The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-04-23
Tho European War and Our Rail-
road Property.

The railway property of tho United States
is likely to be affected in two entirely cppo-
sitc ways by the great war now bursting
upon Europe. The market value of such
property will be still further deprecated
and its real value be considerably increased.
This prediction may look like paradox, but
it is not SO self-contradictory as it seems.
The expected depreciation in the market
price Of American railroad securities will
be consequence Of tho discredit
into which they have fallen in the
period Immediately preceding the out
break of the war; The belligerent gov
ernments will be forced to raise money at
exorbitant rates. When thcir loans are
offered in the European money centres at
temptingly high interest the holders of
American railway bonds will sell them or
send them home to this country for sale,
with view to invest the proceeds in the
war loans Of the belligerent Powers They
will feel that they are merely exchanging
one bad security for another, and that bad
security with very high rate of interest is
preferable to q bad security which does
not promise SO much. The chance
of realizing on Russian bonds or
Turkish bonds will be deemed quite
as good MS the chance Of realizing on the
American railroad bonds in which European
confidence has been FRUSTRATED within the
last few months; and as the offer Of ad-
vantage will be double or treble, the dis
credited American railway bonds will be
sold to procure the means of specializing in
the new war loans We may accordingly
expect large amounts of American railroad
securities to be returned upon our market
for sale, depressing prices beneath their
present low level by great excess ofsupply
over demand.
But this will furnish q golden opportunity
to American capitalists who are in position
to take advantage of it. They will be able
to buy, dog-cheap, securities whose value is
certain to rise. The real value Of American
railroad property will be greatly increased
by the European war. The powerful stimu-
lus which will be given to our grain trade
and our provision trade will add to the
business and enhance the profits of our rail-
roads This species of property will be
largely increased in real value while sinking
in market price. The great amounts of
it which will be offered for sale by
deluging the American market from
Europe will make it favorable time
to buy, and no investments will pay
better to American purchasers who can
afford to hold. Our capitalists may recover
from Europe part of what was lost by the
sale Of our government bonds at about half
their real value during the two or three years
which followed our civil war. As we then
sent government bonds to Europe and sold
them for song, SO European holders will
now send our railroad bonds to America for
sale and take what they can get. Nothing is
more certain than that American railway
property will ultimately recover, and those
who purchase it with proper discrimination
MS to the prospects of particular roads will
make as good thing as did the European
purchasers of our government bonds at the
time when the markets of the world were
flooded with them.