I reply to your enquiry about investments.

I have had a very good opportunity lately of getting information on the subject with the best advice, I think, to be had in San Francisco; our bankers and factors there being a very trusty and cautious sort of men. I have had four thousand dollars to invest for myself and others and have studied the question carefully.

It is very common to get two to three per cent a month. One and a half to two per cent a month seems to correspond very nearly with six or seven per cent per annum in New York, and, although the ruling rates in the country would seem to be a little higher than this, and much [216]higher is constantly paid upon what is here regarded fair security, what I should regard as perfectly sound security it is difficult to get at any price. Nearly all property is dependent, for its value, directly or indirectly upon some mine or mines and I don’t know of more than two mines which can be regarded as permenant sources of production with much confidence. For this and other reasons I put mines and whatever is dependent on any particular mine or class or district of mines out of the question. Thus, ninety nine one hundredths of the popular investments of California are swept off.

But taking the most unfavorable view of the mines, of agriculture, and all other enterprises in detail, I see no reason to fear that the production of the mines in the Pacific States and Territories will not continue to steadily increase, on an average of the whole. New mines are coming in much faster than old ones are failing and while many towns and small districts are every year ruined and depopulated, and the population rushes about in a terrible way from one part of the country to another, it is on the whole constantly increasing and very well paid, the average wages of ordinary labourers, over a region twice as large as all the States East of the Mississippi, being not much short of three dollars a day in gold.

I look therefore to enterprises which are related to the whole of this field or large parts of it as likely ipse facto to be safe, (if well managed and free from excessive competition). Of this character is the Pacific Mail Company, the Wells, Fargo Express and the lines of Telegraph and general communication. I think San Francisco is bound to be one of the greatest cities of the world from its position and the advantages it has already gained.

The fever of the mining speculation has absorbed capital and discounted the capital of the future to such an extent that it is extremely unlikely in the nature of the case that an excess of capital has been or is available for the more comprehensive class of investments which I have indicated.

So far, theory. Looking for actual opportunities within the limits thus fixed I find, that all those classes of securities the value of which would not be supposed by a stranger to depend upon the integrity and good management of a few men, such as City bonds, have found their market at the East and in Europe and do not give an interest on the present prices much above that of corresponding Eastern securities, or where they do there are obvious grounds for distrust. The Rail Roads and most other transportation lines are dependent on too many local contingencies to be safe, the Express company’s stock is not I believe in market; Pacific Mail is controlled in the New York market.

The Pacific Steam Navigation Company is a very rich corporation, running lines of steamers up and down the coast both ways from San Francisco, and in all the connecting interior navigable waters. It owns [217]therefore a large number of vessels, docks and so forth, no one of which is in itself of very great value; its property risk, therefore, is much divided, and it has many strings to its bow of current profits. Its present managers are chiefly old and successful merchants of San Francisco with a good reputation for integrity and caution in business. Its dividends have been so high that competing lines have been frequently established on one or another of its routes but it has never failed to run or buy them off. Its dividends have been, two per cent a month during the last year, payable half in gold and half in greenbacks. Supposing the worst possible that can be imagined to happen in the way of opposition, hurricanes and fires, I do not think that the stock-holders are likely to suffer much beyond a suspension of dividends; the Company has a large surplus capital held in bank as a reserve with which to meet opposition. The incorporate value of the shares is one thousand dollars and the market price has lately been from forty five to fifty: dividend on the investment at this rate four per cent a month +. I made my heaviest investments in this.

Second; California State Telegraph Company, shares one hundred dollars each, market price thirty, recent dividends one dollar per share, quarterly. The lines are very extensive. It is liable to competition which would cause a suspension of dividends and of course depreciate the stock, but it cannot run out like a mine or be burned down and wrecked like a factory or a ship.

There is but one Gas Company in San Francisco in operation and its stock has been exceedingly good property, a new Company has been chartered and is beginning to erect works. It would hardly seem that the City with its present population could afford good business for both, but the stock which is seldom in the market has not sold for any less than before opposition was threatened: one hundred dollar shares sell now at ninety eight. Recent dividends have been three quarters per cent per month on capital stock. I have ordered a small purchase to be made for me at the first opportunity and having regard to the character of the Directors consider this one of the safest Pacific stocks.

There are two companies which supply San Francisco with water; neither are yet paying dividends but both are expected to soon and both are regarded as offering fair security for investments.

Beyond these I have seen nothing which seemed to me to range nearly equal with them in safety. Loans can be made any day in San Francisco with good security upon goods in store or afloat payable “next steamer day,” at one and a half per cent a month, and at the same rate, [218]with bond and mortgage security upon agricultural property; but owing to the fluctuations of population the latter is not quite as firm a security as it would be in the East.

I have requested the brokers whom I employ, Garnett & Wakelee, to send you the S.F. Weekly Stock Circular. Tell me if you don’t receive it.

I will make investments for you alongside my own, with great pleasure, whenever you wish. The prices I have given you are in gold, of course.

If you desire to discuss the matter further, I advise you to consult Howard Potter. I have no objection to your reading this to him, as a text for discussion.

I never was happier, in the present, in my life. I think I am rather gaining of late in health.