The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-10-12
order to facilitate the solution Of the great fnan
cial problem. The great cash system can, In the
meantime, take care Of itself.


On Saturday last, a. we all know, the Illinois
Central went to protest on its floating debt The
immediate cause of the suspension appears to
have been the impoesibility Of disposing of ster-
ling exchange drawn by the company against the
ipstalments paid into the London agency Of the
Iosd; but it ia quite obvious that had not this 90
casjon of failure presented itself, another would
ard that the pre- sent panic has only precipitated
al utterly Unavoidable contamination. The day
before, the Erie Railroad Company likewise went
TO protest on like acceptances for floating debt;
aid at the same time, the Michigan Central Com
parry met with the same dishonor, having no funds
20 meet the paper that was maturing.
These three roads, thus united in a common
catastrophe have had very little in common but
the r eDbarassments The New York and Erie
Railroad Company has been practically insolveat
for years, and, but for an extraordinary coinci-
dence Of financial ssill and good fortune, would
have passed out OF the hands Of the stockholders
few months after the Schuyler crisis. No per-
son of good judgment has believed in it since
then; and latterly its endorsements have been
so notorious that it's failure will take no one by
surprise.
Very different has been the character of the
Michigan Central Company. Until within few
months, its character, as well in an industrial as
financial point of view, stood very high indeed.
1t was understood to be chiefly owned and con-
trolled By solid men in Boston and the West, to
whom the idea of stock speculations never could
present Itself. 1t was said to be managed not
only with science, and economy, but also with in
tegrity railway critics used it constantly as the
standard by which to measure doubtful concerns.
These merits were reflected in its financial re-
tuns it paid ten per cent dividends regularly,
ard its stock-which was scarce-sOld but trife
under par in our markets and those Of Europe.
Ruin overtaking such a concern as this, and in
70 frightful]y sudden manner, will stagger the
most resolute minds, and may we'll warrant the
boldest scepticism in reference to railway values.
The Illinois Central Company was the original
and the exemplar Of another class of railways
the land grant enterprises. Only few years
since, it obtained from Congress 2,5OO,0O0 acres
of land-in great part selected by the company
in the State of Illinois. With the deeds of this
lard in their pocket, the company's agents went
out to England, and raised in round figures
twenty millions = in various shapes and at
various times-for the construction of 700 miles
of read from Cairo, the southern extremity
Of the State of Illinois to Chicago in the North.
The road was built. Part of the land was sold.
Three years ago it appeared almost certain that
the sales Of the land would in q very short time
pay the whole cost Of the road, leaving to the
stockholders free of cost, first, the finest railway
in the country secondly, balance Of many hun
dreds of thousands of acres of land. Assuredly
this was an enterprise which might command
confidence; the stock might well sell at
premium ranging from 20 to 40, and be regarded
as security equal in character to the best State
stocks. in which the widow and the orphan might
safely invest their little patrimony. For all this
it has failed. The receipts from the sales of
and have proved so infinitely small (most of the
ands being sold on credit, at absurdly low rates
Of Interest," as TO be of no account in balancing
the loss on q long, Improbable railway, running
through an uninhabited section Of country.
Complaints Of the absence Of water and wood on
the company land have been generally circulated,
and il is said that settlers who have lived on II
their improvements and move over into Iowa.
than to complete the work they had begun
Meanwhile, the loss on the running of the road
and the cost Of nevcr-endng additions and re-
pairs have required the company to carry a large
floating debt, which has now sunk them at last
1t is quite certain that this beginning of gus
pensions among the railways wiz be followed by
L. eto.t re ~
continues Many other great railways through
out the country win probably fail this fall.
Setting aside the sympathy which one may feel
for individual stockholders who have been duped
into investing their savings in this way, 1t cannot
be disguised that the failure OF these principal
railways will be, both Immediately and ultimate
ly, gain to the country at large. 1t is supposed
that the failures Of railways which have already
occurred will liberate, In the course of the next
thirty Gays, full twelve millions of money, here
tofore used In shaving railway paper, at five
ten Ter cent per month, aud which will now be
turned to good account for the relief Of the
merchants. II is real blessing TO get rid Of
such needy and such enormous borrowers as these
railway corporations have been.
And furthermore, when the Erie Railroad, or
any other great enterprise Of the like kind, is
brought 10 the hammer ard sold out, or foreclosed
upon by bondholders, 1t will not command price
much exceeding one-fourth or onethird of its CON-
monty rcputed cost. The Erie win probably be
taken, for instance, at something like twelve to
fourteen millions Of dollars, instead of forty; the
New York Central at the same rate; and the other
great roads in proportion. AT these prices, under
a sound management we should consider railways
about as coed investments as any in the country.
They would then be enabled to devote their whole
energies to their proper business of carrying pas
stngers and freight, and there is no reason why
they should not do as good business as the steam
ers, the ships, or the express companies