IN THE CITY.

Thames Star, Volume VII, Issue 2143, 16 November 1875, Page 4

IN THE CITY.

(feom the wobld.)

"In what, then, shall I invest my money?" This question is asked, we suspect, by many persons at the present moment; for a very natural distrust has. arisen in the reality of the quotations which are daily paraded in the newspapers, and even in the reality of many of the securities whioh are quoted. English funds, guaranteed railroads, and other 'stocks which form 'either directly or indirectly the public debt of the Empire, are* of course of undeniable value.

The, debts of our Colonies, with the exception, perhaps, of New Zealand, are also certain to be paid. Of all foreign loans we have no hesitation in saying that the loans of the United States are the best. That country incurred its debts owing to exceptional circumstances, and it annually pays off a portion of it. Were it not that the rate of interest is higher in America than in England, the United* States funded loan would only return the same interest as our own consols.

French rentes is a sound security, and would stand higher were it not that there is a possibility of a fresh war some day breaking out between France and Germany. All German public loans are good, although they are little bought in this •ountry. " Italians " are a fairly safe investment. The Italian nation has an aptitude for finance, and is wise enough to avoid European complications. Hungarian bonds are very much dependent upon the material progress of Hungary. More is written respecting that progress than is known about it. Austria owes too much money.

Turkey is bankrupt; it is a mere question of time when she will suspend payments. Greece and Spain are, and will long remain, defaulters. Before the late series of revolutions, the latter country might have paid 1 per cent, upon her external debt. Now, even if she.would, she could pay nothing. Portugal has always paid her creditors. She is an honest country, both able and ready to meet her liabilities. Brazil has borrowed too quickly. Her internal debt is enormous, and her deficit permanent. The price of Brazilian bonds is far too high for their intrinsic value. Of South American Eepublics, Chili is the only solvent State. The Chilians' are aii industrious and commercial race. The financial position of Peru we have frequently explained. Ilussia will probably always meet her liabilities, but she often borrows for railroads, which are not built.

Egypt is, as we have, we trust, made clear to our readers, unable to pay interest on its debt, and is running up a floating debt at an unexampled rate. It would be impossible for her to issue anew loan, arid it seems equally impossible for her to exist without borrowing. The only TurcoEgyptian security of any intrinsic value is what is called the Turkish loan of 1871, as the interest for it is secured upon the Egyptian tribute, which is paid into the Bank of England, and is practically a first charge upon Egypt. In railroads we adhere to the rule that no railroad stock should be bought which does not give a return of 4J per cent, on the cost of investment. If persons will insist upon speculating on future earnings, probably the best chance of getting them would be to buy either BrightOns or Metropolitans, for at least in these cases the prospective gains are based upon some reasonable grounds. Won-dividend-paying stocks are in all instances bad investments. The Great Eastern stock is probably the most flagrant case of the market price of a stock being above its value. Why any person of sane mind should pay above 40 for the mere chance of a small dividend, which may perhaps be earned at some future time by a railroad running through the most stationary counties in England, is indeed surprising. No preference stock can, it should always be remembered, be a preference stock unless a dividend be paid upon the stock to which it is preferred.

In the United States there are railroads which are sound undertakings, but it is almost impossible to separate the good from the bad, or to know whether dividends; when paid, really come out of earnings. The first mortgage bonds of the large companies in the Eastern States are seldom in default. This is not the :case in Canada, where, owing to the inclemency of ■ .the. winter and, the sparseness of the population, railroads seem, under the most advantageous circumstances, only able to pay their working expenses.

Bank shares, and the shares of credit establishments, should be bought to pay 7 per cent, at least on the cost of" purchase, and this 7.per cent, ought to have been earned for an average of years. Telegraph shares should be bought to pay 8 per cent. This is the average return xtpon their market price.