THESE are loans raised by boroughs and counties, 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 probability 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 £9O 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 borrowing 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 investor 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 idvanced to a very considerable premium.
Experience has shown that, so far, the investment has been a safe one,
although great fluctuations 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 distinguish between those
Colonies which are permanently 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
remembered 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.
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 dividend 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.
2. The amount actually owing.
3. When the interest is payable.
4. When ex interest.
5. The rate of interest on the Loan.
6. The name of the country borrowing.
7. When the Loan is re-payable - thus "1919 or 1944."
8. The price for every £100 of stock.
Colonial Government Bonds, the other form of investment, are paper or
parchment documents, on which are printed all details of the particular 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 interest, 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 represented by
bonds, the same as Colonial Government 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 considered responsible for their financial engagements. 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 conditions 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 determine 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 payment 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, costing 96, it is equally obvious that, if paid off at par,
there would be a gain of £4.
Next to the British Government Funds, by far the largest amount of money
is invested in English railways. First in order of safety, as an investment, is the
debenture stock of a railway company. This is the first charge on the railway, and holders
of the stock are paid the interest 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
purchased through a banker or broker, and warrants for the interest are forwarded
half-yearly to the address of the registered holder. The debenture stocks of good English
railways command a high premium, and the investment, therefore, though undoubtedly safe,
does not yield much in the way of interest. Guaranteed 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 investment. The interest on these is
fixed at a certain 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 warrants 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
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 Debenture stocks are similar to those
of British railways, 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, having sunk the capital sum, may cease to receive any
income therefrom when least expected.
Warrants for interest on these stocks are periodically sent to
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 information 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.
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 Continental 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.
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 requirements 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 establishment 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 address 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 certificate from the bank to that effect.*
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 confidence, 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
apprehension that his own would be the next to go, had better be content with a smaller
rate of interest 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 knowledge of accounts, and be able to form some estimate of the position of a
bank from the annual balanc-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 municipalities 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 improvements, &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
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 permanent 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.
Among the numerous commercial undertakings offering for investment,
brewery companies form a class of themselves, and, with few exceptions, 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 consumption, brewery
companies ought to be a trustworthy 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
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 undertakings 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
information 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 knowledge
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 themselves. 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 successful, 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.
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 interest. 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.
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 enormous 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
maintained, 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.
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 Government subsidy for mail or
other service is almost necessary to make them profitable.
Speculation in shares of mining companies has of late years been
indulged in to an enormous 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. Moreover, 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.