business. There remain the uninitiated, who-by lack of time or the pressure of other engagements—have been constrained to invest in American securities, without forming any critical judgment of their own on any specific sphere of investment. To such the present notes may perhaps furnish suggestions tending to guide the judgment in the protection of existing, and the choice of future, investments. Roughly stated, the vital questions for a European investor in American securities are something like the following: Are the losses and disasters of the past properly referable to conditions inherent in American securities, as such, or have they resulted in great part from exceptional misfortune, or the contributory negligence of the investor; and, if so, to what extent? Was it or was it not, in the past, competent to investors to discern the signs of the times, with a nearer approach to correctness than they ever in fact achieved? Is it competent to them in the future, by the observance of a few simple indications, to avoid the graver class of -mistake? Obviously, life is not long enough for an exhaustive examination of every proposed investment. But, if serious error is to be avoided, are there any landmarks intelligible to the casual observer which may suffice -if not to indicate reasonably safe routes-to warn the traveller against dangerous pitfalls? To the mind of the seafarer the lighthouse is not as exhaustive as an ocean chart. But nevertheless it fulfils a useful purpose. It appeals to the eye of the unwary, and marks the existence of a dangerous reef, though it makes no pretensions to map out safe channels. It seems to the writer that the chance of doing something in this direction might justify a modest effort. In this view of the subject, the scope of the present notes is strictly limited, and their object is

the reverse of ambitious. An endeavour has been made to subserve the convenience of the reader by the addition of a comprehensive index.

The total capital invested in American railroads represents an enormous sum. Its precise dimensions cannot be determined with absolute exactness, because there exists a wide difference, in the first place, between the amount nominally and the amount actually expended in construction; and, in the second, between the nominal value of securities and the price actually paid for them by their holders. But, allowing a wide margin for elements of uncertainty, it may be taken as fairly established that the total investment approximates to thirteen hundred millions sterling, and that of this the larger part is foreign. 1300,000,000

In days when it is the custom for' financiers to think in millions, it can scarcely be matter for surprise to find investments of enormous amount treated in a somewhat airy fashion. But, if the true significance of seven or eight hundred millions sterling be thoroughly grasped, it will be seen that a sum of this magnitude is a feature of real importance in the commercial and social history of the day. It forms an appreciable element in any exhaustive estimate of national wealth. It represents the sinews of a vast aggregate of productive enterprise, and the "hoarded selfdenial" of tens of thousands of investors. Now this huge investment is made up of securities varying widely in character and quality. Some of them are sound and productive; but very many possess a modest present and a doubtful future value. During periods of so-called “inflation," the constructive impulse far out-ran the indications of demand. The cart was put before the horse, and railroads were built in advance of any real need of them, by

means of bonds placed in Europe. The securities issued by many of these railroads are not sufficiently sound or attractive to be absorbed by American investors. That is a point of some importance, and very pertinent to the matter in hand, because the money invested in these securities must, as between Europe and America, be considered to be finally sunk. It is scarcely necessary to point out that investments, which are permanently located on American soil but which America will not re-purchase from Europe, are beyond all others the most susceptible to the influences of rash legislation. It is true that many railroad loans negotiated in Europe on the security of faith rather than of works have, by reason of the rapid settlement and the extraordinary internal resources of particular districts, grown steadily in value. But it must not be forgotten that conditions of a specially favourable character attended this growth. The increment of value-which the constructors of a railroad must be taken to have relied on as an equivalent for extraordinary risks-was allowed to enure in its integrity to the benefit of the constructing companies. No legislation was proposed tending to reduce the earning power of a railroad, or to limit its possible dividends. On the contrary, the elements of growth and of recuperative power were fostered by an almost absolute freedom from government interference.

It is assumed then by the present writer that European investors have a large stake in America to protect; and that, owing to political and social complications in the European outlook, a good deal of capital, which is timid and sensitive to the action of violent influences, will probably seek investment in this Country in the course of the next ten years. If there be truth in this view, there would seem to be some show of reason in selecting the

present time for a brief reconsideration of some salient points in the railroad situation. To invest such brief reconsideration with a modest value, it is by no means necessary that the points to which attention is directed should be new or original. It is exactly because wellworn maxims have become too familiar that they are so often forgotten or overlooked. Familiarity has bred contempt, and thus useful indications are very often dismissed as hopelessly stale. But a truism does not cease to be true because it is trite.

In making any forecast about the future, it is wise—if not indispensable-to remember ancient landmarks, and from time to time to make a comparative survey of the ground, taking note of changed conditions and new elements in the situation. The environment of many railroads is materially changed since the European investor first put his money into them. There are available to-day data relating to the settlement and resources of many districts, which some years ago were obscure or unascertained. To-day there has grown up a rank crop of legislation affecting railroad property, which formerly was never dreamed of. State and Federal courts have made decisions on various branches of the subject which were not anticipated. Popular sentiment has undergone great change; and the drift of feeling, in comparatively prosperous days, is less cordial to the investor than in days of extreme adversity, when ready money was scarce and its possession was regarded as a considerable merit in the possessor. There is, in short, abundant room for vigilance and a large sphere for judgment and discretion. If that be so, the lessons of the past may perhaps to some extent, be utilized for the guidance of the future; and it does not follow that nothing is valuable which is not fresh.

The investor wants rather what is true than what is new. A substantially correct statement of data, which are today available for his purposes, is likely to be more useful to him than original theories or ingenious prophecy. Accordingly, for the sake of convenience, it is proposed to jot down, under separate headings, a few notes on several points in the railroad situation, which appear to have been forgotten or overlooked, and which, under the rapidly changing conditions of the present age, may possibly give an uninitiated enquirer some useful hints.

Let us suppose that we have to deal with an intending investor of moderate means, who has very slight acquaintance with the conditions of the American market. Knowledge of details and inferences derivable therefrom, which are ancient history to the expert, may be to him obscure or unknown. It is proposed to make some notes on the following subjects in their order:

1. Spheres of Investment.

2. Fair and Free Trade.

3. Control..

4. Combination. 5. Pools.

6. Water.

7. Parallel Lines.

8. Reorganization.

9. Proxies.

10. Funding.

II. Receivers' Certificates.

12. Corners.

13. Publicity.

14. Railroad Commissions.

15. Vested Interests.

16. State Control,