-TOPICS OF THE DAY.
RAILWAY SPECULATORS: THEIR COURSE WHEN THE EXCHANGES TURN.
DURING the past year about two millions of Railway Shares have been issued to the public; and as all these Shares are at a pre- mium, the public consider themselves in very comfortable circum- stances. But their prosperity is yet to be increased before they retire from the market to rest upon their gains. To realize now might be all very well ; but, after a twelvemonth's experience in 9:teculation, people become exceedingly shrewd, and perhaps a little covetous, and are not to be persuaded to give over till they have got all that is to be had. The public will go on, therefore, till the market has reached its highest point : and, with all the recent discussions shoat the Bank Charter Act and.the foreign exchanges froth in their recollection, they can easily foresee when that may be looked for; they will then step into the Stock Exchange, give orders for the sale of their Shares and, with a complacent sense of their large profits and of the knowing way in which these have been achieved, fall back upon a well-earned competency.
This is what the public intend to do ; and nothing can be more satisfactory than such a prospect. It is quite clear, too, that unless the few gentlemen of the Stock Exchange are shrewder than all the public put together, the plan is certain to succeed.
In the first place the public know that a crisis is sure to come: they are not slumbering in false security, but have got their eyes open, and are only waiting their opportunity. They know well enough, that while the foreign exchanges continue in our favour and gold steadily flows in, prices will continue to rise ; because men are not apt to let their gold lie idle, but will either invest it themselves, or if nervous, lend it out upon interest and good se- curity to others who are not so timid. In this state of things, therefore, it would be folly for any one to sell : the men with money seeking investment must bid over each other's heads, and it would be a pity not to wait and see how far they will go. The public, consequently, will keep their eyes upon the weekly returns of the Bank, and when they see that the influx of bullion has ceased and an efflux has commenced, then will be their time to act, and to act with unanimity. Under this view' the anticipations of plodding men who re- member the years 1826 and 1837, that the community are in danger, will seem for the most part groundless. Let those who doubt the sagacity of the public look at the eager practical-look- ing faces that throng round the brokers' offices when the One o'clock Price-list is stuck up, and they will confess their error. Let them look at the names of the bankers and merchants, au- thorities on currency and banking, who are now deep in Railway- Shares, and they will feel it vain to assert that the less-informed persons who occupy the same boat can be in the slightest peril. These gentlemen will know when to realize ; and even if there were no Bank returns to refer to, it would be enough for others to observe and to imitate their movements.
There are symptoms, however, that this national retirement from business to ease and luxury is not to be long delayed. The monetary tide has risen already far beyond all experience, and the ebb must soon be looked for—perhaps indeed it is already begun, although the upper current is not yet changed. At all events, things are at work to bring it about. The wealth in the shape of Railway Scrip with which each man's pocket is stuffed has led, no doubt,. to increased expenditure increased expendi- ture must lead to increased importations ; and increased importa- tions must, unfortunately, be met by increased payments, to which the calls on Foreign Railways will form a disagreeable addition. To make these payments, sales must be effected—of manufactured goods if possible; but if our foreign friends are not living quite so fast as ourselves, they will not need an over-stock of goods, and will prefer to take gold. To get the bank-notes wherewithal to procure the gold, something must be disposed of; goods at a sacrifice, land, houses, Consols, or, last and dearest, Railway Shares. The man who buys any of these must sell some- thing else to pay fbr them, (for it must be remembered that gold will no longer be flowing in and seeking investment) ; and thus, from a nation of buyers we are to become suddenly converted to a nation of sellers. Money having come into demand, the fortunate holders of Railway Scrip—who have mostly invested every farthing within their reach without laying anything by for future "calls, which may then begin to get pretty frequent— will decline to borrow at 40 or 50 per cent instead of 10 or 15, and the hour for realization will have arrived.
The only chance against this realization being effected in a gratifying manner, consists in the possibility that the gentlemen of the Stock Exchange to whom the Shares will be offered for sale, may, when they find that there are whole armies of sellers and no buyers, refuse not only to give the price which the Share- list of the period may indicate, but even to purchase upon any terms. It is to be feared that the readiness with which they bid for these "securities" at the present moment, arises more from the certainty of being able to dispose of them at a fractional advance the next moment than from any abstract admiration of Railroad Shares in general ; and hence that, eager as they seem now to do business at high premiums, they would, if the public were generously to give them the offer of the whole two million Shares in one lot, even at a reduced price, ungratefully decline accepting it. In fairness, however, it must be borne in mind, that there are perhaps not more than a hundred jobbers in the
Share-market; and as the purchase at anything like present pre- miums would require about ten millions sterling—to say nothing either of the amount paid up, (and absorbed in Parhamentary expenses?) which would come at least to about six millions more, or of some eighty millions still to be called for—these gentlemen might not, even if they had the best opinion in the world of the value of the security, be prepared to draw, upon an emergency, for the cash required. If things shall turn out in this way, the public, instead of being independent, will be in a sad position. But it is to be hoped the gentlemen of the Stock Exchange will generously look up their resources and provide for the demand that is coming upon them. Unless there were some probability of their acting in this fashion, it would be impossible to account for the calmness with which shrewd and experienced City men daily extend their purchases ; and therefore there is room for hope.
Supposing, however, this confidence should prove fallacious, and things should take the fatal turn which has been hinted at, there is one consolation which will be open to all involved in the common ruin. Heretofore, when we have been visited by the consequences of over-speculation, the issuing-banks have con- trived, as fast as the foreign exchanges went down to counteract the contraction of the currency which would otherwise have taken place, by a proportionate increase in their issues, and,Viat to defer the inevitable crash, with the certainty of causing it to' be more extensive and protracted when it came. The Bank Charter Bill of last session will now effectually preclude this pal: liative : when once the exchanges turn and the banking-reserve of the Bank of England is reduced to its lowest point, nothing can then take place but the inflexible working of the law, under which the paper-circulation of the country will contract day by day in proportion to the gold withdrawn ; and from the dull un- varying pressure of this remorseless screw there will be no escape until it has done its work. If under its operation the Railway schemes of the past year should fall from their present premiums, not to a discount but merely to par, about ten millions of wealth of which the public now fancy themselves possessed will have wholly evaporated ; while, if the Shares of the old Companies fall only to the point at which they stood this time last year, and from which they have risen not so much on account of increased dividends as from anticipations of wonderful effects from amalga- mation, &c., an evaporation of about twelve millions more will be found to have taken place. When these events occur, with their long train of bankruptcies, embezzlements, and suicides, the pub- lic will not be disposed to permit self-reproach to be added to their other afflictions : the new Bank Charter Act will receive their anathemas, as the cause of all the evil ; and by hugging this consolation, many will contrive to pass through the misery that awaits them without even deriving the advantage of the lesson which that misery is calculated to teach—namely, a con- sciousness of their own immorality and folly.
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