FOUR PER CENT.
AMID all the doubts as to the revival of trade, doubts which would be unreasonable but that special branches of commerce are still exceedingly depressed, one fact remains certain, and that is a rapid accumulation of capital in this country. Nothing else will account for the steady rise in price of all solid securities, and especially of all those which are acceptable to trustees. Consols, of which the supply is now altogether too small for investors' wants, are creeping up rapidly to 103, and would go higher, but for the latent fear that if they did, the Treasury would seize the occasion to effect a conversion injurious to investors' interests. The debentures of the great railways have risen until they hardly yield more than Consols ; the great cities are all borrowing at 3-1- per cent. ; and Colonial Bonds can hardly be purchased to yield a clear 4. Indeed, the larger Colonies, if they would only make their loans irre- deemable for thirty years, could, we believe, borrow at 3i or less, investors now seeking only a secure 3 per cent, clear of the heavy Income-tax. There is, in fact, no solid reason whatever why Victoria should pay more than Liverpool or Birmingham. Just look at this short list of first-class securities :—
1028 India Three-and-a.lialf per Cents. 100-I Metropolitan Board of Works Three.and-a-Half per 109 Canadian Four per Cents. ... 107} Cape Four per Cents. 102} New South Wales Four per Cents. 109 South Australia Four per Cents. 104 Victoria Four per Cents. 106 Western Australia Four per Cents. 1041 Caledonian Debenture Four per Cents. ... 119 Great Northern Debenture Four per Cents. 120 Great Western Four per Cents. ... 121 Midland Debenture Four per Cents. ... 1208 South-Eastern Five per Cents. 143} Liverpool Corporation Three-and-a-Half per Cents. 1038
Birmingham Three.and-a-Half per Cents. 1038 There are some inexplicable oddities in that list ; but, taken altogether, it means what we have said,—that men are learning to be content with a certain 3 per cent. clear of Income-tax. There is but one solid stock in the market which does not- share in the general rise, and for that there is an intelligible reason. Four per Cent. Edema Rupee Paper was on Friday selling at 68k, which is absurdly below its comparative value. This stock is secured exactly like the Three-and-a-Half per Cent. India Bonds, which are selling above par, and even at the present price of silver, it yields 4,1-, or I per cent. more than its rival. Moreover, even if silver, now quoted at 45d., sunk to, 36d. an ounce, an extreme and even preposterous suggestion, the, stock would still yield £3 8s. per cent., or more than Metropolitan/ Board of Works Bonds at their present price. So deeply rooted, however, is the dislike to receive fluctuating dividends, and so incurable the distrust in the value of silver, that the steady rash for "safe" investments is in this market nearly unfelt. Will this rush last We fear we can give " timid investors —that is, investors who are putting away money they intend to keep—very little hope. Short of an immense creation of Console caused by a great war. or a great operation in Irish land-purchase, we see nothing whatever to depreciate the value of solid securities. This generation will hardly lose its new-born dread of mortgages either on land or houses, and certainly will not purchase land merely for investment. The price of corn may rise, bat it is needful also to await the end of the present mania for limiting landlords' rights and abolishing landlords' claims to the benefit of the laws. A Continental war, if it comes, will only increase the desire for home and Colonial securities ; while the prosperity of trade, if it arrives, will only swell by millions the sum which sooner or later must be invested in them. The upward tendency has lasted through the war scare, and appears to be wholly unaffected by the high interest obtainable on the bonds of unsafe countries like Spain, Greece, China, Roumania, and the South American Republics. These latter are, in fact, purchased by entirely different men. The disproportion between the amount of saved money requiring investment, and the amount of safe stock transferable at short notice, increases every month ; and so, unless we are greatly mistaken, does the timidity of the kind of investor who never speculates. He will look at nothing now, as the example of the Rupee loans shows, which. is not as regular and as safe as Consols ; and as his timidity arises from increased, though still partial knowledge, it in never likely to be removed. Even a burst of wild speculation, which is always possible, and has been for some time overdue, will not catch this class ; and short of some great national calamity, we can hardly conceive of anything that will. Its members will not leave off toiling or hoarding, their toil or their penuriousness must accumulate money, and that money will be put away safely, even if it only produces 2 per cent. We thought, a few years since, that the volume of capital would flow towards Colonial enterprise, which is, of course, limitless ; but the Land Banks and so on have not secured full confidence, and the Indian and Australian Banks feed their local enterprises with money borrowed here at 4 per cent. We should say the hope for the timid investor never stood more low, and believe that the prospects of those who save, of escaping work and living on dividends, are worse than. at any time within this century. They could get 5 per cent. in 1860 where they can only get 4 now, and will very soon only get 31; and the difference, about which nobody writes, means an addition of at least one-fourth to the years spent in work. The world loses nothing, of course, or rather gains ; but the class which has hitherto been the most comfortable in the community finds its comfort decreasing with the rolling years, and will, if we are right, find it decrease still more.
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