CHAPTER XIX. PLAIN RULES FOR RAILWAY SPECULATORS.

(142.) For some time after the completion of the Liverpool and Manchester railway, doubts were entertained of its ultimate success as a commercial speculation; and, even still, after several years' continuance, some persons are found, sceptical by temperament, who have not acquired full confidence in the permanency of its advantages. The possibility of sustaining a system of regular transport upon it, with the unheard of speed effected at the commencement of the undertaking, was, for a long period, questioned by a considerable portion even of the scientific world; and, after that possibility was established, by the regular performance of some years, the practicability of permanently profitable work, at that rate of speed, was still doubted by many, and altogether denied by some. The numerous difficulties to be encountered, and the enormous expense of locomotive power, have been fully admitted by the directors in their semi-annual reports. Persons interested in canals and other rival establishments, and others constitutionally doubtful of everything, attributed the dividends to the indirect proceedings of the managers, and asserted that when they appeared to be sharing their profit's, they, in reality, were sharing their capital. This delusion, however, could not long continue, and the payment of a steady semi-annual dividend of 4-1/2 per cent. since the opening of the railway, together with the commencement of a reserved fund of a considerable amount, with a premium of above 100 per cent. on the original shares, has brought conviction to understandings impenetrable to general reasoning; and the tide of opinion, which, for a time, had turned against railways, has now, by the usual reaction, set in so violently in their favour, that it becomes the duty of those who professionally devote themselves to such inquiries, to restrain and keep within moderate bounds the public ardour, rather than to stimulate it.

The projects for the construction of great lines of internal communication which have been announced would require, if realized, a very large amount of capital. Considering that the estimated capital is invariably less than the amount actually required, we shall not, perhaps, overrate the extent of the projected investments if we estimate them at fifty millions. The magnitude of this amount has created alarm in the minds of some persons, lest a change of investment so extensive should produce a serious commercial shock. It should, however, be considered that, even if all the projected undertakings should be ultimately carried into execution, a long period must elapse, perhaps not less than fifteen or twenty years, before they can be all completed: the capital will be required, not suddenly, but by small instalments, at distant intervals of time. Even if it were true, therefore, that, to sustain their enterprises, an equivalent amount of capital must be withdrawn from other investments, the transfer would lake place by such slow degrees as to create no serious inconvenience. But, in fact, it is not probable that any transfer of capital whatever will be necessary. Trade and manufacturers are at the present moment in a highly flourishing condition; and the annual accumulation of capital in the country is so great, that the difficulty will probably be, not to find capital to meet investments, but to find suitable investments for the increasing capital. In Manchester alone, it is said that the annual increment on capital is no less than three millions. In fifteen years, therefore, this mart alone would be sufficient to supply all the funds necessary for the completion of all the proposed railroads, without withdrawing capital from any other investment.

The facilities which these Joint Stock Companies offer for the investment of capital, even of the smallest amount, the temptations which the prospect of large profits hold out, and the low interest obtained on national stock of every description, have attracted a vast body of capitalists, small and great, who have subscribed to these undertakings with the real intention of investment. But, on the other hand, there is a very extensive body of speculators who engage in them upon a large scale, without the most distant intention, and, indeed, without the ability, of paying up the amount of their shares. The loss which the latter class of persons may sustain would, probably, excite little commiseration, were it not for the consequences which must result to the former, should a revolution take place, and the market be inundated with the shares of these gambling speculators, who buy only to sell again. Effects would be produced which must be ruinous to a large proportion of the bonâ fide subscribers. It may, therefore, be attended with some advantage to persons who really intend to make permanent investments of this nature, to state, in succinct and intelligible terms, the principal circumstances on which the efficiency and economy of railroads depend, so as to enable them, in some measure, to form a probable conjecture of the prospective advantages which the various projects hold out. In doing this, we shall endeavour, as much as possible, to confine our statements to simple facts and results, which can neither be denied nor disputed, leaving, for the most part, the inferences to which they lead to be deduced from them by others.

It may be premised, that persons proposing to engage in any railroad speculation should obtain first a table of gradients; that is, an account of all the acclivities upon the line from terminus to terminus, stating how many feet in a mile each incline rises or falls, and its length. Secondly, it would also be advantageous to have a statement of the lengths of the radii of the different curves as well as the lengths of the curves themselves. Thirdly, an account of the actual intercourse which has taken place, for a given time, upon the turnpike road connecting the proposed termini, stating the number of coaches licensed, and the average number of passengers they carry; also as near an account of the transport of merchandise as may be obtained. The latter, however, is of less moment. An approximate estimate may be made of the intercourse in passengers, by allowing for each coach, upon each trip, half its licensed complement of load. Fourthly, the water communication by canal or otherwise between the places; and the amount of tonnage transported by it. With the information thus obtained, the following succinct maxims will be found useful:—