CHAPTER VII. LOANS TO CORPORATIONS AND COUNTIES OF THE UNITED KINGDOM.
THESE are loans raised by boroughs and coun- ties, and other authorities in this country, for local purposes, upon the security of the rates or other assured income. Before the money is borrowed the consent of the Local Government Board is necessary to make the loan legal, and evidence is required that the resources of the borrowers are ample to meet their obligations.
On most of these stocks the rate of interest is 3 per cent., though there are some few at 3 1/2 per cent. The principal is redeemable at fixed dates, or by a sinking fund, that is, by setting aside so much a year to pay off the loan at a fixed time, or as opportunity offers. For instance, in times when money is scarce or dear there is a proba- bility of these stocks falling below their par value, and the Sinking Fund is then used to buy the stock in the market. Thus the Corporation may be able in effect to pay off a loan of £100 for £90 or £95, whatever the price may be, and so gain the amount of the difference.
Investments in securities of this kind may be considered absolutely safe, although certainly there is the contingent risk of a town, after bor- rowing up to its full powers, drifting into decay from the loss of its staple trade, and so finding itself unable to meet its obligations. The in- vestor should, however, find no difficulty in discovering where such a contingency would be possible.
The interest on these loans is usually sent direct to the stock-holders, by means of an order on a bank.
COLONIAL GOVERNMENT SECURITIES.
Loans made to the various Colonies of Great Britain have always been a favourite mode of investing money, as they command a better rate of interest, at least they have done so in the past, although the confidence which the Colonies have succeeded in inspiring now enables them to borrow money at a low rate of interest. At the same time the old stocks have advanced to a very considerable premium.
Experience has shown that, so far, the invest- ment has been a safe one, although great fluc- tuations have from time to time taken place in the value of some of the stocks, owing to a check in prosperity, depression of trade, or diminished confidence in the stability of the Colony from various causes. These transient clouds have, however, in time, passed away, and confidence has again been established.
The investor should be able readily to distin- guish between those Colonies which are perma- nently settled and not likely to be seriously affected by any passing crisis, and others in a less fortunate or advanced position. And he would do well, if adversity should at any time overtake a Colony, and so send down the value of its stock, to avoid selling out in a panic, but to consider whether the circumstances are such that the crisis may pass off at no distant date, and confidence be restored. It should be remem- bered that there are always speculators who, at such times, endeavour to intensify a crisis, in order that prices may be forced down, and that they may be thereby enabled to acquire stocks at low prices from timid holders.
There are two modes of investing in these
securities,
1. Inscribed or Registered Stock.
2. Bonds.
In the case of Inscribed or Registered Stock, any amount can be invested, and the same is registered in the books of the Bank of England or elsewhere, in the name of the investor, in the same way as the Government Funds. The divi- dend or interest is sent to the owner's address by an order payable at a bank, half-yearly or quarterly, as the case may be, or it may, on written instructions being sent to the agents, be transmitted to the credit of the account of the holder at his own bankers periodically. This is by far the best plan; it saves trouble and risk, and, for the matter of that, something in postage. It is, moreover, the method much preferred by the agents themselves, and it involves no additional expense.
The following is a list of the Inscribed Stocks of the Colonial Governments, with an example of the way in which the market price, which of course varies almost from day to day, is quoted:-
COLONIAL GOVERNMENT INSCRIBED STOCKS. ————————————————————————————————————————————————————————————————- | | | | | | | | | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | | | | | | | | | | |—————|—————|————————-|————-|——-|———————————————————————————————————— | £ | £ | | | | | | | | 100,000| 100,000| 1 Mar. 1 Sept.| 4 Aug. | 4 |Antigua 4% Inscribed Stock | 1919-44 | 115 - 117 | | 375,000| 375,000|15 Mar. 15 Sept.| 17 Aug. |3 1/2|Barbados 3 1/2% Inscribed Stock | 1925-42 | 109 - 111 | | 1,120,000| 969,940| 1 Jan. 1 July | 16 Dec. | 3 |British Columbia (Province of) 3% Insc. Stock | 1941 | 101 - 103 | | — | 194,500|15 Jan. 15 July | 16 Dec. | 4 |British Guiana 4% Inscribed | 1935 | 118 - 120 | | 7,505,800| 7,505,800| 1 May 1 Nov. | 19 Oct. | 4 |Canada 4% Stock Registered |1904-4-6-8 | 105 - 111 | | 3,975,614| 3,975,614| 1 Jan. 1 July | 15 Dec. | 4 | Do. 4% Reduced (late 5%) Registered | 1910 | 109 - 111 | | 4,550,300| 4,550,300| 1 June Dec. | 16 Nov. |3 1/2| Do. 3 1/2% Stock Registered | 1909-34 | 107 - 109 | | 3,431,700| 3,431,700| 1 Jan. July | 15 Dec. | 4 | Do. 4% Loan for £4,000,000 | 1910-35 | 110 - 112 | |10,939,834| 9,978,021| " " | " | 3 | Do. 3% Stock Registered | 1938 | 102 - 104 | | 3,000,000| 2,115,152| 1 June 1 Dec. | 16 Nov. | 4 |Cape of Good Hope 4% Stock Registered | 1917-23 | 117 - 119 | | 3,769,465| 3,769,465| " " | " | 4 | Do. (Loan of 1883) Inscribed | 1923 | 119 - 121 | | 9,997,566| 9,997,566|15 Apl. 15 Oct. | 2 Oct. | 4 | Do. 4% Consolidated Stk. Ins. | 1916-36 | 116 - 118 | | — | 5,154,272| 1 Jan. 1 July | 16 Dec. |3 1/2| Do. 3 1/2% Consolidated Ins. Stk.| 1929-49 | 115 - 117 | | 1,076,100| 1,070,100|15 Feb. 15 Aug. | 16 Jan. | 4 |Ceylon 4% Inscribed Stock | 1934 | 123 - 125 | | 1,450,000| 1,450,000| 1 May 1 Nov. | 2 Oct. | 3 | Do. 3% Inscribed Stock | 1940 | 104 - 106 | | 123,670| 123,670|15 May 15 Nov. | 16 Oct. | 4 |Grenada 4% Inscribed Stock | 1917-42 | 115 - 117 | | 341,800| 341,800|15 April 15 Oct. | 16 Sept.|3 1/2|Hong Kong 3 1/2% Inscribed Stock | 1918-43 | 107 - 110 | | — | 1,086,241|16 Feb. 16 Aug. | 16 Jan. | 4 |Jamaica 4% Inscribed Stock | 1934 | 120 - 122 | | 480,749| 480,759| 1 Feb. 1 Aug. | 2 Jan. | 4 |Mauritius 4% Inscribed Stock | 1937 | 121 - 123 | | — | 282,481|15 May 15 Nov. | 16 Oct. | 4 |Natal 4% Consolidated Stock, Inscribed | 1927 | 120 - 122 | | 3,026,444| 3,026,444| 1 April 1 Oct. | 1 Sept.| 4 | Do. do. do. | 1937 | 123 - 125 | | 3,714,917| 3,714,917| 1 June 1 Oct. | 3 Nov. |3 1/2| Do. 3 1/2% Inscribed Stock | 1914-39 |107.5-108.5| | 320,000| 320,000| 1 Jan. 1 July | 16 Dec. | 4 |Newfoundland Inscribed | 1913-38 | 109 - 111 | | 550,000| 550,000| " " | " | 4 | Do. 4% Inscribed Stock | 1935 | 110 - 112 | | 200,000| 200,000| " " | " | 4 | Do. 4% Consolidated Stock Inscribed | 1936 | 110 - 112 |
| 9,686,300| 9,686,300| 1 Jan. 1 July | 2 Dec. | 4 |New South Wales Stock, Inscribed | 1933 | 120 - 122 | |16,500,000|16,500,000| 1 April 1 Oct. | 2 Sept.|3 1/2| Do. 3 1/2% Stock, Inscribed | 1924 | 110 - 111 | | — |12,826,200| 1 Mar. 1 Sept.| 5 Aug. |3 1/2| Do. 3 1/2% Stock, Inscribed | 1918 | 109 - 110 | | 4,000,000| 4,000,000| 1 April 1 Oct. | 2 Sept.| 3 | Do. 3% Inscribed Stock | 1935 |101.5-102.5| |29,150,302|29,150,302| 1 May 1 Nov. | 2 Oct. | 4 |New Zealand 4% Consolidated Stock Inscribed | 1929 | 115 - 116 | | 5,960,588| 5,960,588| 1 Jan. 1 July | 2 Dec. |3 1/2| Do. 3 1/2% Stock | 1940 |105.5-106.5| | 1,527,000| 1,526,620| 1 April 1 Oct. | 2 Sept.| 3 | Do. 3% Inscribed | 1945 |100.5-101.5| |10,866,900|10,866,900| 1 Jan. 1 July | 2 Dec. | 4 |Queensland Stock Inscribed | 1915-24 | 113 - 115 | | 8,516,734| 8,516,734| " " | " |3 1/2| Do. 3 1/2% Inscribed | 1921-4-30 |105.5-106.5| | 1,250,000| 1,250,000| " " | " |3 1/2| Do. 3 1/2% do. | 1945 |107.5-108.5| | 85,490| 85,480|15 Feb. 15 Aug. | 16 Jan. | 4 |St. Lucia 4% Inscribed Stock | 1919-44 | 112 - 114 | | 7,721,000| 7,721,000| 1 April 1 Oct. | 11 Sept.| 4 |S. Australia (Loans of 1882-3-4-5-6-7) Reg. | 1916-36 | 112 - 114 | | 2,850,713| 2,517,800| 1 Jan. 1 July | 14 Dec. |3 1/2| Do. 3 1/2% Inscribed Stock Registered | 1939 | 111 - 113 | | 839,500| 839,500| " " | " | 3 | Do. 3% do. do. | 1916-26 | 97.5- 98.5| | 3,546,500| 3,546,500| 1 Jan. 1 July | 16 Dec. |3 1/2|Tasmanian 3 1/2% Inscribed Stock | 1920-40 | 106 - 108 | | 1,000,000| 1,000,000| " " | " | 4 | Do. 4% do. | 1920-40 | 114 - 116 | | 100,000| 100,000|15 Mar. 15 Sept.| 17 Aug. | 4 |Trinidad 4% Inscribed Stock | 1917-42 | 114 - 116 | | 3,365,300| 3,365,300| 1 Jan. 1 July | 16 Dec. | 4 |Victoria 4% Railway Loan, 1881, Inscrib. Stock | 1907 | 106 - 108 | | 9,358,200| 9,358,200| 1 April 1 Oct. | 16 Sept.| 4 | Do. Loans of 1882-3-4, Inscrib. Stock |1908-13-19 | 107 - 113 | | 6,000,000| 6,000,000| 1 Jan. 1 July | 16 Dec. | 4 | Do. Loan of 1885, Inscribed Stock | 1920 | 112 - 114 | |12,000,000|12,000,000| " " | " |3 1/2| Do. 3 1/2% Inscribed Stock | 1921-3-6 |104.5-105.5| | 2,107,000| 2,107,000| " " | " | 4 | Do. 4% Inscribed Stock | 1911-26 | 108 - 110 | | 961,277| 961,277|15 Jan. 15 July | 16 Dec. | 4 |Western Australia 4% Inscribed Stock | 1934 | 121 - 123 | | 1,876,000| 1,876,000|15 April 15 Oct. | 2 Oct. | 4 | Do. 4% Inscribed Stock | 1911-31 | 112 - 114 | | 750,000| 750,000| 1 May 1 Nov. | 16 Oct. |3 1/2| Do. 3 1/2% Inscribed Stock | 1915-35 | 110 - 112 | | 750,000| 750,000| " " | " | 3 | Do. 3% Inscribed Stock | 1915-35 | 98 - 99 | | | | | | | | | | ————————————————————————————————————————————————————————————————- The numbered columns are explained as follows:- 1. The amount of Loan authorized to be raised. | 5. The rate of interest on the Loan. 2. The amount actually owing. | 6. The name of the country borrowing. 3. When the interest is payable. | 7. When the Loan is re-payable - thus "1919 or 1944." 4. When ex interest. | 8. The price for every £100 of stock.
Colonial Government Bonds, the other form of investment, are paper or parchment docu- ments, on which are printed all details of the par- ticular loan taken up by the Colony, the nature of the Security the lender has in advancing his money, the rate of interest, and when and how the principal is to be repaid. These bonds are payable to bearer, and pass from hand to hand without any formal transfer, so that as much care is necessary in safe-keeping them, as with bank-notes. Attached to these bonds are little coupons or slips of paper, each one representing a half or quarter year's in- terest, from the date of purchase to the time when the principal is to be paid off. The coupon bears the name of the bank or agency where it may be cashed, and any banker will negotiate it. Of course, only the coupon for the interest actually due on the date indicated on the face must be cut off.
FOREIGN GOVERNMENT STOCKS.
These represent money borrowed by various foreign countries on the security of their credit or solvency, and the loans stand to them in the same relationship as the British Government Funds do to this country. The debts are chiefly repre- sented by bonds, the same as Colonial Govern- ment Bonds, and with coupons attached, which, whether payable in England or their own country, are collected by bankers in the same manner. Such European States as Germany, France, Russia, Denmark, Sweden, and Italy, always enjoy good credit, and they may be con- sidered responsible for their financial engage- ments. In the case of Italy, however, it must be remembered that the Italian income-tax, amounting to 20 per cent., is deducted from the interest, which has also to bear the English income-tax, whatever at the time it may be.
When investing in Colonial or Foreign bonds, especial care is necessary in observing the con- ditions of re-payment. Sometimes it is at the option of the borrower, but usually at a certain specified date. Neglect of this precaution may lead to an investor purchasing at a premium, and sooner than expected being paid off at par.
Some of these loans, too, are paid off by annual instalments, lots being drawn to deter- mine the bonds to be redeemed. If the bonds, therefore, have been bought at a premium, there is always the risk of their being drawn for pay- ment and paid off at par. On the other hand, if the bonds are bought at a discount, there is no danger of loss; and a profit will be realised should they be drawn for payment.
For instance, a £100 bond is purchased at 4 premium, costing £104. If the bond is paid off at par, or £100, there is obviously a loss of £4; but if the bond is purchased at 4 discount, cost- ing £96, it is equally obvious that, if paid off at par, there would be a gain of £4.
RAILWAYS.
Next to the British Government Funds, by far the largest amount of money is invested in Eng- lish railways. First in order of safety, as an investment, is the debenture stock of a railway company. This is the first charge on the rail- way, and holders of the stock are paid the in- terest thereon in priority to all other stocks. In the event of the failure of the company they must also be fully satisfied as to principal and interest before any one else can receive a penny. Any amount of stock, odd or even, may be pur- chased through a banker or broker, and war- rants for the interest are forwarded half-yearly to the address of the registered holder. The debenture stocks of good English railways com- mand a high premium, and the investment, therefore, though undoubtedly safe, does not yield much in the way of interest. Guaran- teed stocks are of various kinds and rank — some on the same level as, and others next in order to, debenture stocks. In some cases the interest is guaranteed by another railway. Before investing in these stocks the nature of the guarantee should be ascertained and its value taken into consideration. Preference stocks and shares come next in rank as an invest- ment. The interest on these is fixed at a cer- tain rate per cent., and, after satisfying the preceding stocks, must be paid in full; or if there is not sufficient profit in the year to pay in full, then as much as means will allow. But any deficiency cannot be carried on to the next year, and so it is lost to the holders.
There are several degrees of Preference stock, some taking precedence of others as to interest; a first preference may be as good as debenture stock, whilst the last preference of the same railway company may be no better than ordinary stock.
Preference stock may be purchased in any amount in the market, and the interest war- rants are sent half-yearly to the registered holders.
Ordinary stocks depend on the profits for the year for the interest they yield, and thus afford a wide field for speculation. The stocks of the great English lines may be relied upon as a good investment, the profits being steady and sufficient to assure a fair amount of interest after satisfying the prior claims of debenture and preference stocks.
Ordinary stock may also be purchased in any amount, and the warrants for interest are sent half-yearly to registered holders of stock.
In all cases railway warrants of every kind will, upon written request to the secretary of the railway company, be forwarded periodically to the bankers of the holder of the stock for the credit of his or her account.
INDIAN RAILWAY STOCKS.
These are a favourite investment with the British public. They consist of Debenture, Guaranteed, and Ordinary stocks. The Deben- ture stocks are similar to those of British rail- ways, and are a first charge on the undertaking. The Guaranteed stocks are those upon which there is an undertaking by the Secretary of State for India that the interest shall not be less at any time than they are stated to bear; any deficiency in the earnings being made up by the Government. Should the earnings be more than sufficient to pay the stated interest, the surplus is divided between the Government and the railway company. Annuities may be purchased in some of these railways, that is to say, by paying, we will assume, £30 as the market price, an annuity of £1 a year will be granted for a certain number of years. In dealing with these it is necessary to ascertain when the annuity ceases, or the investor, hav- ing sunk the capital sum, may cease to receive any income therefrom when least expected.
Warrants for interest on these stocks are periodically sent to registered holders.
AMERICAN RAILWAYS.
The stocks and shares of Canadian and American railways offer a more remunerative return than English railways, as they may be purchased at much lower prices. They are subject, however, to speculative influences of many sorts, and can hardly be recommended for safe permanent investment.
No venture should certainly be made in these stocks without full knowledge of the position and prospects of the railway company and the contingencies to which it may be subject. Any banker would obtain for a customer all the in- formation that could be afforded in regard to these stocks, and indicate their market value as an investment, apart from the fictitious value induced by speculators, and the manoeuvres of syndicates and wire-pullers.
FOREIGN RAILWAYS.
The capital of foreign railways consists of obligations, stocks, and shares. The obligations are in the form of bonds, being a first charge on the railway. The bonds vary in amount, but chiefly represent £100 and £20, and they bear a certain rate of interest. Some of the Conti- nental railways may offer a fair investment in this way, but great care is required in the selection.
The stocks and shares of some of the South American railways command a high premium, but of the whole number quoted in the official list the large majority show a heavy decline on the original value, many indeed being valueless. These stocks are highly speculative and subject to be affected by political convulsions and other contingencies, which make them undesirable as an investment.
BANKS.
A joint-stock bank is composed of a number of proprietors who hold the shares which make up the capital of the bank, and to the nominal amount of these shares their liability is limited.
The whole of this amount, however, is not paid up, but only sufficient for the working re- quirements of the bank, the remainder being held in reserve for contingencies. Let us take, for instance, the London and Westminster Bank, which has the largest capital of all the joint- stock banks.
The capital amounts to £14,000,000, made up of 140,000 shares of £100 each. Only £20 of this £100 is paid up, leaving a liability of £80 on every share.
A joint-stock bank is governed by a board of directors, elected by the shareholders; and managers and other officers are appointed by the board to conduct the business. Many of these banks, besides having a head establish- ment in London, have branches all over the country. Every joint-stock bank is compelled by law to publish its accounts so as to show its position, and these accounts are presented to a yearly or half-yearly meeting of the shareholders for approval.
The British Colonies have a good many joint- stock banks, with agencies in London. By a Permissive Act passed in 1825 the shareholders in most of these are liable for double the amount of their shares.
The profits of banking have been, in times past, very large, and the original shareholders of the older banks have reaped the advantage thereof, but bank shares of good repute are not now to be obtained except at a high premium.
The dividends are sent half-yearly to the ad- dress of the shareholders, and they are not liable to income-tax, as the bank pays this. Any one entitled to exemption from income-tax can claim from the surveyor of taxes the amount the bank has paid in respect of the dividend, on a certifi- cate from the bank to that effect.*
* See Note, p.39.
Individuals of a timorous disposition, if they value their peace of mind, would do well to avoid investing their money in bank shares. There are banks whose position and stability are above suspicion, and which return handsome dividends to their shareholders; but there have been cases of banks, enjoying unlimited confi- dence, which have unexpectedly collapsed and overwhelmed their shareholders in ruin. The nervous person, therefore, who could not read of the collapse of a bank without a fearful appre- hension that his own would be the next to go, had better be content with a smaller rate of in- terest and a tranquil mind therewith. The more sanguine investor who desires a good rate of interest for his money, and has a contempt for contingencies, should at least have some know- ledge of accounts, and be able to form some estimate of the position of a bank from the annual balance-sheet, and should carefully ascertain what immediate contingent liability he would be subject to in the event of collapse.
COLONIAL AND FOREIGN CORPORATION STOCKS.
These represent money borrowed by munici- palities and trusts in Colonial and foreign towns, and the security offered consists of rates and revenues from the various undertakings, such as harbours, gas, and water-works, city improve- ments, &c., in which the loans are invested. The loans are mostly represented by bonds, to which coupons are attached for interest, and are repayable at a certain specified date. Although they do not command the high credit of British Corporation loans, yet some of the Colonial towns are in fair repute as an investment, and the rate of interest is high enough to tempt a large amount of money from this country. Towns of some size in our Colonies, and thoroughly settled, may be relied upon to carry out their obligations, but mushroom cities and foreign places liable to political fluctuations should be looked upon with suspicion.
CANALS AND DOCKS.
These offer but a limited area for investment. They were formerly very popular with the British investor, but rival interests and labour troubles have affected the confidence in which they were held, and the ordinary stocks are mostly at a considerable discount.
Gas and electric lighting companies, trams and omnibus companies, telegraphs, telephones, water-works, &c., must all be judged by the localities which they serve and the amount of business they are likely to command. As per- manent investments it should be considered whether they are likely to suffer by supersession or opposition, and if they are managed by a trustworthy competent board of directors.
BREWERIES.
Among the numerous commercial undertak- ings offering for investment, brewery companies form a class of themselves, and, with few excep- tions, the English companies appear to have done well, and the shares of the best of them stand at a high premium. Properly managed and dealing in an article of universal consump- tion, brewery companies ought to be a trust- worthy investment: but they are liable to much fluctuation. The shares of one of the leading concerns, which now stand at about 150 for the £100 share, were only four years ago as low as 28, and at the same time only half the interest was paid on the preference shares. American brewery companies are liable to be manipulated by cliques and syndicates, and should be avoided as an investment.
COMMERCIAL AND INDUSTRIAL COMPANIES.
Speaking generally, taking shares in this class of property is like purchasing tickets in a lottery in which the prizes are not numerous. It may fairly be said that at least three-quarters of these companies are formed for the purpose of relieving private owners of concerns which were on the verge of failure through some cause or another.
It would be palpably foolish for a man or a firm doing a prosperous business to give it up into other hands, unless such a price could be obtained for it as would be almost ruinous to the purchaser. True it is that in the remaining quarter may be found perfectly legitimate un- dertakings formed into companies, owing to the death of the owner, deficient capital, or some other valid reason. Some of these flourish and take root, others are prosperous for a time and gradually die out. After a time it will be found that few remain which could be recommended for a permanent investment; and much informa- tion has to be sought and acquired before the venture should be made.
There are, of course, many persons who have the means of acquiring reliable information about a company, and are able to form a sound opinion as to its prospects, but the information is derived from personal knowledge and not from kind friends or from public prints, which are not always to be trusted. These persons purchase shares either for investment or as a speculation — in this latter case with a know- ledge or, at all events, a safe presumption that they will go to a premium, that is, rise in value to considerably more than their nominal amount, either from their own merits, or from an active demand for them on the part of the public, or by artificial stimulation. The holders know pretty well when the highest price has been reached, and then sell out with great advantage to them- selves. It is often at that moment that the tyro is recommended to buy, or is seized with a desire to have a share in so good a concern, and parts with his money. The knowing speculator has taken his profit, and sees with grim satisfaction the shares gradually declining in value, until they arrive at the position of more than one- third of existing companies which are now quoted at a discount.
FINANCIAL LAND AND INVESTMENT COMPANIES.
These companies are mostly formed for the purpose of employing their capital in the Colonies, where money commands a higher rate of interest, and can be more profitably employed than in this country.
Some of the older concerns have been suc- cessful, but of the whole number of existing companies at least one-half, judging from the price of their shares, have been failures. The difficulty with these concerns would seem to be the want of direct control, their business having chiefly to be conducted by agents who often consider their own interests before their employers'. Some of these companies appear to have advanced large sums of money on the security of land which they can neither sell nor let, and which has been abandoned by the borrower.
FINANCIAL TRUSTS.
The shares in these trusts were at one time much sought after as an investment. The ostensible business of a trust company is to purchase shares and stocks of other concerns at favourable opportunities, and to invest widely in foreign and other companies offering good dividends, so as to average a high rate of inter- est. They are divided into debenture stock, preferred stock, and deferred stock. The latter has its share of the profits after the others have been satisfied, and at present three-fourths of the companies now doing business have their deferred shares at a discount. The financial collapse in Argentine, some years since, very seriously affected most of these concerns, and it is doubtful, in view of the risky nature of the business, whether they will ever come into favour again.
INSURANCE COMPANIES.
Under the head of Life, Fire, and Marine Insurance, these companies, as a class, have been more steadily successful than others. Most of these concerns are making large profits, and their shares command a high premium; so high, indeed, that an investment at current prices yields but a moderate rate of interest. The risks undertaken by insurance offices are enor- mous in extent, but the law of average by which they are conducted is so accurate that, taken in the long run, and with sufficient business main- tained, misfortune is almost impossible. In all cases, however, so little is called up of the nominal amount of their shares, that a very large liability attaches to them.
STEAMSHIP COMPANIES.
Judging from the prices of the shares in these companies, they have not been very successful as a whole, and it would appear that a Govern- ment subsidy for mail or other service is almost necessary to make them profitable.
MINES.
Speculation in shares of mining companies has of late years been indulged in to an enor- mous extent, and large fortunes have been made and much money lost. As a rule the prizes have been secured by those behind the scenes, and the public have not had the opportunity of participating until the price of shares had reached a figure which was almost prohibitory. As an investment mining shares, even of the best, are not to be recommended. Mines are apt to get worked out when the source of income fails and there is an end to the concern. More- over, hundreds of companies are promoted which have a specious appearance on the prospectus, and are puffed in every imaginable way, when they have not an ounce of ore or a yard of ground to call their own. Of course, there are genuine undertakings which answer well and yield large profits, but it is extremely difficult to discriminate between the good and the bad, and the best after all are but a speculation.