USA > Missouri > Jackson County > Kansas City > Kansas City, Missouri : its history and its people 1808-1908 > Part 18
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the Chicago, Milwaukee and St. Paul to Chicago and the great Northwest; the St. Joseph & Grand Island railroad to St. Joseph and Grand Island, Neb., The Quincy, Omaha & Kansas City, Kansas City to Quincy. The Kansas City, Mexico & Orient railroad, the short line to the Pacific ocean, was partly completed in 1908.
Some of the railroad officials who co-operated with Kansas City in the early days in making it a great railroad center were: Octave Chanute, George H. Nettleton, D. R. Garrison, Oliver Garrison, Thomas McKissock, T. F. Oakes, Sly T. Smith, C. W. Mead, L. W. Towne, C. F. Morse and Jay Gould. These were the early railroad builders of Kansas City and had the confidence of James T. Joy and the Adams family of Boston and other noted Eastern capi- talists, who had faith in their works and furnished the money to carry out their plans.
CHAPTER XII.
REALTY IN KANSAS CITY.
The most prosperous cities, it is recognized, are those in which real estate transactions show greatest activity and in which values are on a solid basis. The early history of Kansas City real estate does not differ materially from that of other new western towns, and the only abnormal conditions that ever existed here were caused by the boom of 1886-87. At that time values were on a plane entirely out of relation to the business and population of the city, but all evil effects of that period gradually were wiped out in the slow period of liquidation extending to 1903. Outsiders who had lost money as a result of their ill-advised operations, were disposed for a time to distrust the real estate business in Kansas City. The home people, appreciating the evil effects of over-speculation, became very conservative, and as a result Kansas City real estate for several years was considered as worth what it would bring, just as it is in many old and settled communities. This sort of judgment was car- ried too far, and prices on inside business property and choice outside residence properties had a steady and slow growth. Up to about 1900, $2,000 a front foot was considered a high price for inside retail business property and $60 a foot an extravagant price for choice residence lots. This condition con- tinued in spite of the tremendous prosperity in Kansas City's trade territory, resulting from the bumper crops of the period from 1896 to 1908. The holders of business property did not improve it, and rents became abnormally high considering the character of the buildings. To men who traveled and learned
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things, it soon became evident that Kansas City values were ridiculously low as compared with those in other cities.
A demand sprung up for inside business property and one piece after another was sold at prices so far above what had been considered reasonable values that holders refused to sell, except at great advances. Purchases con- tinued by outside investors until the residents were awakened, and the demand for inside business property became so great as to amount to a small boom in the spring and summer of 1907. It was in the fall of 1907 that the financial disturbances of the East frightened the bankers of the country, and Kansas City suffered a bankers' panic. It was predicted that real estate values would suffer a heavy decline. These prophecies were not fulfilled because values then were only what they should have been to correspond with values in cities in less than one-half the size of Kansas City. No forced sales took place, and heavy sales were made in 1908 at prices that exceeded those of 1907. Kansas City, in 1908, was on a solid basis and the supply of money for loans on improved real estate was greater than the demand.
Many miles of streets had been paved with asphalt or converted into boulevards through the residence districts, and added to this, 25 million dol- lars had been paid out for the acquisition and improvement of the park sys- tem. These outlays naturally had a depressing effect on vacant lots, but after the bargains had been removed from the market, the residence property began to command prices more nearly representing the actual values.
Many fortunes have been made and a very few lost through operations in town lots and suburban tracts. It is difficult for a Kansas Cityan to talk or write about real estate without dragging in the hogs, the cattle, the bank clearings and the railroads, all of which are so numerous as to surge and swell, roll over and almost submerge everything else in ever increasing volume.
It may be demonstrated that there are more individual owners of real estate in Kansas City in proportion to population than in almost any other great city in the world. It also is true that there is a larger proportion of pro- fessional men, wage earners and those engaged in general business who actively operate in building and trading and general speculation in real estate than in almost any other city, excepting where a so-called "boom" is in progress. This condition accounts for the fact that more than twenty-five hundred persons are dependent for a living on the sale of real estate as agents or employees of agents. The basis for this universal interest is the underlying confidence that this town is actually "builded on a rock," metaphorically as well as geo- logically.
Kansas City real estate had its trials and ups and downs in the '70s and '80s from natural causes. As the surrounding country grew Kansas City in- creased in wealth. The disgust for inflated real estate values that caused the
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panic of 1886-87 and the depression that culminated in the panic of 1893, caused the residents to become indifferent to nominal high prices on real estate that could not be realized. The building activity had become less and less until in 1892 it reached the lowest point in the thirty years period between 1878 and 1908. Prices were correspondingly low. Then began the real growth of Kansas City.
Streets were paved, sewers built and a park system begun. How were the residents to pay for these extensive improvements? What to do was soon determined. It was determined to issue the ever ready special tax bills running four to twenty years, interest and penalties 7 per cent to 15 per cent, thus giving property owners the option to pay spot cash or take time on the bills at ruinous rates of interest.
This plan was criticised and prophecies of bankruptcy were made, and with much justification. These prophecies were not fulfilled, however. Con- demnations were commenced and the taxpayers actually were compelled to pay for the property taken, in cash before the city acquired it, or else pay heavy interest charges. If an owner permitted tax bills to be issued and af- terward decided to sell, these tax bills must be paid by him out of the proceeds of sale. Property owners paid out 25 million dollars in this way which should have remained as working capital, and on which future owners could have carried the debt at an interest tax of 31/2 to 4 per cent a year. It is a wonder that this terrific cash drain had an effect on real estate prices? This is the explanation of the fact that up to 1906, real estate values were lower than in any other city of 100,000 population.
The real estate business began in Kansas City in 1838, when by order of the circuit court of Jackson county a tract of land containing 256 acres, belonging to the estate of Gabriel Prudhomme, was sold to a syndicate for $4,220. A portion of this land was plotted and a few of the lots were sold in 1839. Legal complications prevented further sales until 1848, when a reor- ganized company acquiring the property and, after extending the plat of 1839, had a sale of lots at which $8,265 was received. John C. McCoy platted the remainder of the Prudhomme tract in June, 1847, and twenty-three lots were sold July 17, 1847.
The town of Kansas was fully organized in June, 1850, and in April, 1853, a city organization was effected and thoughtful men began to see its great possibilities. The subdivision of new areas of land was Hubbard's addi- tion, made November 29, 1855, at which time the number of inhabitants was about 500 and the valuation of property, $54,000. Additions then were made rapidly ; three in 1856; seventeen in 1857; nine in 1858; and nine in 1859. In 1857, 527 houses were built and the population increased to 3,224 with an assessment of $1,200,000. There was a great combination sale of lots to
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persons who would build, October 20, 1858. In 1859 the population had in- creased to 7,180, and the assessment to $3,311,730. The same causes that were then making Kansas City a trade center, operated to bring real estate into the market,-the line of boats to St. Joseph, to which point the Hannibal & St. Joseph railroad had just been completed, being an important factor.
The West Hannibal Land company, of which William McCoy was presi- dent and Solomon Houck was secretary and treasurer, bought land in the West bottoms between the state line and the bluffs, and platted it, but few sales were made until after the Civil war. Near the close of the war, Case & Balis platted Pacific place, and L. K. Thacher the Depot addition. The price of . lots at that time was $6 to $8 a front foot. Turner & Co.'s addition extended from St. Louis avenue to Fourteenth street, and from the Union depot to Pacific place. From its proximity to the Union depot, in 1868 it became the center of the wholesale implement trade, and the price of lots advanced to $300 a front foot, but under the inflated values of 1887 they brought such fabulous prices as $1,000, while immediately opposite the Union depot the price was as high as $1,500. Some lots in the old town sold at about the same prices. Ashburn's addition lies between Ninth and Twelfth streets and Broadway and Baltimore avenues, and the lots there sold in 1865 at $12 to $28 a front foot, and advanced to from $600 to $1,600. The McGee addition lies between Main and Holmes streets and Twelfth and Twentieth streets; it brought $8 a front foot and advanced to $250 in 1887.
Appraisers appointed by the Jackson county court, in 1895-96, fixed the value of $195,000 upon sixty-seven feet of ground at the southeast corner of Twelfth and Main streets, belonging to the Mason estate. In 1869, a tract of six acres between Ninth and Twelfth streets, east of Tracy avenue was bought for $450 an acre, out of which lots were sold at $300 each in 1887. Dundee place consisted of ninety-eight acres lying between Twelfth and Eighteenth streets and Virginia and Campbell streets, and was bought by a Scotch com- pany in 1881 for $415,000, or $4,235 per acre. It was platted and the lots sold at $25 to $40 a front foot, or at the rate of $6,250 to $10,000 per acre. East Dundee place, comprising an adjoining ten acres, in 1886, sold by the front foot at the rate of $16,500 an acre. In 1882 land between Ninth and Twelfth streets, and Prospect avenue and Olive street, sold for $1,400 an acre. Lots sold at first for $25 a front foot, advancing to $150 in 1887. Eighty acres east of Broadway and north of Twenty-first street, which sold in 1878 at $450 an acre, was bought at $10,325 an acre by a syndicate in 1886. Lots in the business centers sold in 1887 at $1,200 to $2,500 a front foot, and in the West bottoms at $600 to $750; some lots in Turner & Co.'s addition sold for $1,000 a front foot.
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A wave of extravagant speculation passed around the world in 1886-87. It appeared that almost every sort of commodity dealt in by man became subject to wide fluctuation and prices became a matter of indifference to those who wished to buy. Kansas City real estate received the full force of this flood of speculation and lots were bought and sold with the same facility as po- tatoes and apples. The supply of town lots not being sufficient, tracts in the out-lying country were platted and "choice" corners that were sold at fancy prices then, still are abandoned to undergrowth, or still are used for pastures or truck gardens. The "boom" became an era in the history of Kansas City. Fortunes were made and lost, and some of the most substantial men built firm foundations in 1886-87, while others became financial wrecks. Deeds were given in a minority of cases when sales were made, contracts being passed from hand to hand by assignment, frequently several times in one day.
The stories of the transactions of those exciting days are interesting now to disinterested persons. One of the most notable of the deals was the sale of lots in the Goodrich addition, between Broadway and Baltimore avenue and Seventeenth and Twenty-first streets. A syndicate was formed and purchased the tract for $800,000. When the opening day of sale arrived, buyers lined up in front of the agent's office and had tickets issued in order that everyone might buy in his proper turn. The line was a long one before the doors were opened. All lots appeared alike to the buyer; he simply wanted a lot or lots. Within one year the entire tract was closed out for $1,800,000, and the million dollars was divided among the members of the syndicate.
Prices in the Goodrich addition underwent a slow decline until one tract of about two hundred feet which formerly was rated at $200 a front foot was sold in 1903 for $35 a front foot. In 1908, the same tract was sold by the purchaser at $300 a foot, a clear profit, less taxes and interest, of $265 a foot on the investment. Land was purchased on South Broadway in 1886 for $200 a front foot and upward, because it appeared that the railroad companies de- sired to construct a new Union Passenger station at Twenty-third street and Broadway. Twenty-three years later, the railroads announced that they would build a Union station at Twenty-third and Main streets. In the interim values swung down to $25 and back again. This shows how steady a locality can become with proper support and also gives an uncomfortable hint as to the significance of "Number 23."
Numerous investment and loan corporations, capitalized at from $200,000 to $2,500,000, operating with Eastern and European funds, contributed largely to the conditions that brought on the boom. These were money lend- ing enterprises, and most of them extended their transactions over a large scope of tributary country. The local real estate agencies of that same period contributed in a large degree to the substantial development of the city, and
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with few exceptions their operations were conducted prudently and with the fullest measure of financial integrity. Several hundred agents were engaged in buying and selling realty and the aggregate of the transactions was enor- mous, increasing from $2,021,600 in 1872 and $4,634,401 in 1879 to $26,- 500,000 in 1886. The latter figures are those of recorded transactions in that phenomenal year. Large aggregate values have been quoted but are only estimates based on deals made on the street, in which there was no real trans- fer of property. The growth in commercial lines and the vast concentration of eastern capital through the trust and investment companies, with the possi- bility of Kansas City becoming a successful rival of Chicago and St. Louis in various industries, unduly stimulated the real estate market and inflated prices.
Dealing in city lots became a craze, and even men dependent upon small salaries, as clerks and mechanics, bought on monthly payments. The time came when dealers had exhausted their purchasing powers and buyers ceased to bid for property at any price. In the reaction, fictitious values were oblit- erated and much of the highly priced property relapsed to sellers under mort- gage proceedings.
The first organization of the real estate dealers of Kansas City was ef- fected in 1886 in the boom period. The first annual report of the organization, which was known as the Kansas City Real Estate and Stock exchange, shows that the object of the dealers who became the incorporators, was to regulate the business which had become degraded because of improper practices of irre- sponsible persons. Many took advantage of the excitement of the day, when speculation was wild, and dealt in real estate without financial or moral back- ing. Owners of property became distrustful and dissatisfied on account of treatment received from the "curbstones" and frequently law suits grew out of their improper and unwarranted actions.
It was found necessary by the regular dealers to remove this stigma and to place the real estate business on an equally high plane, which it deserved, with all other legitimate lines of business. At that time there was more than three hundred persons and firms advertising themselves as real estate agents, each one acting on his own plans and governed only by his own ideas of justice and morals. The final plans of organization were completed on the date of the great cyclone of May 11, 1886, and the members were actually assem- bling at the old Natatorium on Eighth street between Central and May streets, in the center of the path of the cyclone when the storm burst. The baptism of wind did not check the activity of the real estate men.
Membership in the Real Estate exchange in 1908 was limited to those dealers who were regularly licensed and who had a recognized standing in the community for integrity and reliability. In the beginning the member-
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ship was limited by the bylaws to one hundred, but the rapid growth of the city made this a hardship on deserving applicants and the limit was dropped. The initiation fees and the annual dues were much larger in the early days of the Exchange than in later years.
The benefits derived from organization were so great that it was deter- mined to purchase a lot and erect a building for the use of the association. This enterprise, in later years, became a burden on the organization and finally was abandoned. In dull times following the collapse of values, it be- came difficult to sustain a live interest in the Exchange, which was an incor- porated company with a capital stock of $10,000. The building finally passed out of the hands of the organization because of the depreciation in values and decrease in business of the members.
In the first year of the Exchange, certain other agents who were excluded from membership, formed an organiaztion with a similar title. The Secretary of State refused to grant a charter on representations made by the original body and the case was taken to the Suppreme court of Missouri, which upheld the Secretary of State in his refusal to grant a charter. The preliminary or- ganization was concluded on May 17, 1886, and on July 22, 1886, the formal opening took place. The officers for the first year were: Theodore S. Case, president : E. M. Wright, vice president; A. A. Whipple, treasurer; W. V. Lippincott. Jr., secretary : and S. E. Swanson, assistant secretary. Some of the objects of the Exchange, announced at that time, were as follows: To secure uniform rates of brokerage on real estate transactions; to maintain principles of honesty and fair dealing in the operations of licensed real estate brokers; to establish and maintain the calling of the real estate agent in a position of dignity and responsibility; to devise, encourage and foster schemes of public improvement and benefit to the city at large.
These men who were charter members of the Exchange were members in 1908: John Bayha, T. T. Crittenden, Jr., John F. Downing, T. J. Green, J. Scott Harrison, George Hoffman, P. H. Madden, George Law, W. H. Royer, Simpson & Groves, R. L. Winter, C. W. Whitehead, B. T. Whipple, A. A. Whipple, W. S. Woods.
The proper conduct of the real estate business is a potent factor in deter- mining the future of the city. The investment of outside capital in purchases of real property, in loans on such security, and in the erection of buildings of all sorts, is largely governed by the treatment of outside investors by the real estate agent. In 1901, when it became evident that the real estate association could work to better advantage under new organization, application was made to the Secretary of State for a charter and the new association was formed. The purposes of the association, as stated before, were to promote knowledge of municipapl affairs and of taxation, with special reference to real estate;
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to collect information and data; to increase acquaintanceship among the mem- bers of the association and to maintain suitable rooms or quarters for meetings of the members and for study, discussion and social intercourse; to aid at all times in the development and improvement of the city.
As an indication of the conservatism of leading members of this body, a resolution was introduced at a directors' meeting in February, 1901, pro- viding that the Board of Park commissioners be petitioned not to make any further expenditures in the way of acquisition of new parks and boulevards in the west, north and south districts. It does not appear that the general body approved the resolution, however. In January, 1902, a motion was passed excluding newspaper reporters from the monthly dinners. There was a general protest against this policy, and all times since invitations have regularly been issued to newspaper men, who have made public all important actions of the Exchange, and in this way increased its influence. A determined effort was made by the Exchange members in 1903 to secure the adoption by the Legis- lature of a law, establishing the Torrens system of real estate transfers. Attor- neys were employed, committees visited Jefferson City and much time and money was spent in the effort to place in the Statutes of Missouri this necessary enactment. The opposition of abstracters of real estate titles, and of many attorneys throughout the state, defeated the bill. A committee was appointed in 1903 to oppose the arbitrary actions of the State Factory inspector who at- tempted to arrest and impose fines upon property owners by putting his own construction on the law, regulating fire escapes. A committee of the Exchange working with the city officials had a new fire escape bill passed which was fairly satisfactory as a compromise, but not as it should be. In the same year, the Exchange took up the question of open specifications and competition on city contracts as a check on the system which had prevailed, favoring certain bidders. A special meeting was called in March, 1903, to discuss the question of issuing bonds to improve the water works, parks, and for building a new city hospital. George M. Shelley and D. J. Haff addressed the Exchange on these subjects. There was a full attendance and resolutions were adopted favor- ing not less than one million dollars for parks, one million dollars for water works and $400,000 for the hospital. The agitation for a bond issue induced Mayor J. A. Reed to form a Bond commission to consider fully the necessities in the matter and to act in an advisory capacity with the City council The real estate dealers were fully represented on this commission and materially influenced its final action, favoring improvements in the water works and park system and a new city hospital.
A few days before the crest of the 1903 flood reached Kansas City, the Exchange went on record at a called meeting with the following resolution : Resolved that the Honorable Mayor and Common Council of the city be urged
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to take such steps as may be necessary and with the utmost expedition to hold an election for the amendment of the charter at the earliest possible day in the future; that in view of the great disaster to the Water Works System and the necessity for placing the plant beyond any possibility of similar injuries in the future, a large increase in the amount of bonds is necessary but the immediate action required, is the forwarding of the proposed election for amendment of the charter, empowering the city to issue the necessary bonds.
In October, 1903, at the largest meeting ever held by the Exchange up to time, strong resolutions again were adopted, demanding flood protec- tion. At this meeting the guests and speakers were: Colonel C. F. Morse, S. Waters Fox, United States Engineer; Congressman W. S. Cowherd; O. V. Dodge, President of Manufacturers' and Merchants' association; E. J. Roe, vice-president of the Commercial club; J. S. Silvey, secretary of the Mercan- tile club of Kansas City, Kas .; George M. Shelley; H. S. Boice, president of Live Stock exchange; W. C. Goffe, vice-president of the Board of Trade.
The Exchange in October, 1903, took up the work of raising $15,000 to make a practical representation of Kansas City at the World's Fair in St. Louis. The money was expended on the Casino, one of the most attractive small buildings at the fair. The regulation of the smoke nuisance; the offer- ing of rewards for the apprehension of plumbing thieves; for the conviction of persons destroying the "For Sale" signs; the proper regulation of fire escapes ; the proper construction and care of apartment houses and tenement houses; and other reforms were urged by the real estate Exchange. The Exchange in 1904 urged appropriations from Congress for the improvement of the Missouri river, and in 1905, made subscriptions for the capital stock of a boat line.
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