Pacific Railway Company, is quoted at 123; certain other of its bonds, equally well secured, but payable in 1937, are quoted at 110; both bear five per cent. Investors of the wealthiest class prefer investments which, while absolutely secure, may be subscribed for in blocks of a quarter to a round million a desideratum which further restricts their choice. An electric current may be so intense as to become an obstacle in its own path; a vast volume of capital in the hands of an individual has somewhat the same effect.
While the rate of interest on Government bonds, and city and railroad debentures has been steadily falling within the past two decades, the rates payable on real-estate mortgages have declined in sympathy. This year, in New York and Boston, liens on the best city property have been placed at four per cent, two per cent less than the rates current in 1869. In other large cities of the Union a similar decline is observable; and, as between newly settled States and Territories and the financial centers of the nation, the disparity in the rates payable on well-secured loans is much less to-day than it was twenty years ago. The significant point in the matter under consideration is not so much that the rate of interest has been falling as that interest has become distinctly separated from the wages of superintendence and the premium for incurred risk, which used to be combined with it. The return on a Government bond represents the bare remuneration of capital employed, without hazard or care. An investor in first-class city mortgages receives a larger income than if he had bought Government bonds with his money, but he has not so easy a time of it. He must have titles carefully and responsibly examined; his creditors may be unpunctual; occasionally he may have the trouble of a foreclosure on his hands. His investments are for comparatively short terms of years, and, between one investment and another, part of his capital may be unproductive; or, in reinvesting, he may be obliged to accept a reduced rate. Hence the competition for securities eliminating hazard and bother, which is one of the notable facts in the modern world of finance. Many causes have been at work in bringing down the return on a New York debenture to five eighths as much as can be obtained on a Fifth Avenue or Broadway mortgage. First of all, of course, must count the enormous growth of American wealth within recent years; and, next, the fact that a good deal of it is in the hands of comparatively few men. A multi-millionaire's income, even at the lowest current percentage, is so much more than his outgo that, if he can be relieved from care and anxiety in looking after his possessions, he is often content to buy securities paying but half as well as the best properties did twenty years since. Another prime cause for the fact under notice is the steady approximation to European rates of interest which has been going on since the close of the
