The Sun.
London, England, 1859-02-01 00:00:00

1:1IE PROPOSED AUSTRIAN LOAN.

;Fro.* the Times' City Article.)

The particulars of the proposed Austrian Five
•pr Cent. Loan of £6,000,000, were announced yester-
Vby Messrs. Rothschild. The price is to be 80,
fad the net amount will therefore be £4,800,000.
The existing public debt of Austria is estimated
t about £200,000,000, and her annual revenue at
'bout £28,0'00,000. The last loan raised in London
Pas contracted on the 31st of May, 1852, and was
:)r £2,250,000 in a Five per Cent. stock at 90. A
`irther £1,250,000 was at that time subscribed at
:'rankfort. The price of Consols was then ap-
Ooaching 100, but the scrip during the first fort-
eight of its introduction remained languid at quo-
ations varying from Ito 1 premium. Before the
,Apse of three weeks, however, it had touched 5
vremium. Subsequently it has been almost entirely
bsorbed on the continent, and the little that now
femains here is in the hands of permanent investors.
In the Stock Exchange yesterday there was no
..ttempt to make any quotation for the new loan,
:cid the general feeling seemed to be against the
Zirobability of the subscription being accom-
plished. The members of that body have suffered
oep much from having subscribed too hastily
to the •various securities introduced during the
Vast two or three years that they are at length
=disposed to touch anything until they have
aicertained the disposition of the public. In
the interval before the closing of the lists on
the 7th instant new light will most probably be
thrown on the political situation by the opening of
Parliament, and it is upon this contingency that the
success or failure of the proposals may mainly de-
pend. By many persons the announcement of the
loan at the present moment is interpreted as an
additional symptom of the prospect of war, but it
positively understood that it was to have been
brought forward at the end of December, before the
recent alarm, and was merely delayed by considera-
tions which had no connection with politics. At
the same time, the object for which it is raised is
stated to be to replace the £5,000,000 in course of
disbursement by the Government to the National
Bank, according to the agreement under which the
resumption of specie payments was to be accom-
plished by that institution. The final moment for
receiving applications is 11 o'clock a.m. on the 7th
of February, just an hour previous to the time
when the speech of the Emperor will be delivered
to the Legislative Chambers at Paris. This has
been pointed out as giving too great an advantage
to the contractors, since they could retain any part
of the loan or distribute the whole in proportion as
the effect then produced might be favourable or the
reverse. On the other hand, however, apart from
the consideration that fair dealing is always shown
in these matters, the public have the opportunity
afforded them of waiting the announcements in our
own Parliament, while it is also probable that
something will be gleaned in anticipation of the
Emperor's speech, either from common rumour or
from the movements on the Bourse.

(From the Daily News.)

At a time when Russia, Austria, Sardinia, and
other States are looking wistfully to our market for
those pecuniary facilities without which military
despotisms cannot be kept up, oppressed nationali-
ties cannot be kept down, and designs against the
peace of Europe cannot be carried into execution,
the heavy depreciation of the projects lately intro-
duced suggests reflections -which, if attended to,
may circumscribe the area of loss in future. How
happens it that the Brazilian, Chilian and Turkish
Loans, as wbll as Bahia Railway shares, have fallen
to a discount more or less considerable, and the
shares of the Red Sea and India Telegraph Com-
pany, guaranteed 44 per cent. per annum by the
British. Government, to par ? The Brazilian Loan
was so eagerly sought after that the aggregate
subscriptions represented eight or nine millions
sterling, instead of the million and a half asked.
Considered in relation to the prize long maintained
by the Chilian 3 per Cents., a Chilian 44 per Cent.
Loan at 92 is cheap. The Old Turkish 6 per Cent.
Loan, secured upon the tribute of Egypt, commands
about 91 per cent. ; ergo, the new Turkish 6 per
Cent. Loan, likewise secured upon social revenues,
ought to be very tempting at the issue price of 85
per cent., and absolutely " dirt cheap" at the present
market price—viz.,. 79 per cent., more especially
considering that a month hence 3 per cent. dividend
will be due. As regards the fourth case cited—that
of the Bahia Railway project—surely it is an
anomaly that, whilst the Brazilian 41 per Cent.
Loans command from 94 to 96 per cent. and the
Brazilian 5 per Cents. 3 per cent. pm., a Brazilian
guarantee of 7 per cent. stands at a discount. The
circumstance that for a portion—viz., 2 per cent.—
of the 7 per Cent. Guaranteed, the Bahia Railway
Company look to the Provincial Government of
Bahia, scarcely helps to explain the anomaly
pointed out; for the provincial credit is locally esti-
mated as high as the Imperial. - Moreover, in the
case of the Pernambuco Railway Company, which
occupies the same position in many respects as the
Bahia, the Imperial Minister of Finance has practi-
cally simplified the matter by paying the whole 7
per cent., taking upon himself the rectification of
accounts with the provincial authorities ; and it is
thence reasonably assumed that a similar plan will
be adopted with respect to the Bahia Railway,
Company. We have instanced a fifth case of de-
pression—that of the Red Sea and India Telegraph
project—the shares in which were eagerly run
after at the allotment, but the premium on which
has gradually dwindled to zero. The British 3
per Cents. are held to be now worth nearly 96 per
cent. ; the Turkish Guaranteed 4 per Cents.—the
value of which is determined solely by the British
guarantee of 4 per cent.—are maintained at 3 or 4
per cent. premium, after allowing for the dividend
accrued : yet the Red Sea Telegraph, with a
British 44 per cent. guarantee, is barely kept from
sinking to a discount. Perhaps the uncertainty
and risk attending telegraphic enterprises may be
suggested, by way of explanation. But no ! Ac-
cording to the statements put forward by the Coin-
pany, their, position practically resolves itself thus :
—The British Government guarantees to the com-
pany 44 per cent. upon a certain amount of capital :
responsible contractors have bound themselves to
the company to deliver the telegraphic line in
complete working order for a sum within that
capital, and to take upon themselves all the risks
attending the first establishment of the enterprise.
It is, therefore, scarcely an exaggeration to say
that we have here a British 44 per cent. guarantee
going a-begging at par. In each instance we have
confined ourselves to a consideration of the Govern-
ment guarantee, leaving surplus profits from the
railway or telegraph entirely out of the question.
Now for the explanation, which is indeed‘so
clear that he who runs may read. A large portion
of the capital of each of these projects was allotted
to speculators, instead of to bona fide and solid
holders. We imply no reflection upon the gentle-
men who conducted the business connected with
'the several allotments. They had merely to
distribute the capital as fairly as they could
amongst the numerous applicants, each of whom,
having lodged the stipulated deposit, had an equal
claim to consideration. Rightly viewed, the class
ofspeculative subscribers includes all those who wrote
for a larger amount of stock than they intended
to hold permanently. The man who asks to be
allowed to take a certain share in a new undertak-
ing, and is prepared to embark permanently a
proportionate amount of capital, is alone entitled
to be considered. a bona fide investor. He who
applies merely with, a view to netting a'premium,
or who writes for a larger amount than he means
to pay upon, trusting that the market will give
him a better price than par for the surplus, is a
speculator. Of the latter class, some of course are
greater speculators than others, but the difference
in merely in degree.
The result has been something after this wise :
the public at large, who did not care to participate
in or were excluded from the allotment, have
evinced little inclination to rush into the market as
buyers at a premium, and the speculators have been
chilled and disappointed by their. apathy. As a
rule, the more frenzied the rush for an allotment,
the weaker and more speculative the subscribers.
Many were barely possessed of sufficient means or
credit to meet the first instalment on their stock.
an this case, the obligation of selling was immediate
and imperative. Hence the sudden fall which
usually follows—sometimes precedes—the issue of
allotment " letters." Others hold on desperately
!ior a few weeks, until the pressure of accruing calls
and instalments forced the stock from their hands
--a process involving regret that they had not sold
before. And thus in most instances a steady
supply of stock was flung upon an already over
supplied and thereforef drooping market. Even
when the weakest
'been
weeded
out.,
theo the speculative allottees had
_sales. continued, for account of
persons who had
investment,
denmtore stock than they
meant to hold for
or of. the stronger
who were prepa;edb, if necessary, to
speculators,
meet several successive "
isut
sTere at length
induced to realise out of sheer
of ata_ sao. unsatis-
factory
each instffalirs. The
and disappointing a state
approach of the period for
determined fresh sales. Even when
immediate
recovery them:•
has
, for the
the capital shall have been paid up, an
is not a necessary consequence
absorption of the excessive supply of stock may
require time.
-What is the moral of all this ? Simply that the
sober public need be in no haste to rush after any
new stock, however tempting. Of late, in nine
cases out of ten, the ultimate advantage remains,
with those cautious persons who hold entirely aloof
from the queue of speculative applicants, and are
content to wait until the speculator disgorges. They
have now the option of embarking quietly such