¹ Hidy, Ralph W., The House of Baring in American Trade and Finance (Cambridge, 1949), p. 411CrossRefGoogle Scholar.

² Herapath's Railway and Commercial Journal, April 9, 1853.

³ Currie, A. W., The Grand Trunk Railway of Canada (Toronto, 1957), pp. 20–22Google Scholar; Skelton, O. D., The Railway Builders (Toronto, 1916), pp. 78–79Google Scholar.

⁴ Herapath's, May 14, 1852.

⁵ Ibid., Feb. 5, 1853 (editorial).

⁶ Cochran, T. C., Railroad Leaders, 1845–1890 (Cambridge, 1953), pp. 111–115Google Scholar; Currie, Grand Trunk, pp. 65–69; Jenks, L. H., The Migration of British Capital to 1875 (New York, 1927), pp. 134–138Google Scholar; Patterson, R. H., Railway Finance (Edinburgh, 1867), pp. 27–30Google Scholar: Harold Pollins, “Railway Contractors and the Finance of Railway Development in Britain,” Journal of Transport History (May, 1957), pp. 41-51: ibid. (Nov., 1957), pp. 103–110; Unsigned, “Railway Morals and Railway Policy,” Edinburgh Review (Oct., 1854), pp. 420–461.

⁷ “Dissatisfied Holder” of Grand Trunk shares wrote in Herapath's, Oct. 24, 1854, that investors “have been induced by the use of influential names to subscribe. Now they treat us in a very aristocratic fashion.”

⁸ For brief summaries, see A. D. Noyes, “Railways and the Stock Exchange,” London Times, American Railway Number, June 28, 1912, p. 28: Ripley, W. Z., Railroads: Finance and Organization (New York, 1915), pp. 1–10Google Scholar.

⁹ The Temiscouata Railway of Quebec is typical of many promotions by relatively unknown bankers in London. In the 1880's it sold 5 per cent bonds with a par value of about $2,750,000 and issued $1,000,000 in stock. The provincial government guaranteed the bond interest to 1898 on part of the issue and to 1900 on the remainder. Between these dates and 1930 bondholders received a total of 18½ per cent in interest or, if interest on capitalized arrears of interest is taken into account, about 1 per cent per annum. No interest was paid after 1930 and no dividends were ever declared on the stock. In 1950 the line was purchased by Canadian National Railways for its scrap value so that, after more than 60 years, bondholders got back roughly one third of their investment.

¹⁰ Thos. Skinner, “British Investments in American Railway Securities,” Journal of the Institute of Bankers (Feb., 1888), p. 78.

¹¹ Hidy, Muriel, “The Capital Markets,” in Williamson, H. F., ed., The Growth of the American Economy (New York, 1951), p. 266Google Scholar.

¹² Chambers, Wm., About Railways (London, 1865), p. 19Google Scholar.

¹³ Bartlett, Wm. and Chapman, Henry, A Handy-Book for Investors (London, 1869), p. 238Google Scholar. Reference was made to C. F. Adams, “A Chapter of Erie,” North American Review (July, 1869).

¹⁴ Quoted by A City Editor, The Rationale of Market Fluctuations (London, 1876), p. 115Google Scholar.

¹⁵ Bartlett, Wm., The Investors' Directory to Marketable Stocks and Shares (London, 1876), p. 47Google Scholar. See also unsigned, “Romance and Reality of American Railroads,” Quarterly Review (July, 1884), pp. 79–102.

¹⁶ Nash, R. L., A Short Inquiry into the Profitable Nature of Our Investments (London, 1880) p. 34Google Scholar. This book is a reprint of articles in the London Economist (March 27, Sept. 20, 1879).

¹⁷ Nash, Inquiry, p. 46.

¹⁸ (Sir) Joseph Price in Skinner, “British Investments,” p. 99.

¹⁹ Skinner, “British Investments,” p. 76.

²⁰ Menzies, W. J., America as a Field for Investment (Edinburgh, 1892), p. 18Google Scholar.

²¹ “How can this stupendous system of American railways [about 8,650 miles] with a traffic comparatively insignificant, among a people where profits on capital are high, and the rate of interest from 6 to 10 per cent be made to answer? This difficulty is explained, partly by the general [level] nature of the country, partly by the [cheap] mode of constructing the railways, and partly by the manner of working them.” Lardner, Dionysius, Railway Economy (London, 1850), p. 396Google Scholar. See also Herapath's, July 25, 1852: Grand Trunk, Semi-Annual Meeting, Jan. 23, 1874, quoted by Currie, Grand Trunk, p. 139.

²² London Economist (Oct. 8, 1887).

²³ Henry Lowenfeld, “Investment Practically Considered,” Financial Review of Reviews (1909), p. 417.

²⁴ Giffen, Robert, American Railways as Investments (London, Stanford, 1873), p. 13Google Scholar. By the end of the century capital had been inflated through refunding. An issue of 6% debentures originally sold at par might be replaced with an issue of 4% debentures at 150 or less.

²⁵ London Times, June 28, 1912, p. 24.

²⁶ Van Oss, S. F., American Railroads and British Investors (London, 1893), pp. 68–69, 54-55Google Scholar.

²⁷ Grinling, C. H., “British Railways as Business Enterprises,” in Ashley, W. J., ed., British Industries (London, 1903), p. 178Google Scholar, states that “owing to the predominance of shareholders' influence upon British railway policy, it has been the custom to divide the profits of each half year ‘up to the hilt.’ … The amount carried forward is usually because it is not possible to squeeze out another ½ per cent.” See also Eason, Chas. Jr., Statistics of American Railways (London, 1886), pp. 12–17Google Scholar.

²⁸ London Economist (March 6, 1897).

²⁹ The London, Chatham and Dover was in financial trouble from 1862 to about 1900. It was built by substantially the same firm of contractor-financiers as the Grand Trunk. The North British was in hot water in 1866. The Eastern Counties which operated from London to Cambridge and other points in East Anglia were notoriously poorly run and a financial failure. Sommerfield, Vernon, English Railways (London, 1937), pp. 180Google Scholar ff. Several smaller roads did not pay but eventually most of them were absorbed by larger systems.

³⁰ Daggett, Stuart, Railroad Reorganization (Cambridge, 1908), p. 35CrossRefGoogle Scholar.

³¹ Grand Trunk, Semi-Annual Meeting, April 12, 1912, quoted by Currie, Grand Trunk, p. 372.

³² Currie, Grand Trunk, pp. 461–481. “So largely were the railways especially of the Western states built with European and particularly with English, money that for many years it was the fashion of Western demagogues in appealing to the passions of agricultural audiences to represent the ‘bloated British bondholder’ as the curse of the country.… If it were not for the necessity of paying interest on bonds to satisfy British greed, it was represented, the railways would be able to carry the farmers' products to market at vastly lower than the current rate.” London Times, June 28, 1912, p. 30. Crowell, J. F., “Railway Receivership in the United States,” Yale Review, Vol. VII (1898), pp. 318–330Google Scholar, is also critical of American railway managers for taking advantage of bondholders.

³³ Sir Clapham, John, An Economic History of Modern Britain (Cambridge, 1932), Vol. II, pp. 183–188Google Scholar; ibid. (1938), Vol. III, p. 361. See also Cleveland-Stevens, Edward, English Railways: Their Development and Their Relation to the State (London, 1915), pp. 230–239Google Scholar; Ross, H. M., British Railways (London, 1904), pp. 17–36Google Scholar; Royal Commission on Railways, 1867, Report; Joint Select Committee on Railway Amalgamation, 1872, Report & Proceedings.

³⁴ Herapath's, May 1, 1875.

³⁵ Webb, Beatrice, My Apprenticeship (London, 1926), p. 7Google Scholar.

³⁶ Menzies, America, p. 21.

³⁷ L. H. Jenks, “British and American Railway Development,” Journal of Economic History (Fall, 1951), pp. 375–388.

³⁸ Herapath's, April 27, 1876.

³⁹ Skinner, “British Investments.”

⁴⁰ W. Gutteridge & Co., Speculation and Investment in Stocks and Shares with a Minimum of Risk (London, 1882), p. 12Google Scholar.

⁴¹ Geo. Adam & Co., Stock Exchange Investments: Fluctuations of Prices and How to Benefit Thereby (London, 1886Google Scholar).

⁴² London Economist (Aug. 9, 1884). For longer run changes in prices see A. H. Cole and Edwin Frickey, “The Course of Stock Prices, 1825–66,” Review of Economic Statistics (Aug., 1928), pp. 117–139.

⁴³ Duncan, W. H., How Money Makes Money (London, 1897), pp. 95–96Google Scholar.

⁴⁴ Financial Review of Reviews (Nov., 1905), p. 18.

⁴⁵ Morris, Ray, “Railways,” in Encyclopaedia Britannica, 11th ed., Vol. XXII (1910-1911), p. 834Google Scholar.

⁴⁶ Jeans, J. S., Railway Problems (London, 1887), p. 49Google Scholar. In 1862, 1863, and 1867 average returns were 3.86, 3.99, and 3.91 per cent and in 1871–1873 they were 4.66, 4.74, and 4.59.

⁴⁷ Ibid., p. 58. American and Canadian lines give a “better return than English railways but are subject to speculative influences of many sorts and can hardly be recommended for safe, permanent investment.” Cotton, Wm., Everybody's Guide to Money Matters (London, 1898), p. 67Google Scholar.

⁴⁸ Margaret Myers, “The Investment Market after the Civil War,” in Williamson, Growth of American Economy, p. 573; “Government, Corporation and Other Loans issued from Nov. 1, 1887, to Oct. 31, 1888,” Journal of Institute of Bankers (1888), pp. 673–680; (Sir) Geo. Paish, “Great Britain's Capital Investments in Other Lands,” Journal of the Royal Statistical Society (Sept., 1909), p. 479. James J. Madden of the University of Western Ontario hopes shortly to publish his results. His comments on this paper are gratefully acknowledged.

⁴⁹ Menzies, America, p. 18.

⁵⁰ Walker, J. D. and Watson, J., Investors' and Shareholders' Guide (Edinburgh, 1894), p. 242Google Scholar.

⁵¹ Financial Review of Reviews (Sept., 1906), p. 204, quoting the London Times.

⁵² Stevens, W. J., The British Railway Outlook (London, 1906), p. 11Google Scholar.

⁵³ Clapham, , Economic History, Vol. III, p. 348Google Scholar.

⁵⁴ Stevens, W. J., Investment and Speculation in British Railways (London, 1906), p. 56Google Scholar.

⁵⁵ Ibid., pp. 1–2.

⁵⁶ Grinling, “British Railways,” pp. 166–167, 168, 172; W. J. Stevens, Investment, pp. 11–14; W. J. Stevens, Railway Outlook, pp. 18ff.

⁵⁷ Dorsey, E. B., English and American Railroads Compared (New York, 1887Google Scholar); Paish, Geo., The British Railway Position (London, 1902Google Scholar).

⁵⁸ Morris, “Railways.”

⁵⁹ Overseas investors held substantial proportions of the stocks of the Illinois Central; Pennsylvania; Louisville and Nashville; the New York, Ontario and Western; Reading; Great Northern; Baltimore and Ohio; the Chicago, Milwaukee and St. Paul; and probably other roads. These holdings declined substantially after 1905 when American investors began to repatriate many of the holdings. Ripley, Railroads: Finance, p. 5.

⁶⁰ According to Price in Skinner, “British Investments,” p. 102, six British investors owned $17,269,000 of the stock of the Ontario and Western which was held in the name of a broker in New York. “The result is that it is a very easy thing for an American Board of Directors to be elected upon a very small amount of stock.” In 1911, during a period of unsettled money in Berlin, perhaps $100,000,000 in railway stocks was put up as security for short-term loans in New York. It was found that these shares had for years been held in New York for the account of their foreign owners. “What was true of Berlin institutions was true also of banks in London, Paris, Amsterdam, and other foreign cities.” London Times, June 28, 1912, p. 30.

⁶¹ Beatrice Webb told Bertrand Russell that her father, a president of the Grand Trunk and several companies in Britain, believed that it was “the recognized function of directors to keep shareholders in their place.” Russell, Bertrand, Portraits from Memory (London, 1956), p. 102Google Scholar.

⁶² Joint Select Committee, 1872, Report, pp. xxix–xxx.

⁶³ In Jan., 1889, some of the strongest financial houses in the United States — Drexel Morgan, Brown Bros., and Kidder Peabody — failed to protect the investors' interests. A. T. Hadley, “The Prohibition of Railroad Pools,” Quarterly Journal of Economics (Jan., 1890), p. 166.