ENGLISH AND AMERICAN RAILWAYS.
FASHION changes in commerce as well as in every other field of life. A little while ago, Fashion looked down upon American securities of all kinds, but now the capricious goddess seems taking a very decided turn the other way. There are reasons for all changes, even in the gay universe of the drawing- room. The Elgin marbles are discovered, ard the matrons of England, conceiving that they shall shine in the classic aspect, assume that plain style of drapery of which Fuseli has left us such amusing though unintentional caricatures. An imperial beauty is struck with the idea that her loveliness will be more resplendent if she appear like Aphrodite rising from an ocean of hoop, and the costume of Louis Quartorze once more extends from France to England, and now even crosses the Atlantic. The changes of fashion in American securities are traceable to reasons at least as substan- tial. Some years ago, the State of Pennsylvania deviated into certain dubimis proceedings with regard to its stock ; the most versatile of English wits happened to be hurt at the proceeding, and he "showed it up " with more brilliancy of satire than accuracy of statement. Many circumstances contributed to render rail- ways independent of the wit's shots ; for the grounds On which their value rests in the market are too substantial and too visible to be joked out of sight. Still there were strong causes indeed for the reeent disfavour even of railway securities in America. During the three past years, we have had in that eountry two bad harvests and an indifferent harvest. A large proportion of American railways depends in a great degree upon what we should call "their goods traffic, particularly in the trans- port of agricultural produce ; and, unquestionably, the traffic on many very popular lines fell off very seriously. The Bears seemed in permanent possession of the market. But even if bad seasons had continued, a change must have taken place, since it could not fail to be observed that the receipts of the railway companies continued to recover, even during the adverse weather ; and why ? Simply because the vast community which peoples the United States is perpetually increasing in its numbers and in its conquest of the soil ; hence, there is a perpetual growth in the passenger and goods traffic of every line already existing in the American Union. So decided is it, that the produce sent east- ward from Chicago in 1859, an adverse year, almost equalled the same traffic of 1856, one of the most prosperous in America.* Chicago, indeed, very well exemplifies the growth that is going on at all the great centres of western agriculture and commerce, including St. Louis, Milwaukee, and Cincinnati.
"Only fifteen years ago," says Mr. Lance, " not a single line of railway entered Chicago ; now it receives freight and passengers from 4736 miles, which, at a moderate estimate, must have cost over 23,000,000/. sterling. Not many years since an Indian track was the only guide from Chicago to the Mississippi; now nine railways run direct from Chicago to different points on that river, and some of these lines have paid dividends of over 25 per cent per annum to their shareholders. In 1830, a resident now in Chicago, who had become entitled to a quantity of land for services during the Black Hawk' Indian war, was offered a tract on the Illinois river, but he declined to accept it, saying that he had sufficient garden ground.' In 1856, this same land, now the centre of the city of Chicago, was worth some millions of dollars. Many farmers residing about one hundred miles from Chicago, told me they could not obtain any profit on their wheat when it was 'teamed' to that city, for the expense of teaming was as great as the value of the wheat.. Now it can be conveyed that distance by railway for at most six cents per bushel; and in 1856, no less than 24,674,824 bushels of all kinds of grain were imported and sold in Chicago, the conveyance of which, if forwarded by rail to New-York at two cents per ton per mile, would give a revenue of Over 12,000,000 dollars. In 1859, the quantity of grain ex- ported was 20,008,223 bushels, the total export tonnage being equal to that of 1856. Up to 1856, the increase of Trunk line' accommodation between the East and the West had been proportionate to the growth of the West, and the movement of freight and passengers in proportion to the produce of the soil in each year. Good harvests produced abundance of freight to the East, and created a demand for Eastern manufactures, besides furnishing the means for passengers travelling ; while bad harvests checked every de- scription of trade. The prosperity or depression of railway traffic on the
* This fact, with some others, is taken from two pamphlets just issued by Mr. William Lance, of 54, Throgmorton Street. 'Ike other figures in the article are taken from the official report of the railways of Great Britain', by Captain Galion, giving the statistics for the year 1857. If similar returns could be taken for the present year 1860; the comparisons would, we have reason to believe, Sc even more striking. But the reader will observe that the comparison which islorced upon our notice does not at all depend upon the transitory details of particular seasons ; it is caused by the different conditions of the two countries, and it is no disadvantage to our view if its fault lies in moderation rather than in any enhancement of the facts. Trunk lines is then dependent on the prosperity of the West, and hence the imnortance of understt.ndiug the causes of the decline of traffic in 1858 and 1859." .
The movement in the market for American securities, natu- rally enough, happens simultaneously with the annual report ' of our own railway companies, and challenges comparison,— though in making that comparison we must remember the essen - 1
tial difference of the two eountries. The population of the two s not very different, and yet over what a vast space is the America republic spread ! What wide span between the American‘sta tions ! In this respect, it is the comparison of a small island' against a vast continent. Many of our readers are ' familiar with what we have called the New Brunswick plan of pro- moting land culture and settlement by the making of roads direct into the wilderness—a most efficacious plan. The same principle has been applied in the Union_ to the making of rail- roads, though that has, in some instances, been abused by a pecu- liar sort of speculation, in the free grants of land made by the' States to encourage the construction of railways i spe.chlations not altogether of the moit laudable character. Whether on these par- ticular lines, or on others traversing scantily 'peopled districts', American engineers have necessarily designed their railroads with the view of meeting a traffic comparatively lighter than ours, but spread over larger spaces; the works, therefore, were slighter, and they have immediately shown a larger preportionate wear and tear. The consequence is, that in many eases the railroad has to be what they call "repaired,"—what we English should call "re- newed," or built over again from the beginning, in a solider fashion, commensurate with the heavier traffic that the railroad itself has called into existence. It must be borne in. mind, too, that adverse seasons necessarily have a more sudden and obvious effect upon the returns of railways in the Western districts ; though, at the same time, the perpetual growth of agriculture and population reacts upon any such abatement, aa we have already seen. 'Whenever a comparison has to be made between English and American property in railways, these facts must be borne in mind, constituting as they do the risks to which American pro- perty is liable. Even with these qualifications, however, we English, who take so great a pride in the prosperity of our country, in the returns of capital invested upon our own land, and in the certainty of our commercial transactions, may look with seine respect upon the ac- tual results of railway enterprise in the United States. We have already seen the wondrously rapid growth of railway trafficlin the West. This necessarily follows from the stupendous growth of the commonwealth itself,--inereased by orie-third the number of souls within the decade ! But let us look at the details. Consider- ing the immense spread of the American territory, it is not sur- prising that the extent of railroads should exceed ours as it does —26,210 miles there against 9119 here. But the comparison holds good even with regard to population : for every million of people in England there are 378 miles of railway open ; in the United States, 674. The Americans manage to make their rail- ways cheaper for all classes : the average 'charge for first-class carriages in England is 2d. per mile ; in America, ld.—our Par- liamentary rate. The charge for second-class passengers there is one-third of our average, and for third-class- passengers a trifle more than one-third. Yet it is notorious that in convenience and comfort the American carriages greatly exceed the English. There is, therefore, positively more accommodation, and better, at a cheaper rate. We might have expected this in a republic, but what do the shareholders think of It? For that is the point ; and the comparison interests them quite as much as the passenger. The total cost of all the railways in use in England is 304,000,000/., in America, 216,000,000/. There, 26,000 miles have cost little more than two-thirds of the money paid for 9000 here. In Ame- rica, there has been a larger draught upon capital for the purpose of construction and working, and what are the returns ? Cap- tain Galion states the nett earnings for English railways. at 41 per cent, for American railways at 61 per cent. At the re- cent meetings, the dividends declared by our great railway com- panies have scarcely supported the standard of these statistics ; the dividend of the Great Northern was 21; of the GreatWestern, 3; Brighton and South Coast, 41, ; North-Western, 21 per cent. We have alluded to the fluctuations of American railways, but we may observe that, not long since our North-Western 'dividends were at a much higher percentage, the Great Western down at 2; while last year the Brighton dividend was 6 per cent. If we take a larger view, and compare the aggregate of several railways in the two countries, the results are even more striking. We take fifty English railways, including the metropolitan lines, and fifty American railways in what we may call the midland district. Here we find that, as usual, the cost of the English exceeds the American, being 247 millions sterling here against 54f millions there. The The revenue in England is 20 millions, in America nearly: 91. The aggregate nett revenue in England is 101 millions; in America, nearly 41- millions. But what is the dividend per cent ?—for that is the point which most concerns the shareholder: it is, in England, 4.25 per cent ; in America, 8-06 per cent. If the reader will glance at these figures, remembering the re- cent development of vast territories in the Union, he will observe that the ratio of growth indicated by the history. of Chicago practically applies to the whole history of railways, except those which run due South, and what may be called the local traffic of the New England States. The future increase, there- fore, must be marked by a geometrical ratio. It will, of course, IF fluctuate ; but it does not follow that the fluctuations will be at all in the same geometrical ratio; and for this reason. The geometrical character of the ratio arises from the increase of population and its perpetual spread in a Westward direction, whereas the fluctuations are nothing but the direct temporary change of seasons ; and we have already seen that the most ad- verse Seasons are compensated by a steady growth, while the pros- perouiSeasons exhibit an extraordinary burst of prosperity. There is another reason why the figures will show this stupendous ex- pansion: We have already explained how, on some lines, the works have been very Slightly constructed in the first instance ; the lines have, as it were, been built out of a very limited capital, and have then been reconstructed out of revenue. On these lines theie will be a sudden flush of prosperity about the period when
morepermanent works shall have been finished. •
Several lines have been constructed also on the strength of tem- porary notions, blindly following the growth of individual settle- ments, and planned on gauges locally thought to suffice ; but new ways have already been established in the Union; the great ad- vantage to be derived from striking one continuous highway Westward to St. Louis has not only been recognized by .men as high in American statesmanship, but has at last been carried out by American enterprise. The New York and Erie was planned upon the broad guage, so Was the Ohio and Mississippi; lines whose securities have been largely held in Europe, on demount of their excellent prospects'. But these fragments of a great high way from the Atlantic to the Mississippi and Mis- souri,—to Arkansas, Oregon, and:California —have been without the connecting link only now supplied in the Atlantic and Great Western. This line is also on the broad gauge. Its constructors, profiting by the experience of the past,—seeing the economy of raising sufficient capital to build their works in the solidest form from the first,—knowing that an ample business awaited them, both the local traffic of a district rapidly becoming peopled, and the through traffic proper to the two fragments of the Western high- way,—have so designed the execution of their works that, from the first, they will have no abatement in the shape of "renewals." The consequence is evident, and, indeed, is to a certain extent already realized on the portion of the road that has been finished ; for the proprietors of the line immediately take possession of a traffic which was only waiting for the road, without any abate- ment of the revenue for the item usually so large in American railway accounts—repairs. It is true that American dividends have been big-enough to bear that abatement, but what share- holder would not prefer his dividend without such an income-tax ?
There are industrial and social features of the comparison, in some respects still more striking than those which we have noticed ; but they will furnish the material for another survey.
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