23 JANUARY 1858, Page 14

THE NEXT MANIA.

THE recovery of the money market is, as we expected, followed by unmistakeable evidences of reviving speculation, and already men are making their calculations as to the probable character of ". the next mania." "It is now only a question of a few months as to the new kind of speculation that will be developed t

the influx of gold. The general tendency is plainly discernible and it would be futile to attempt to stop it." Futile, beediuse it would be vain, and because the abuses of speculation are no sufficient reason for checking the active employment of capital. The danger lies in the apparent incapacity for capitalists and dealers in money to discriminate between a sale, profitable, ii-nd useful employment of their means, and speculations which are On. their nature dangerous if not certain to end in loss. Now it

appears to us that the dangerous, for carrying out a discrimination of that kind are as obvious as they are simple and easy.

One reason for the difficulty of discrimination is very fairly pointed out by a high commercial authority. A large part of the speculative investment of this country lies in foreign countries, over which we have comparatively small control ; and even now a hope for the safety of English creditors is sought in some novel state of virtue among foreign authorities.

"Probably," says the Money writer in the Times, "the best chance of as limitation of the nuschief will he in the moderation of the best of the State* or Governments who may be solicited for guarantees. Such of them as may wish to maintain their financial reputation will hesitate to flood the market with engagements, each sucoessive issue of which can only depreciate all that have gone before. Withregard to India, it will be the fault of the Home Government if any improvidence is practised. The next danger will be from our Colonies enjoying independent Parliaments, who, without much thought of their future ability, will be likely to be led by the skill of bribed, orators into any extent of commitment. Bearing upon these cases, however, some experience can be cited which will possibly operate as a warning to the public. The other sources of demand will be from foreign nations. For further investments in the United States there may be no danger of an im- mediate mania. Among other countries, those who prize their credit, such as Brazil and Sweden, who are likely to be applicants, will confine them- selves to moderate amounts. Russia has spoiled her opportunities by a claim for a preposterous total, which should render her concessions a drug for many years to come. Turkey is a quarter that must be looked to with cau- tion; while with respect to France the operations of the speculators on bothsides are so blended that the prospect will simply depend upon whether a new inflation is to be promoted by the Imperial Court.'

But whatever experiences we may have had, it is assumed as perfectly certain that our funds will be scattered in any direction rather than such as concern our immediate interests. Now there must be a reason for that scattering; and it is, we conceive not difficult to discover. It lies in the divorce between the ownership of capital and the practical conduct of its application. There are men who deal in money and distribute it for investment, and there are men who employ money in the industry of trade; but those who own the money, and those who use it, are in many cases divided by wide intervals. The lender looks to his profit, and. relies for security upon some very mechanical kind.of " gua- rantee " : it is probably a government guarantee ; though the insolvent condition of Austria, the shameless bankruptcy of Spain, and the repudiation of some American States, might have taught him that government guarantees whether autocratic, constitutional, or republican, are not better than private gua- rantees. The best guarantee that any capitalist can have is a knowledge of the people who are to employ his money, and of the mode in which it is to be employed. If he cannot get directly at that ultimate knowledge, he can at least know that the man. to whom he intrusts his money is sharpsighted, thoroughly honest, and really prudent. To discriminate between those schemes which will return a pro- fit and those which are in their nature dangerous, we must learn the practical utility of the project, and the ability of the pro- jectors to execute it. If the Government of this country gives sufficient power to execute an Indian railway and undertakes to defend the railway against positive aggression then we may rest assured that the shareholders are most likely to enjoy a profit; because the work is required by commerce. It will lead to an increase of wealth in the country through which it passes and in the united empire ; and it will "pay" as an operation. So those who lend their money are likely to have the opportunity, as well as the "right," of sharing the proceeds. Money invested. in American railways, or schemes that are called by the name of railways, has in many cases not returned a profit, because those who borrowed the money cared less and, knew less about the con- struction and working of the lines than about the buying and selling of the " shares " or "securities." Investments will be attended. with risk in proportion as there are many stages be- tween the capitalist and the practical work to be done, and. in proportion as any one of those stages is removed from th control which he has a right to invoke. The Russian military railways, therefore, fail on both points : we have no tangible hold over the, administration, and we know that the lines are not calculated to be profitable in a commercial sense. If the experience of our decennial crises can. infuse a better wisdom into the capitalist, it will make him look less to the nominal rate of his profit than to the practical utility of the scheme in which his money is to employed. Better to have 4 per cent promised on a useful rail- way than 70 per cent on a Spanish loan. So much for the individual lender; but there is a consideration also for the commercial public at large, and for those who by ex- ample, precept, or legislation, are able to guide the multitude of All I really -useful investments, by increasing the wealth of the community, or of those communities with whom we are in commercial relations, enlarge the field of commercial action and make new openings for further profitable investments. The mone7 invested in an Indian railway which opens up the country will undoubtedly create a demand for subsequent investments upon the lands of India : ansi it is the same all the world over. The capitalist, therefore, is safe in proportion as he looks to the worth and value of the working plan upon which his money is to be

ventured, and upon the character of the persons, whether public or private, that have to administer his funds. If he is satisfied upon those two points, he may safely give his money, and enjoy both his meals and his night's rest.