, 1873-12-10
Why They Are No Longer
Sa1able.
Enormous Shrinlzage in the
Past Year,
List ef American Railroads that Have
DefauIted on Their Coupons.

Correspondents ef The Chicago Tribune.

Correspondence ef Ths Chicago Tribune.
FnANkronT-os-rnE-AfA1N Noy. II, 1879.
1t Is no exaggeration, but sorry, ndsput-
nble fact, TINT tloro las uovor boon snel1 q
thorough diHtruBt of all kinda Of American
securities, with tho almost sole exception Of
Uniiod States 0overnmont-bonds, in this
country aH has now prevailed unntcrruptcdly
aud grown moro intonso from mouth to month
aud week TO wools, for moro than year. Cor
nun capital Inns had moro than onco, In times
past, discouraging experience, and mot with
large lossos. in connection with various Amori-
eau enterprises Especially botweon 1858 and
1860 many millions Of Gortnan money wero sunk
in American rai1wny-stocls Of companies whoso
original capital WAS entirely wlpcd out, though
aomo Of them now nro among the bost-paying
roads in tho United States. But tho
PROFOUND AND UNIVERSAL D1sTnusr
hat luB characterized tho daily record OF tho
Gornan Douracs us regards American railroad
bonds, ovor since last yoar, has mover hal
parallel in The financial history Of Germany.
This diBtrust has even greatly affected tie
estimate Of pafoty and doarab1oncBs for per-
mancnt Investment placed heretofore upon
Tho bonds OF Tie American Government by tho
public ut large. ThiB Is proved by tho faot that
every effort to plnco tho now por cont United
5tntes bonds among tho latter has failed, md
that the aggregate Of United States per cont
bonds held III this country ia now loss by hum
drods Of millions than d fow years ago. Tho
wr1tor has read, in somo lato American papers,
Bpcculations rs to tho probability OF European
cnpltal ayailing itsolf of tho opportunities for
choap and yet Bafo Investments at high ratcs of
interest afforded by tho proaont crisis in tho
Unitod States, and thus contributing to tho
return Of better tines. Now, as far as Germany
is concerned, It will bo absolutely useless to OK
pcct any direct or Indirect roliof from lcr in the
manner stated. Tho German nioney-market, IN
5col, must be considered as
nEna1ET1cAL1Y oLosED
for years to como agninst al casaes of Amori-
eau railway stocks aud bonds and eyon all
Slate, county, and municipal bonds, no matter
by whom Issued and at what prices offered I
do not hesitate to any that all Germany might
bo searched yainly for banls or banker willing to
touch any mortgage loans, oyon of any Of tho
older Eastern States or cities, or OF any OF tho
best-pavlng railroad companies. such os tho
New York Central. Pennsylvania Central
Chicago, Burlington l. Quincy, Chicago
& Alton, Illinois Central, aud the like.
And this not bccauso tho intelligence aud
Information Of German bankers is 80 limited as
to rcndcr them incapable Of pcrcciring TINT such
loans would DO safo, but bocauso bankers buy to
tell, and tho German public will not touch any
Thing American any longer. Wha. say, thon,
Kill be confirmed by tho humorous representa-
lives of American railroad companies that hayo
ocon foolish enough, in spite Of frequent warn
nge TO attempt to persuade German bankcra to
buy mortgugc-ioaus of them within tho last few
months. Especially thoae that peddled tho
bonds of new Western roads through tho Cor
man money markets lad to return with extra
largo 1cas In their cars. Even the influential
delegation representing the Southern Pacific,
though 1t consisted Of such magnatcs as Thomas
a. Scott and Judge Piorrepont, could hardly got
hearing. For. verify, 4 German banker con-
Bidera it ut this time almost au insult to his un-
derstanding to DO expected to take Western
railroad mortgage-loans.
Tho dlscro1it OF American railroad bonds In
the German marriott datoa back to the latter part
OF Fcbruaty, 1872. During tho summer md full
Of 1871, there had alrealy boon groat dullness in
thon,, partly owing to tho effect Of tho war be-
tween Franco and Germany, and partly to the
previous Offering Of loanB Of the aame clasH In
too rapid succession for the absorbing capacity
Of tho BoursoB, and to tho
MoN-pAyMEST OF TIE COUPONS
II tho Alnbama j. Chattanooga and the Rock
ford, Rock Island d. St. Louis bonds. But, in
November, 1871, under tho stimulus of tho
French Indemnity millarda, Which had already,
months before, excited general speculative
fever all ovcr Germany, m uuexamplod demand
for American railroad-bonds sprang up, and
continued until the end Of tho following Fobru-
ary, wien tho sudden dangor OF war botwoeu
Engl nd and the United Stalos over tho famous
indirect or consequential damages chocltel 1t
instantly and permanently, In tho poriot Of
theso threo months, not far from $50, ,00o, 600 OF
American railroad-bondB wero brought on aud
absorbed by the HRrket,-South Germany and
especially Frnnkfort-ou-the- Main, boiug tho
main fold Of operation. at tho height OF tho
das.'a1lu l havo known aa many III 35, 000.000 OF
5onds to bo subscribed for in a single day.
subscriptions were obtained on the
SYNDICATE pLAN
,foporatiou, by which all loans arc placed in
tIis country, and undor which number Of
banks and bankers III various cities aud
towns take part Of loan Ordinarily from
onc-tcntl to ouo.fourtl) !" t1r1n,"-that il,
pny cash for it, aud obtain "options"
for the remainder, aud thon offer tho whole
simultaneously, Oh n certain day or uumbor of
days, through tho different mombcrs OF the Syn
aicato. So ougorly were tho mortgago~bond
loans thon taken by tho public, that tAore WIS
very lively competition among banks aud bankers
for the cllanco Of bringing them out and Amor
can uegotiatora did not hayo much difficulty In
finding customers for their financial wares, II
they only sold tho!n cheap enough to give tho
original takers d large margin for profit. Could
there bo anywhere eleanor or moro profitable
business than to tako such loans at certain
price, aud then, within fow days, shove the
wholo OF them of on tho public, at profit Of
from to 10 per cent ? So anxious wero the
houses making regular business Of bringing
out such loans-,the Oldest aud moat reputable
Grlns, however, nearly al declined having ANY,
!ling to lo with them, leaving tho field to now
banks and private firms Of rooent orlgn--of
roaping such easy laryosts Of enormous profits,
that they looked In many casoa
n,uro to tho cheapnoss than to tho
sounilncss of loans, and closed bargains