nitude. The season's railroad construction was progressing at the rate of thirty to fifty miles of track per diem, for which stocks and bonds were being issued at the daily rate of from $1,200,000 to $2,000,000. The capital actually absorbed in the work must have approached $20,000 a mile. The promoters of railroad enterprise took advantage of the over-supply of the money market to obtain subscriptions for railroad construction a year and two years in advance. Scrip dividends to an immense aggregate amount were declared by established companies and newly amalgamated corporations, ostensibly based upon improvements made in the corporate property and additions made to it by the purchase of other properties or fresh extensions of their own and paid for out of recent earnings. The stock thus distributed was fed in large quantities into the market. Yet the whole vast influx of new and rehabilitated stocks and bonds did not stay the overflow of the money market, brought about by the national prosperity and by the extraordinary financial operations of the Government, the success of which is attributable to the same general cause. The prices of stocks rose higher and higher, and the market showed no signs of relapsing again to a lower level, although many capitalists refrained from purchasing, placing their money in the trust companies at 2 or 24 per cent interest, in expectation of a decline. The calculations of the speculators were all at fault. The most venturesome sold out repeatedly, thinking the flood - mark was reached, only to buy in again at an advance, upon being convinced of the continued upward drift.

One incident occurred in February to disturb the smooth surface of the swelling tide of prosperity. This was the sudden and simultaneous action of the national bankers of New York city and of a number in other parts of the country in withdrawing gold and United States currency from circulation to deposit with the Government for the purpose of redeeming their bank currency. Proceeding thus in concert while the obnoxious 3 per cent funding act was awaiting the final action of the House of Representatives and the approval of the President, they brought Wall Street to the extreme verge of a money panic. The tone of the money market was only partially restored by an order of the Secretary of the Treasury for the redemption of $25,000,000 of bonds on presentation. These bonds did not come in fast enough to afford much material relief, but the moral effect of the order was to allay anxiety and prevent serious embarrassments. About $5,500,000 were purchased, and money flowed in from other sources after a week of severe strain. There were about $18,000,000 of gold and legal tenders deposited by the national banks throughout the country, principally those of New York, to enable them to withdraw their bonds. The rate of money on call loans rose on the 25th to 1 per cent a day commission in addition to the legal rates, from which point

VOL. XXI.-9 A

it receded in five or six days to the normal low rates. Stocks fell heavily on the 25th, but recovered in a few days. From the time of this financial spasm until Secretary Windom formulated his refunding plan in April and the great Treasury transactions commenced, although an undertone of hope and confidence prevailed, the monetary situation changed day by day, with a tendency to improve, however. The real strength of the situation could not be brought out while money was still only moderately abundant and occasionally quite stringent. But when the Treasury began to pour out its accumulations, the tidal rise in values set in.

In midsummer various causes combined to produce a sharp decline in stocks. The superabundance of money was succeeded by dearth. In addition to the usual flow to the rural dis tricts for harvesting purposes, great sums were drained to the West to maintain gigantic speculations in grain and provisions. The shooting of President Garfield, and the anxious doubts of his recovery, could not but strongly affect the most sensitive part of the commercial system. Exaggerated reports of failures in crops had a still more depressing influence on the stock market. A bitter war between the great trunk lines was equally potent with the last cause to disturb confidence in the values of railroad properties. Some of the most powerful operators in Wall Street were actively working at this time to bring prices down to a lower level. For three or four months the surplus in the New York banks oscillated about the 25 per cent minimum required by law, and several times sank below it. Money which had lately been freely supplied at from 2 to 4 per cent on call, was so scarce that high daily commissions were charged in times of greatest demand. The drain of money to the West continued until October. Upon the cessation of large disbursements by the Treasury, a great quantity of currency was abstracted from the circulation and accumulated on the hands of the Government. The only relief was given by large importations of gold, stimulated by the stringency of the money market. In October, at the critical moment, the immediate pressure was relieved by the action of the Treasury Department in redeeming a large amount of bonds before maturity. The inland requirements began at this time to abate, so that an easy money market again prevailed.

At the same time the tone of the stock market improved and prices began again to ascend. The underbidding of the through lines for the summer business was seen to have still left a profit. The shortage of crops was found to have been overestimated. The impression prevailed that the deficiency would not seriously harm the general prosperity, and would not have the effect of diminishing railroad earnings. The political fears and forebodings all vanished after the inauguration of President Arthur.

The Western Union Telegraph Company in the beginning of February took possession of

the property of the American Union, upon the dissolution of an injunction to prevent the consolidation of the two corporations. The Western Union stock was increased to $80,000,000, $22,473,500 of the $38,000,000 increase being assigned the American Union stockholders, and $15,526,500 being distributed as a dividend among the Western Union stockholders.

A syndicate, headed by Henry Villard, was organized for the purpose of acquiring a controlling interest in the Northern Pacific Railroad, in order to connect that line with the roads of the Oregon Railway and Navigation Company, and prevent its extension into Washington and Oregon as a competitive establishment. The passage of a law by the Legislature of Tennessee to pay the whole of its debt eventually while reducing the interest one half, was the signal for active speculation in the State bonds, which were in default, and had fallen to very low prices. In the spring, the Gowen project for bridging over the financial difficulties of the Reading Company, by issuing deferred bonds to meet the floating liabilities, was adjudged by the United States Circuit Court illegal and contrary to the charter. Mr. Gowen was finally supplanted in the management about the same time through the efforts of the Messrs. McCalmont. The affairs of the elevated railroad companies of New York were in an embarrassed condition, and the lessee company, being unable to meet the fixed charges, prayed for a remission of taxes. The Attorney-General threatened to dissolve the company by authority of the State; but refrained, and the concern was placed in the hands of a receiver. Toward the close of the year a consolidation of the three companies was effected.

The condition of the markets in July was particularly favorable to speculative schemes. The intermittent and frequently stringent state of the money market and the oversold stock market, which had been depleted of its usual stock of floating securities by the purchases of investors, enabled cliques of operators to control the supply of money or of special lines of stock; while the above-described elements of doubt, amid the general flourishing outlook, permitted them to play upon the hopes or the fears of the speculating and investing public. A general and heavy decline in all but the highest class of securities, which initiated the speculative phase, was precipitated by the active co-operation of the great manipulators of values. A curious episode of this period was a slyly effected corner in Hannibal and St. Joseph common stock, a third-class property, by which some of the magnates of the market were forced to pay many times the value of the stock for which they stood engaged. The war between the trunk lines, which was waged by the competitive lowering of passenger and freight rates between Eastern and Western termini, was supposed to have had for its motive the desire on the part of the manager of the New York Central and its continuations, Will

iam H. Vanderbilt, to obtain the revocation of the conditions of the pool entered into between the through lines, which fix the charges for freight on the roads terminating at Baltimore and Philadelphia too low to afford a maximum of business and profit to the New York Central road, and which draw to those cities a portion of the foreign commerce which would go to New York under the desired rearrangement of the covenanted tariff. The competition of the water-route was sufficient, however, to warrant the reduction of freight rates, great as it was, if it did not first prompt it; for the reports of the roads show an actual increase of the net profits over the previous year. The New York Central company demonstrated its remarkable economical strength, but did not accomplish the object of compelling the other lines to enter into a new compact. The contest could not be continued when, toward the time for closing the canals, business so increased as to tax all the roads to their full capacity. About the end of October one road after the other set up the old schedule of prices, and all had more custom than they could attend to.

At the rates ruling in the early part of the year for the new Government bonds, the interest received by investors is not above 3 per cent per annum. Of railroad bonds, ten of the larger loans of the highest standing netted from 4 down to 3 per cent annual interest, and averaged only 4.20 per cent, calculated on the prices ruling in April, with deduction of the loss of premium on maturity. The majority of bonds, however, gave better returns, the average net rate of interest on all classes standing at or above par being about 51 per cent, including those of many enterprises whose future was not yet assured. States and cities whose credit was sound, issued no new bonds bearing a higher rate of interest than 4 per cent, and at that rate they usually commanded a premium. The rise in the selling value of forty-seven prominent stocks of the par value of $964,000,000 was between July 1, 1879, and July 1, 1881, from $643,000,000 to $1,166,000,000, or over 81 per cent in two years.

Railroad enterprises, as usual, engrossed the main bulk of the capital offered for investment. Railroads are the most important of the tools which enable the agricultural resources of the country to be utilized with commercial advantage. As the development of the country is now mainly in this direction, and as the foreign demand for agricultural products enables every newly opened district of rich land to be tilled with profit, railroads yield surer and larger returns than almost any other species of property into which accumulated savings can be placed. At the beginning of the year there were upward of $5,000,000,000 of railroad securities of all sorts outstanding. The favorable reports of railroad business furnished good grounds for the growing confidence in this species of property and the strong demand

for railroad securities, which began early in the year and supported an unprecedented expansion of the total volume of values. Severe snow blockades, a large falling off of the corn and wheat traffic compared with 1880, and freshets in the early spring, coupled with the critical condition of the money market, caused fluctuations in the first quarter of the year. When it was found that the railroads were taking in more money than the year before, that passenger traffic and miscellaneous freight showed a remarkable increase, the confidence in the future became general. For the first three months the gross earnings upon a mileage 15 per cent greater were over 9 per cent in excess of those of the same part of 1880. In April the receipts of wheat and corn began to exceed those of the previous year, and the railroads reported 25 per cent greater earnings than in the April of 1880.

Between the 1st of January and the 1st of September the total amount of stocks and bonds for the construction of new lines or branches of railroad or of telegraphs amounted to $390,312,200. The cash payments undertaken by the subscribers, extending through

Of the subscriptions for the construction of new roads, the mortgage bonds were sold at or near par, and called for full value in cash. The income bonds and stock were added as a bonus, except $13,500,000 cash subscriptions for stock. The amount of cash capital provided for new lines and extensions is therefore $234,683,000. For the increase of stocks and bonds issued on consolidation, some $155,194,200, as recited above, are payable. The third class represents improvements made out of surplus earnings or a higher capitalization for politic reasons, and asks for no cash contributions. Some of the largest of the new issues of stocks and bonds for railroad and telegraph construction were as follows: $16,000,000 of mortgage bonds and an equal amount of stock issued by the New York, Chicago and St. Louis company, and taken by a syndicate for the construction of road between Buffalo and Chicago; $20,000,000 of Northern Pacific bonds for extensions which will bring the mileage of the road up to 2,600 miles; $12,200,000 of bonds and half that amount of stock of the Oregon Short Line, a spur of the Union Pacific to run into the State of Oregon, length 600 miles; $15,000,000 of bonds and stock to an equal amount of the New York, West Shore, and Buffalo road, which will join the projected line up the west bank of the Hudson; $5,000,000 of mortgage bonds, $5,000,000 of income bonds,

the year and through a good part of 1882 in the cases of some of the heavier loans, amount in all to $234,683,000. Besides these issues placed upon the market there were others, amounting to at least 15 per cent in addition, which were subscribed privately by large companies for the construction of tributary lines. For improvements, purchase of other roads, and on consolidations, $243,684,200 of stocks and bonds were issued, calling for an estimated amount of $155,194,200 in cash. The aggregate cash requirements of the new issues for the first eight months of the year were thus $389,877,200, covering the remainder of the season and a portion of the next. There were issued in addition, in the form of stock dividends or otherwise, $26,933,700 of stocks and bonds which called for no cash payments. The grand total of the financial adventures in extending and improving the means of intercommunication taken up in the market during the first eight months of the year amounted to $389,877,200 in engagements for cash payments, and $660,930,100 in certificates of indebtedness and ownership given therefor, divided as follows:

and $6,250,000 of stock for the new division of the Richmond, Alleghany and Ohio consolidated railroads; $6,000,000 of bonds and the same amount of stock of the new Georgia Pacific line from Atlanta to the Mississippi River; $3,000,000 of bonds and $6,000,000 of stock to extend the Denver and Rio Grande narrowgauge line; $6,000,000 of bonds and $3,000,000 of stock to complete the Denver and Rio Grande system; $5,000,000 of bonds, accompanied by stock of the same amount, of the Texas and Pacific Railroad building from Fort Worth to El Paso; $3,000,000 of bonds, and the same amount of stock for the New Orleans Pacific, a combination of the above from Shreveport to New Orleans; about $6,250,000 of bonds and $12,500,000 of stock to carry on the construction of the Southern Pacific; $7,500,000 of bonds and stock to the same amount to construct the Mexican National Railway, for which the Palmer-Sullivan concession was granted; $5,715,000 of mortgage bonds, $1,139,200 of income bonds, and $4,572,000 of stock of the Mexican Central, for which a Boston syndicate secured concessions; $10,000,000 of mortgage bonds and $7,000,000 of income bonds of the Atlantic and Pacific line to be built from Albuquerque to the Pacific coast, about 600 miles; $5,000,000 of stock, with bonds of the same amount given as a bonus, to construct new lines of the Mutual Union Tele

graph Company; and $10,000,000 nominal capital of the Cable Construction Company to lay two new Atlantic cables.

The largest amounts of new stock and securities issued for improvements and to effect consolidations, not including the huge amounts issued on reorganization in lieu of the existing obligations of the merged lines, were as follows: $14,492,000 of mortgage bonds, $16,500,000 of income bonds, and $39,000,000 of stock representing the addition by purchase and construction of 850 miles to the 1,123 miles of road owned or being built by the East Tennessee, Virginia and Georgia company; $10,000,000 of bonds and $2,000,000 of stock for new lines acquired by the Wabash, St. Louis and Pacific company; $30,000,000 of stock of the Oregon Transcontinental company, which has expended $16,000,000 in purchasing an interest in the Northern Pacific road; $5,000,000 of income bonds and $22,500,000 of stock of the Alabama, New Orleans, Texas, and Pacific Junction, offered in London; $7,000,000 of mortgage bonds for improvements and acquisitions of the Louisville and Nashville Railroad; $7,600,000 increase of stock of the Ohio Central company; $10,237,700 of new stock issued to stockholders of the Union Pacific Railroad for extensions and betterments; $6,000,000 of stock for additions to the property of the Oregon Railway and Navigation Company; $10,000,000 of bonds issued by the Pennsylvania company for the purchase of leased roads; $10,000,000 of 4 per cent bonds issued by the Pennsylvania Railroad Company for the purchase of the Philadelphia, Wilmington and Baltimore line; $4,000,000 of bonds and $5,000,000 of stock of the Chicago, Milwaukee and St. Paul company.

The largest issues of dividends in stock, certificates, and bonds, and increased allotments of stock to shareholders on reorganization, were an increase of $13,000,000 in the stock of the roads consolidated into the Columbus, Hocking Valley and Toledo; $4,225,008 of loan certificates issued to old stockholders by the Georgia Central company; and $15,526,500 of stock issued to former holders of Western Union Telegraph stock upon the absorption of the American Union lines.

The extent of new railroad definitely undertaken and destined to be completed before the end of 1882, was 15,886 miles. For the construction of that amount of new track within fifteen months, engagements were known to have been entered into before October 1, 1881. This does not include the roads projected but not yet subscribed for, nor those for which the means were provided and the plans matured, which had not been advertised to the public. Of the prospective extensions, 4,791 miles were to be built east of the Mississippi River and north of the Potomac and Ohio Rivers; 2,352 miles east of the Mississippi and south of those two rivers; 4,063 miles west of the Mississippi and north of the latitude of St. Louis; 4,140

miles west of the Mississippi and south of that line; and 540 miles on the west side of the Rocky Mountains.

Railroads require for construction an expenditure of about $20,000 per mile. Counting equipment and other expenses, they actually absorb about $25,000 per mile of new line. The railroads undertaken, as estimated above, reduce therefore about $397,000,000 of floating capital to this form of fixed capital. As new enterprises of the same sort were being matured with the same frequency during the remaining months of the year, that sum represents only a part of the aggregate capital provided for railroad extension in 1881 and 1882. A considerable part of the railroadbuilding of the earlier part of 1881 was done with money engaged for the purpose in 1880. The advance subscriptions for railroads to be constructed in the ensuing year were vastly heavier in 1881. Six new through or connecting lines have been projected between the Atlantic coast and the West, two of which are to be completed before the end of 1882, and all of them before 1884. The capital for these routes has nearly all of it been raised by private subscriptions of capitalists. The New York, Chicago and St. Louis road is being put down rapidly between Chicago and Buffalo. The Chicago and Atlantic is to connect with the Erie and Pennsylvania Railroads at Marion, Ohio. The New York, West Shore and Buffalo road is to run from Buffalo to Schenectady, and thence along the right bank of the North River, terminating opposite New York at Weehawken. The Boston, Hoosac Tunnel and Western follows a straight route from Boston to Buffalo. The New York, Lackawanna and Western runs parallel to the Erie road, and connects New York with Buffalo via the Delaware, Lackawanna and Western. The New York, Pittsburg and Chicago is to use the Central of New Jersey and its connecting lines in Pennsylvania, and to reach Chicago by the new Chicago and Atlantic Railroad.

The result of the railroad war, which strongly affected the stock market, was that the gross earnings of the five trunk lines were $126,500,000, against $121,000,000 in 1880; the net earnings $48,250,000, against $51,500,000.

In the autumn of 1878, just previous to the resumption of specie payments, the first signs of a revival in business appeared. Prices then stood at a lower figure than had been known for forty years. Since that date there has been a continuous general rise in values. In a table printed below are given the New York wholesale prices for the staple articles of American commerce on or about the 1st of November for 1878, and each succeeding year. A computation based on those prices, and the quantities of the different commodities entering into consumption or into commerce, gives the following comparative estimate of the general rise in values, and its proportional distribution among the main classes of commodities: