REPRODUCTIVE INVESTMENTS—EMPIRE RAILWAYS. "THE immense floods of capital which are
dammed up in London create apprehension, notwithstanding the apparently safe temper of the money-possessing public. Many fear, and not quite without reason, that the temptation of large returns, where the abundance itself has beaten down the interest until it has touched even one per cent, will be too great for the self-denying mood to last, and that, at no distant date, the dam will burst,—to the immense profit of many, to the utter ruin of still larger numbers. The ex- citement into which the Stock Exchange of Europe can be thrown by theuncertainty of politics, undoubtedly contributes to render chance much greater : and, therefore, the best safeguard against the renewal of impulses to ruinous and absurd invest- ments is, to find outlets leading to safe and profitable investment. We pointed out that recourse last week, and it is scarcely possible that our remarks can have been misunderstood. The touchstone, as we said, is involved in the answer to the two-fold question—is the investment calculated to be reproductive ; and is the state of the country such as to protect the property which is created in it ? Try any of the great railway plans at present before the world by these two tests, and the project may be judged at once.
For example, Lord Bury has just returned from something like what we may call a business survey of the ground proposed for a junction of the Railway system in British North America. We have not yet the substance of his report ; but from his hereditary integrity, from the rising state of the British colonies, ana from the obvious characteristics of the scheme, we may be tolerably sure that money expended in uniting, rounding off, and extend- ing the railway communications of British North America, -will be as profitable to the owner of that property as it will to the colo- nies, which are thus drawn more closely together. And as to the safety of British North America there is no question.
Turn from the west to the east,' and survey the magnificent re- gion which Sir Macdonald Stephenson discusses in a sort of practi- cal prophetic vein. At present we only have the Smyrna and Aidin Railway, the first section of which, forty miles in length, is in course of of rapid construction, and will be opened in Sep- tember next. Now, Smyrna is the greatest commercial port of the Ottoman empire ; its imports have been rated at 2,447,0001., its exports at 2,397,0001.; and exchange has developed to that
amount, notwithstanding the fact that in the interior, merohandize travels by the slow carriage of the camel's back. Prophetically, the Smyrna and Aidin Railway may be associated with the sys- tem of railways extending from Northern Europe to British India ; and the reproductive tendency of the works is undoubted. The second, question perhaps is less satisfactorily answered ; we mean, the defence which the police of the East can give to pro- perty so open to trespass and damage. Turning to the west again, we find another project courting the attention of the investor' in a very curious and interesting form. It is the Atlantic and Great Western Railway. "The survey of the Atlantic and Great Western line," says the City editor of the Times, "which is intended to complete a new and unbroken broad gauge route from New York to St. Louis by the con- struction of a link of 378 miles between the New York and Erie and the western roads, has been completed by Mr. Kennard of London, and very favourably reported upon. There are two other routes to the west, both of which pay largely, although they have disadvantages of elevation and of interruption of gauge, from which the new line will be free. The opposition to its con- struction has therefore been severe, but the statements brought against it do not appear to have been borne out." It was De Witt Clinton, who projected the New York and Erie Canal, that afterwards seized upon this line as the high road of the age from New York to St. Louis. It is indeed only surprising that local apathy, with political or commercial jealousies, should so long have kept the great railway arch without its keystone. Now, undoubtedly, there have been American railway investments not of the most reproductive character, and the cause is stated with perfect distinctness in the report of Mr. Kennard on this very pro- ject of the Atlantic and Great Western Railways— "In placing this report in the hands of European capitalists at a time when American Railroad securities are not viewed with particular favour, I desire to call attention to the amount of money invested and the return de- rived from the same collectively. I therefore place in the appendix a list of one hundred and seventy-one railroads taken indiscriminately1 good, bad, and indifferent, and including twenty-three just completed or in progress, on which thirty-three millions have been expended, and as yet unpro- ductive, representing 17,649 miles in length and a cost of nearly 800 millions
i of dollars, from which t will be seen that the net profits are equal tcs6 per cent on the expenditure or 10 per cent on the bonded debt. I would further call attention to the fact, that by far the largest portion of the bonded debt
England has been advanced, often upon the simple representations of paid agents sent over to negotiate, in the shape of the most wretched de- scription of rails, at prices averaging at least 30 per cent above the market value. I submit, therefore that it is unreasonable to expect a steady return on all capital thus invested. Over confidence and reckless trading must sometimes be attended with total loss.
"In concluding this report, there are three points to which I would draw especial attention. "1st. That the average return on the whole bonded debt of railways in
the United States is about 10 per cent, and that the ition of the Atlantic and Great Western clearly entitles it to rank a .e an average line.
"2d. That the present traffic per mile on the two roads of which it will form the centre link, is above the average and that the only road—the Lake Shore—with which it can fairly be compared, has paid dividends exceeding 30 per cent per annum since its opening. "3d. That the existing through traffic will far more than cover the interest on the Bonded Debt, without estimating local business, which will, in ad- dition, be very large."
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