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Real estate record and builders' guide: v. 84, no. 2177: December 4, 1909

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December 4, 1909.' RECORD AND GUIDE 989 ^ ESTABUSHED-^ MJWCH BV^^ 1858. Dk^ io Rpjj.EsTAn.BuiLDifJG Af^nxcrnJR.E.Ho'USEiioiDpDsaiunt BlfSIt/ESS AtfoTHMES Of GHjfeRAl IrfreRFSlr, PRICE PER YEAR IN ADVANCE EIGHT DOLLARS Communications should be addressed to C. 'W. S'WEET Published Every Saturday By THE RECORD AND GUIDE CO. President, CLINTON W- SWEET Treasurer, P. W- DODGE Vlce-Pres. St Genl. Mgr., H- W. DESMOND Secretary, F- T- MILLER Jioa. 11 to 15 East 34tli Street, New York City (Telephone, Madison Square, 4430 to 4433.) '•Entered at the Post Office at New York, N. Y.. as second-class matter." Copyrighted, 1909, by Tbe Record Sc Guide Co. Vol. LXXXIV. DECEMBER i, 1909. No. 2177 THE income account of the Interborough Company for the year ending June SOth last shows clearjy that it should divide the proflts of the proposed Seventh avenue and IMadison avenue extensions with the city. The net income of the Interborough Company for the year amounted to about 13 per cent, on the original stock of that company- Thus after four years and a half of operation it is earning a per¬ centage on its original stock which would have made that stock worth somewhere between 250 and 300—provided no merger had taken piace. Moreover, the chance of future profit is still very large. The Subway is carrying now a much heavier trafflc than it did last year, and will probably earn over 15 per cent, during the current period. The lengthen¬ ing of the platforms will increase its carrying capacity by 30 per cent; and the increase of residential population on "Washington Heights and of business population at Longacre Square and along Fourth aveuue will provide eventually a much greater density of traffic dependent exclusively on the Subway. In another flve years its net earnings will probably amount to over 20 per cent, on its original stock. When the Broadway-Lexington avenue line is operated there will be a reduction, but not for long, nor will it be serious. The proposed extensions along Madison and Seventh avenues will not be so quickly profitable as the existing Subway, and they will be burdened with a heavier load of interest charges; but at the end of ten years they will be earning far more than six per cent- on the value of the stock necessary to equip them. The districts through which they run are destined to great future business development, and eventually the traflic which they develop will be as dense as it is on the existing Subway. It Is only fair that any profits over six per cent- on the stock issued to pay for the equipment of the proposed extensions should be shared between the com¬ pany and the city. inhabitants of the East Side, it seems as if this point might be waived—-providing the company met the commission's objections in the two other respects. On the other hand, when Mr. Willcox" declares that the Interborough Company cannot be allowed to build any extensions in Manhattan and the Bronx unless it also builds more subways in Brooklyn, the Record and Guide feels bound to declare the demand unreasonable- The failure of the Interborough Company to propose certain needed Brooklyn extensions would be cen¬ surable, provided the monopoly of that company in respect to rapid transit was complete, or in case, as far as it is com¬ plete, it were to be preserved. But the commission has laid out a new route in Manhattan competitive with the existing Subway rather than supplementary thereto, and this route is apparently intended for the purpose of affording another company an entrance into Manhattan. Moreover, this Man¬ hattan route includes a Brooklyn extension and is officially called the "Tri-Borough System." Finally, the Brooklyn Rapid Transit Company already operates elevated roads in Brook¬ lyn and wants to supply additional means of rapid transit. Why, when the Interborough Company is obliged to meet all this competition, should It be obliged to assume the respon¬ sibilities of a monopoly and be forced to build subways wherever the commission thinks they are needed? Above all, why should the poor tax-payers and travelers of Manhat¬ tan, who have been denied additional rapid transit for yeari because the Fourth Avenue Subway in Brooklyn blocked the road—why should they continue to suiter from intolerable congestion, because Brooklyn may be suffering from a milder version of the same trouble? Last year the commission said to Manhattan, "You cannot have any subways, no matter how profltable they may be, until an unprofltable subway haa been built in Brooklyn." Now when the Brooklyn suhway is under construction, the commission says: "No matter hoff much certain parts of Manhattan and the Bronx remain In need of subways, we object to their construction until still more subways are laid out and contracted for in Brooklyn." Why this persistent discrimination against Manhattan? THE LATEST phase of the continuous disputing per¬ formance between the Public .Service Commission and the Interborough Company leaves the contending parties so far apart that the public, which is Interested personally in new subways, has reason to be discouraged. If the commis¬ sion was absolutely opposed to the terms under which the Interborough Company proposed to build its extensions, why did they not announce this decision long ago and make some effort in the meantime to reach an understanding? As it Is, flii months more have been lost and nothing accomplished. In respect to the merits of the present dispute, the Record and Guide Is Inclined to sympathize with the commission on some counts and with the Interborough Company on others. The former is right in objecting to saddling on the city the cost of all the real estate, easement, damage suits and increased taxes. It is right also in insisting that the Subway extensions shall not be built under the terms of contract, but shall afford the city a share of any future profits above interest and sinking fund requirements. The proposed subways are too important to be treated merely as extensions; and while it is reasonable that they should be leased for a deflnite period, it is unreasonable to demand from the city all the probable proflts of such a lease. The rate of remuneration which the company propose to pay for third-track privileges on the East Side elevated roads is also too small; but inasmuch as these tracks would only accommodate long-distance passengers and would be an im¬ mense and easily accessible convenience to the swarming CERTAIN CONSERVATIVE financial writers have re¬ cently been warning the business community that the business of the country is again showing symptoms of a dangerous excess of prosperity; and the warning should most assuredly be seriously considered. With the defective currency and credit system of the United States, every period of good times, when capital is in demand for all sorts of business purposes, tends soon to stretch the financial re¬ sources of the country to the point of absolute inelasticity; and something of the kind is happening now- Money is, indeed, easier than it was, but the comparative ease has the appearance of being only temporary. In case the busl-. ness expansion continues, relief will have to be found in some direction; and it is not apparent iust where such relief can be obtained- The railroads will need to raise or borrow a great deal of money during the coming year. They cannot obtain that money on advantageous terms, in case there Ia a fall in the price of stocks- On the other hand, stocks could not be further advanced without the employment of an amount of capital for the purpose that would make credit conditions still more dangerous. Possibly the situation may be straightened out, in case stocks are kept at about their present level and further speculation discouraged; but even sfich measures may not be effective, because It looks as It the general economic situation was becoming unwholesomely speculative. The price of commodities has almost reached the level prevailing in March, 1907- In some lines, such as food, prices are higher than ever before in the history of the country. People are spending money as extravagantly as they were three years ago. Imports are enormous. Ex¬ ports are less than they were last year. The country is ex¬ porting all the gold it produces. Real estate speculation la rampant in the West, The prices of agricultural land haa been very much increased, owing to the prosperity of the farmers of that region; and they have been borrowing rno^iey on this increased value in order to. buy more land. In'the meantime wage-earners have not, except in exceptional cases,' received any increase in wages, and it-looks as if during the coming year the higher cost of living, coupled with the com¬ parative Immobility of wages, would result in serious indus¬ trial disturbances- In spite of all these dangerous symp¬ toms, there is no immediate threat of a crisis, but storm signals are-certainly fiying. It behooves conservative busi¬ ness men to take in sail, and prepare against a check to the business expansion of the country and a contraction •{ credit and confidence.