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 registered holders.

American Railways

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.

Foreign Railways

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.