things, be perpetual, and though even the temporary facility may, and probably will, last for some years." This is a hopeful, sunny-minded fellow, with whose aspirations, did our conscience permit us, we should be thoroughly delighted to concur.
These writers may be taken as examples of two numerous classes. They are, in fact, the Trois Eschelles' and Petit Andrés of the railroads. The first consider every commercial exertion consequent on a new discovery, or the opening of a new channel for investment, doubtful in itself, and highly dangerous if hurriedly and unhesitatingly adopted. The social system, in their view, may suffer quite as much from plethora as from inanition. Too much blood is as unwholesome as too little, notwithstanding of any extraneous means to work it off. "Slow and sure," is their motto—"Carpe diem," essentially that of their antagonists. And yet in one thing, we believe, most individuals holding these opposite opinions will be found to concur. They all speculate. Heraclitus signs his contract with a shudder, and trembles as he places his realized premium in the bank. Democritus laughingly subscribes his name to thousands, and chuckles as he beholds his favourite stock ascending in the thermometer of the share-market. Heraclitus sells—Democritus holds; and thus the great point of wisdom at issue between them, is reduced to a mere question of time.
But it is with their opinions, not their practice, that we have to deal. As usual, truth will be found to lie somewhere between two opposite extremes. We neither entertain the timid fear of the one writer, nor the fearless enthusiasm of the other. The present state of matters presents, in a double sense, a vast field of speculation, through which we think it necessary to see our way a little more clearly. Rash interference may be as dangerous as the principle of "laissez faire," which in fact is no principle at all, but a blind abandonment to chance. Let us, therefore, endeavour to borrow some light from the experience of the past.
The desire of growing rapidly rich is a very old epidemic in this country. It is a disease which infests the nation whenever capital, in consequence of the success of trade and prosperous harvests, becomes abundant; nor can it, in the nature of things, be otherwise. Capital will not remain unemployed. If no natural channel is presented, the accumulated weight of riches is sure to make an outlet for itself; and the wisdom or folly of the irruption depends solely upon the course which the stream may take. Of false channels which have conducted our British Pactolus directly to a Dead Sea, from which there is no return—we or our fathers have witnessed many. For example, there were the South American and Mexican mining companies, founded on the most absurd reports, and miserably mismanaged, in which many millions of the capital of this country were sunk. Again, Mr Porter writes so late as 1843—"A very large amount of capital belonging to individuals in this country, the result of their savings, has of late years sought profitable investments in other lands. It has been computed that the United States of America have, during the last five years, absorbed in this manner more than twenty-five millions of English capital, which sum has been invested in various public undertakings, such as canals, railroads, and banks in that country. Large sums have also been, from time to time, invested in the public securities of that and other foreign governments, not always, indeed, with a profitable result." We need hardly remind our readers of the poignant testimony of the Rev. Sydney Smith as to the profit derived from such investments, or the probable fate of the actual capital under a repudiating system.
These may be taken as two great instances of the danger of foreign speculation. The capital of the mining companies was squandered with no other effect than that of providing employment, for a certain number of years, to the lowest of the Mexican peasantry; whereas the same amount, applied to a similar purpose in this country, would not only have produced a handsome return to the invester, but would have afforded work and wages to a considerable portion of the community. There is a reciprocity between labour and capital which
never ought to be forgotten. Labour is the parent of all capital, and capital, therefore, should be used for the fostering and assistance of the power by which it is produced. Here, however, it was removed, and became, to all intents and purposes, as useless and irrecoverable as the bullion on board of a vessel which has foundered at sea. This, therefore, may be regarded as so much lost capital; but what shall we say to the other instance? Simply this—that whoever has lost by the failure of American banks, by repudiation, or by stoppages of dividends, need not claim one single iota of our compassion. With British money has the acute Columbian united state to state by more enduring ties than can be framed within the walls of Congress—with it, he has overcome the gigantic difficulties of nature—formed a level for the western waters where none existed before—pierced the interminable forests with his railroads, and made such a rapid stride in civilization as the world has never yet witnessed. What of all this could he have done on his own resources? Something, we must allow—because his spirit of enterprise is great, even to recklessness, and a young and forming country can afford to run risks which are impossible for an older state—but a very small part, unquestionably, without the use of British capital. We cannot, and we will not, believe that any considerable portion of these loans will be ultimately lost to this country. Great allowance must be made for the anger and vexation of the prospective sufferers at the first apparent breach of international faith, and it is no wonder if their lament was both loud, and long, and heavy. But we think it is but a fair construction to suppose that our Transatlantic brethren, in the very rapidity of their "slickness," have carried improvement too far, given way to a false system of credit among themselves, and so, having outrun the national constable, have found themselves compelled to suspend payment for an interval, which, in the present course of their prosperity, cannot be of long continuance. So at least we, having lent the American neither plack nor penny, do in perfect charity presume; but in the mean time he has our capital—say now some thirty millions—he has used it most thoroughly and judiciously for himself, and even supposing that we shall not ultimately suffer, what gain can we qualify thereby?
If John Doe hath an estate of some twenty thousand acres in tolerable cultivation, which, nevertheless, in order to bring it to a perfect state of production, requires the accessaries of tile-draining, planting, fencing, and the accommodation of roads, it is quite evident that his extra thousand pounds of capital will be more profitably expended on such purposes than on lending it to Richard Roe, who has double the quantity of land in a state of nature. For Richard, though with the best intentions, may not find his agricultural returns quite so speedy as he expected, may shake his head negatively at the hint of repayment of the principal, and even be rather tardy with tender of interest at the term. John, moreover, has a population on his land whom he cannot get rid of, who must be clothed and fed at his expense, whether he can find work for them or no. This latter consideration, indeed, is, in political economy, paramount—give work to your own people, and ample work if possible, before you commit in loan to your neighbour that capital which constitutes the sinews alike of peace and of war.
We believe there are few thinking persons in this country who will dispute the truth of this position. Indeed, the general results of foreign speculation have been unprofitable altogether, as is shown by the testimony of our ablest commercial writers. One of them gives the following summary:—"Large sums have, from time to time, been lent to various foreign states by English capitalists, whose money has been put to great hazard, and, in some cases, lost. On the other hand, many foreign loans have been contracted by our merchants, which have proved highly profitable, through the progressive sale of the stock in foreign countries at higher than the contract prices. It is evidently impossible to form any correct estimate of the profit or loss which has resulted to the country from these various operations; the general impres
sion is, that hitherto the losses have much exceeded the gains." In that general impression we most cordially concur—indeed, we never heard any man whose opinion was worth having, say otherwise.
But in the absence of home speculation it is little wonder that, for the chance of unfrequent gain, men should choose, rather than leave their capital unemployed, to run the risk of the frequent loss. It does not, however, follow, as a matter of course, that home speculation shall always prove profitable either to the invester or to the nation at large. We have said already, that the proper function of capital is to foster and encourage labour; but this may be carried too far. For example, it is just twenty years ago, when, at a time of great prosperity in trade—the regular products of this country being as nearly as possible equal to the demand—a large body of capitalists, finding no other outlet for their savings, gave an unnatural stimulus to production, by buying up and storing immense quantities of our home manufactures. This they must have done upon some abstruse but utterly false calculation of augmented demand from abroad, making no allowance for change of season, foreign fluctuation, or any other of the occult causes which influence the markets of the world. The result, as is well known, was most disastrous. Trade on a sudden grew slack. The capitalists, in alarm, threw open the whole of their accumulated stock at greatly depreciated prices. There was no further demand for manufacturing labour, because the world was glutted with the supply, and hence arose strikes, panic, bankruptcy, and a period of almost unexampled hardship to the workman, and of serious and permanent loss to the master manufacturer. Speculation, therefore, in an old branch of industry, is perilous not only to the invester but to the prosperity of the branch itself. The case, however, is widely different when a new and important source of industry and income is suddenly developed in the country.