others there were in April last 42 American bonds quoted n London all of which pay their interest regularly, yet give as large a return upon net investment as, and therefore in our estimate of their credit are classed with, a miscellaneous lot of second-class foreign railway stock - Turkish, Argentine, Central American, and so forth - which can no more rank with St. Paul, Northwestern, or Burlington bonds than can the dilapidated Ottoman Empire or a turbulent Central American Republic with the United States. Similar anomalies are so striking that to enlarge upon them is absolutely superfluous. The most cursory comparison with other classes of securities must clearly show that the credit of American bonds is as a rule, from to 1 per cent. below the point to which they are fairly entitled.

Having called attention to the fact that American bonds do not enjoy that amount of credit which we might reasonably accede to them, I shall presumably be expected to state why they have no more. Two reasons suggest themselves. In the first place we underestimate their safety as a result of the lack of confidence which remains from the days when we were duped, and to the exaggerated nature of which we have referred before. Secondly, the fact that the price of bonds is regulated in New York rather than in London influences their quotation. American securities are mostly held in America, and in America people are not satisfied with the low interest upon a safe investment that is acceptable to us. Houses and mortgages upon real estate often yield eight per cent., and mostly between six and seven; and the fact that money in America has a greater value than here cannot but have an influence upon the price of investments the value of which, broadly speaking, is fixed by Americans.

This last circumstance places the European investor at a great advantage, which, to some extent, seems to be realised; at least our holdings increase steadily. But it does not appear that the advantages this class of securities offers are understood to their full extent; if they were we should probably

seize them with still greater avidity than we do now. There are at the time of writing 39 descriptions of American bonds paying between 4 and 4 per cent. upon net outlay, which, as a safe investment, find no parallel among any other stock quoted at corresponding prices. To have the same return. upon his capital an investor would, if he were to limit himself to railway stock, have no other choice than a very limited assortment of South American or Turkish railway "securities" or shares of Colonial or Home railways of very doubtful rank. Upon an investment in British railway stock possessing the same essential qualities, the return would be at least 2, and probably 1 per cent. less.

PART IV.

THE EASTERN GROUP.

CHAPTER XIII.

RAILWAYS IN THE EASTERN STATES.

I have deemed it convenient to divide the railway system of the United States into six groups: Eastern, Central, Southern, Northwestern, Southwestern, and Pacific, which will be successively dealt with. This division somewhat closely follows that adopted by the U. S. Census office and the Interstate Commerce Commission, with which it is in every respect identical, except in so far as I have combined. several of the ten groups into which these official bodies divide the country in order to reduce their number.

Of these groups that which we call the Eastern is by far the most important, and for this as well as for other reasons of a more practical nature we shall give it precedence. The States in which these lines either lie or centre are eleven in number, and embrace that part of the country bordered in the West by the State of Ohio, in the South by the two Virginias, in the East by the Atlantic Coast, and in the North by Lake Ontario and Canada. The eleven States lying within this section and enumerated in the first of the subjoined tables cover an area of 183,000 square miles, or one-twentieth of the total area of the Great Republic; and their importance may be inferred from the fact that they contain three-tenths of the population of the entire country, a similar proportion of its railways, and nearly one-half of its wealth.

Table showing Area, Population, and Assessed Valuation of the eleven Eastern States (New England and Middle States) Census of 1890.

Table showing relative importance of the Eastern States as

compared with that of the entire Union.

For the great comparative importance of this section, which is illustrated by the foregoing statistics, there are several reasons. In the first place this was the earliest settled part of the United States; secondly, the Eastern coast is very important on account of its proximity to Europe; in the third place this region is fertile, has a salubrious climate, and abounds with minerals, especially coal and iron. These advantages rendered the East the centre of trade, industries, finance, population and wealth; and although by no means as densely peopled as Europe, it has reached a very advanced stage of cultivation.