general interest in proper and just methods of taxation. For this reason it is en¬ couraging to note that the Allied Real Estate Interests pro¬ pose to maintain a permanent organization, and work for the repeal of the tax. It is only by some such means that New York can hope to receive fair treatment in matters of taxation from Albany; and the real estate and building interest will in a month be suffering from mortgage taxation, because it has ne¬ glected in the past to work assiduously for just and efficient methods and principles of taxation. It has had uo organization sufiicient for the purpose, and no appreciation of the danger it has been running iu allowing the state policy in matters of taxation to be dictated by the needs pf Republican party politics