The Evansville daily journal. [volume] (Evansville, Ia. [i.e. Ind.]) 1848-1862, 1850-07-19
From the American Railroad Journal
Railroad Securities.

Railroad Securities.
By far the greater part of the railroads now
in progress are in the South and West, parts
of the country that have but little accumula-
ted capital. Most of the conn anies are there
fore obliged to resort TO the commercial towns
for loans Of money to purchase iron equip
ment etc The preparation of the road bed
for the iron often exhausts the immediate
means of those building them. For all be-
yond that, they must borrow upon such time
as will suffice TO convert the means they
possess into money.
great number of these companies are
now coming into market for money. A ma
jority OF the securities which they bring are
the obligations Of towns and counties inter
ested in these works. As far as safety and
certainty OF payment are concert ed. no secu-
rites can be better. They represent mere
fraction OF the ability of those issuing them.
The payment of them may be readily en-
forced by law, and the aggregate property
OF u whole community may be seized in dis
charge of the debt. The bodies asking for
these loans have high standing and credit.
and are every day becoming more and more
able to pay
All this is as a general rule admitted. No
capitalist doubts but that the bonds of the
richest counties of Ohio and Indiana for the
amount OF 100000 are perfectly safe in
vestment, as safe as New Y ork or Ohio State
stocks yet these stocks command a very
large premium tor permanent investment
while those OF counties having the same time
TO run and bearing the same rate of interest
are at large discount. This difference in
the price of these securities is in part owing
to the shortness of time they have been in the
market. They have attracted so little at
tention that the public have not become i'm
pressed with their true value. Another
cause is to be found in the interest that the
brokers by whom they are mostly negotiated
have III keeping them at a low figure If
broker can buy at IS cents and sell at 100 the
amount Of one of his comm ssions is readily
seen. Where too, broker buys at low
/ figure, upon an order, his principal may wish
TO sell again us the value of the security rises
in the market. This gives him a chance Tor
a second commission which he would lose If
| he gave In the outset all the security were
worth, saving his first commission.
Here we are satisfied lies the great OBJ
stacle with which railroad companies have to
contend in obtaining the fill value OF their
securities. The money broker and the ccm-
pany have exactly opposite interests the
former 10 buy as low, and the latter to get as
much as possible. The broker is interested
to keep the seller away from the capitalist,
who buys for investment, for the purpose OF
pOcketing the commission rs the gO-between.
! The systematic concert Of this large, active
and influential class, renders it very difficult
to negotiate, without their aid, securities not
already well known in the market and theiI
gains are measured just in proportion as they
can blind the eyes or embarrass the position
Of the persons having securities to offer
Such persons cannot be too cautious how they
show their hands to this class Of men. They
ingeniously worm out the seller every fac
in his case that can make for or against him
tor the purpose Of using whatever is favOra
BILE for their own advantage If they get the
job, or against the seller if they lose it. A:
an invariable rule the less a security is hawk
ed about Wall street the better An expo
sure there for a few days will faint the best o
them. After all, only one person can have
the BUSINESS of selling them, and every per
son consulted, and who has failed to get thu
LOB, feels that he ought to have had it, ant
gives the scheme kick, so that his success
ful rival shall carry off as few honors a
possible. Every one who knows anything o
t Wall street, knows how easily it is for any
, man or body of men to throw discredit ant
f distrust upon the best of security.
In money matters it is the same as witt
, purchases of produce. The merchant buy
at the smallest possible price, and sells at tn
= highest he can get. He stands between tn
producer and consumer, and his profits ar
, measured by the gains he can make between
the two.
If a company wish to negotiate securities
the proper way for them to 90 to work is, +
first make up their minds what they propos
to do, and having done this, TO select the RICH
r kind Of a man to aid them, man who sha
bring the seller and purchaser for investmen
t together, and who shall be entitled to prop
] er commission for his services. 1t is linn
? that these negotiations should be effected up
on some system which shall do justice to tn
important improvements going on in all part
5 OF country, and which shall receive the aic
r good will, and encouragement of ali,