The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-07-24

The Beard meets daily.
DOWNFALL Of R.sAy~~y sscuxatses.
We published the other day, in the csarun
devoted to such topics, the circular of an eminent
house Of brokers Of American securieies, estab-
lshed In London, England, in which 1t was stated
that the late proceedings Of certain prominent
railway companies here had not only shaken the
faith Of British capitalists in that class of securi
ties, but had created a profound sensation in
financial circles ON the Continent of Europe The.
statement was the more remarkable 90 il was
evidently reluctantly extorted from the parties
who made IT; their business being to invest Brit
ish moneys in American securities and their inte-
rest, consequently being directly in favor of the
inAatiOa-not the depression-of the latter. The
companies to which reference was especially
made in the circular were the New York and Erie,
| and the Southern Michigan aud Northern Indiana;
and the circumstances which led to the allasiou
were the report of the former, in whicA il was
shown that three years abstinence from dividends
bad left that corporation more deeply involved
than ever; and the late financial scheme of the
Michigan Southern, by which the holders of stock
were irreparably injured without their consent
by the creation of preferred ten per cent
stock.
| The prudent reader will thus learn thast
the system OF Misrepresentation and fraud
which has been the mainstay of our
railway securities for 80 many years has at last
broken down, and that even the English now see
through it, So long as Engishmen were eager
to invest their money in Our bonds and stocks,
railway building was not only comparatively
easy, but the natural decline in sach securities
was checked if not arrested by demand foe
them from abroad. For several years, many of
the leading capitalists Of England have made
rule of keeping certain amount Of money in Sc
curities OF this country they obtained from to
10 per cent on their investment, and were satisfied
that the gigantic growth of the country would tend
to increase rather than diminish their dividends
They are aow ascertainlng their error. They
now learn-from the report of the Erie, for in
stance that railroad well built, well equipped
in good situation, and doing good business
cannot always lie certain of earning moaey
enough to pay its expenses; and they learn, as
we'll from the report of the Erie as from the
creation OF preferred stock IN Michigan South
ern, that when trouble befalls these corporations,
the directors will extricate themselves if they
can by the sacrifice of the stockholders 1t is not
surprising that such discoveries should teach
them to wash their hands of us and of our securi.
ties at any cost
| We leave to the great financiers" and the
poor creatures in the press whom they hire
| IN do THAR nuntnO Ia uybol
bility Of the shame aud Disgrace thus brought
upon our financial community. Another
Sidney Smith might well be called into being TO
denounce the scandalous dishonesty by which the
foreigners who have put their money in our rail
way securities have been robbed and ruined
Such u case as that we published the other day
where poor German, having invested all his say
ings, some $4,000, in the purchase Of one hun
dred shares Of Michigan Southern stock, took
ship for this country, and found on arrival, that
without his knowledge the directors of the COM
pany had created preferred stock. thue deprc-
ciating his property from fifty to seventy per
cent and n all probability rendering it ultimately
worthless such case might well exercise the
highest sarcasm and inyective. For such things
under other names-men wear perti-coored
suits in pententiarieS
This railroad system Of ours, which has done
70 much for this country, and helped indirectly
to make so many fortunes, will in reality prove
the ruin, moral and financial. of all connected
with il, save only the rogues who have the cum
ming to escape the final CONFUSION Men are
sick of the old lies and the old balderdash about
the schemes of the wicked bears aud the uu-
prncipled operations of Wall street. il needs
but very little common sense to perceive that
rs between the two sets Of spectators there is
nothing to choose; but if anything, those are
the most vile who try to swindle other people,
and especially foreigners, into placing their mo-
ney where they will lose il. II is not the bears.
or Wall street. or this or that great journal that
Is running the railways; il is the simple, naked
fact tina; the principle on which they have
been constructed an. wrought is a combination of
ignorance and fraud. In some cases, they fall
victims to an error in their principle; but in the
vast majority Of cases they are ruined by the
fraudulent management Of their directors, who
knew when they started them. and persuaded peo-
pie TO put their money in them. and hawked
them among our friends in Europe that they
were worthless, and that vender OF such com
modities ought to have been held liable for OBJ
tanning money on false pretences.
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