The morning call., 1891-08-27
THE INVESTMENT OF MONEY.

Mr.. Huntington's article in the North
american Rerieir on railroad consolidation
contains one paragraph which will receive
consideration from people who are neither
shippers nor carriers and who are not inter-
ested in railroad problems. 1t refers to the
investment of money. 1t is necessary in
every country in which wealth accumulates
to have some form Of investment in which
widows, minor children, trustees and re-
tired business men can place their funds.
Such an investment must be absolutely safe,
though it cannot bear a high rate of inter
est. 1t should not Iequire continued look
ing after. For the past quarter of a century
it has been found in this country in United
States bonds. But the extinction of the
national debt is proceeding so rapidly thai
in the first or second decade or the TWEEN tieth
century it will cease TO be available for the
purpose. Most of The Government bonds
will have been paid off; those which sur
vive vii! not be offered in the market
Nor will State bonds take the place of
Governments. The nominal aggregate of
the Indebtedness of all the States at the
present time is about 100000 600; but fully
half of this is held by Stale Sinking Funds
or State Treasures or school departments
California is really out of debt; so is Iowa,
the State bonds being all held by the School
Department.; Kentucky's bonds are all in
her Sinking Fund; Mary land owns her ow n
debt; of the S31. .0O0,OOO of bonds issued by
Massachusetts SO, 600, 900 are in the Sinking
Fund; three-fourthS of the debt of Mime
sofa is held by the School Department;
nearly the whole debt of MisSiS ippi is in
the same ownership; tw0-thirds of New
Iork'S debt is in the Sinking Fund; three
fourths of the debt of Texas is owned by
various branches of the Stale Government.
Nor Is there any present prospect of an in
crease OF State indebtedness. On the con-
trary the tendency is toward paying off the
debts which exist and keeping out of debt
in future.
Mr. Huntington believes that people viii
be forced by the necessities of the case to
invest trust funds and the property Of wild
Ows and minors in railroad bonds, and he
argues that inefficient management and
reckless competition will in many cases
make the investment insecure He OBJ
serves that large proportion. if not a ma
jOrity, of the smaller lines are earning 50
little, if anything, over their expenses that
it is question every year whether they can
pay interest on their bonds. The propor-
tion of defaults recorded every year in
"Paor'S Manual" is really startling. In
this the public will generally agree with the
President of the Southern Pacific.
We can derive no guidance from study
of other countries. The accumulation of
wealth is probably larger in England than
in this country, but the investments offered
are very much larger. Great Britain owes
nearly S3,5Oo,000,OOO. and every colony has
sold bonds to capitalists in the mother coun-
frv
securities representing public enterprises
afford employment for large sums of money.
There is S1S0.0OO, Geo invested in railroads
in the United Kingdom, and $40, ,O0O,0 900 in
mines. France has a national debt which
amounts to about ST, 400, ,0OO, ,0O0 and besides
this number Of industrial enterprises and
financial companies consume large pro-
portion of the savings Of the people. Not
withstanding these emplOyments for money
the English and French are both constantly
investing considerable sums in public ell
terpriSeS in Asia and Africa--which indi-
Gates that there is more loose capital in
those counties than can be absorbed at
home.
In a few years the trustee of an estate or
the retired merchant in the United States
Will have to seek employment for money
either on bond and mortgage on real estate
OF in the bonds of industrial enterprises If
he lends on bond and mortgage he takes the
risk of fluctuations in the value Of the prop
erty, and when he wants his money he is
often compelled 10 resort to the costly pro-
cess Of foreclosure. If he buys railroad
bonds be takes the risk that the railroad
will be mismanaged or dishonesty admin
istered, or its business taken from it by 4
competing line, in which case its coupons
may not be met, and he can only recover
his investment al the end of long itiga-
lion and reorganization. The chances are
that the best investment he can find will be
purchase of improved real estate either in
city or cOuntry-not a whole township, but
modest holding which will support fam
lily in frugal circumstances. Such an in
vestment can never vanish or shrink it will
always be there when the owner wants it :;
and if it has been judiciously selected, it Is
quite likely to increase ia value as time
rolls on.