The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-08-02

Hsvy Railroads MalEs Money scarce.
When individuals or the community find them
selves In trouble or that thelr affairs d not 80 on
- desired, or - was expected, \ u customary 70
vote the apparent cause . nuisance or humb0g 70
be suppressed or abated, and they fully resolve,
henceiosth, 10 have nothing to do With the suppos
ed author Of their miortunes This practice pretty
well describes the feeling entertained ct this par
tcular crisis toward railroads which arc supposed,
by the immense sums expended In their constrac'
money market, and which, In addition to interior.
ing In the ordinary transactions Of business has re-
acted upon railway securities themselves, carrying
prices al the way from to 30 per cent below FIRST
cost.
With the market value Of railroad securities we
have little concern. II any one mas made mistake
In going into them, II is not because the conclusions
then formed as 10 their productiveness wore erro.
neOOs but because the RELATIONSHIP things are chang
ed. As we stated in last, railroads have been.
and are, g productive as was supposed they would
be when the public took their securities ct the high
est figures which prevailed. II there has been
change 1t y not so much In the railroads as In the
relations that other things boar toward them
In the United States where entire freedom Ia al
lowed to every impulse 1t is natural that the pendu
lum OF public opinion should oscillate beyond the
boundary that marks the limit Of its healthy move
ment. 1t was TO be expected that with the passion
which has existed for railroads in this country unit
ed with the conviction that they would prove profit
able investments Of capital that their construction
should have exceeded the harmonious developement
Of all great interests. and that they should have
taken the lions share Of the available or accumulat-
ed means Of our people, leaving corresponding de-
fciency for other avOcations and enterprises.
We have no doubt such Is the fact. We have fire.
Quently stated such to be conviction. Bat il Is
Of little use to give warning ~ advice. A man must
experience what has been told him before he will
hear what has been said.
While the construction Of railroads has proceeded
out Of proportion to other interests this fact by
Ynpa rrn hat hnu in adv nran wantS
Of the country. To supply this want, great in
crease Of roads may yet be necessary. The mistake
committed is not that we have too many railroads,
but that there are wants paramount to these which
should first be provided for for as soon as harmony
or equilibrium Is restored the construction Of rail-
roads may be resumed with both safety and profit.
II is undoubtedly true that railroads have given
value and significance to capital that it never before
mechanic arts has infinitely increased the pro1uc-
tive capacity Of society, the demand for capital Is
increased in tho same ratio. There Is not q man
among us Of forty who does not remember when
plenty of money to lend at and per cent ON good
security Of Thames lands. Society had then hardly
crossed the line Of demarkation which separates the
old from the new, the period which signalized
the introduction of the forces of nature into the
economy Of life. The use Of steam has increased be-
yoDd all calculation the value and productiveness
OF labor Money now stands for whatever results the
steam engine can accomplish. Capital has become
VduhDl0 just III proportion 70 It's luC00Do0 CHp6 1y
for production, and as by the inventions aud dis
coveries which are being made every day this capa-
city Is increasing in geometrica ratio, we can see
no pause in the demand for capital till there Is
corresponding pause In human ingenuity, or till
man shall f0reg0 portion of his wants, or rest
contented with his present means for their gratf-
cation.
But these remarks are somewhat wide of the sub
lect. What we intended to say was, that railroads
have, as alleged, consumed an immense amount of
capital in the construction, which has in measure
been withdrawn from other channels at some incon-
venience to other departments of industry. While
this has been the case the effect has been to create
additional demand for twice thrice the capital
that has gone into them. The construction Of every
railroad furnishes the means for the DEVELOPMENT
OF other resources, greater or less the case may
be- Let us suppose one hundred miles of railroad to
be constructed in Ohio At every two or three miles
upon its line some element Of wealth is rendered
available, which before lay dormant. At one point
the timber on the line of the road is manufac-
tured for use at another, . coal mine Is opened;
at another, iron works are erected; at
fourth, some other useful mineral is brought out;
at fifth Is water power to be set at work
for whole neighborhood. The developement Of
all these resources offers the greatest nducement to
the profitable investment OF capital; 30 that no
sooner is q road constructed than demand springs
up for the objects stated far two dollars where the
construction Of the road called for one, to accom-
plsh the legitimate results due to such work.
The demand for capital created BY the construc
ion of railroads is not only what is required for the
roads themselves, but for oil the works and improve
ments to which the former gives birth, and which
may safely be estimated to exceed, in very short
time, twice their cost. But the cost Of rail-
to the increase Of their business. The Boston
and Worcester railroad, brief history of which
ia to be found in another column, is a good
illustration in point The first cost Of this roai
was about 81 zoo, 000., This amount has been
increased some 400 per cent in eighteen years. or
OF the rate Of twenty-five per cent annually. Now,
the additions to the first cost of the road were just
as necessary and proper as was the original outlay.
II the roads completed the present year have cost
$76 900 900, they will require an equal expenditure
within the next four years to accommodate the 0rd
nary increase of business. Estimating the annual
increase Of cost Of our roads at ten per cent, this
amount would call for $50 900 annually for old
roads. Our works In progress probably call for
SIS 900 600. If the improvements and Investments
consequent upon the construction of railroads equal
this sum, the expenditure Of capital due to con-
structons OF these works amounts to 5000 900 900
annually.
Such is the annual draft that railroads impose
upon the productive energies of the country. The
above facts will serve to explain the constant and
active demand that exists for money. When we
reflect that we have only commenced the construc-
tion Of railroads ard the development Of the un.
limited resources Of this country aud that at Fifty
years ON the present time our people will be Just
as much occupied with new projects as they are at
this moment and that every year enlarges the field
OF enterprise and industry, it is difficult to foresee
q period in which the Accommodations of capital
shall exceed the demand for its profitable employ.
ment
BIT while railroads ore making, and will continue
to make, immense calls upon the capital of the
country, of all other investments they make the
speediest and most generous return on their cost.
They have increased value of the aggregate property
of the country, by than fvefod their cost. In
addition to their earnings they 70 the public at
least twenty five per Mt of the whole cost annually
in transportation. They have created no small
share Of the foreign and domestic commerce of the
country. They are the great fact in the physical
progress Of our people, and have contributed more
than any other agency 10 their astonishing progress
in wealth, prosperity and comfort. They may have
received a disproportioDate development, not dis