PROMISING OUTLOOK

Evening Star, Issue 20053, 19 December 1928, Page 12

PROMISING OUTLOOK

PHONEY MORE PLENTIFUL “ I think it can ho said that business throughout tho year has been satisfactory, and that the outlook is promising,” said _tliG_ Chairman (Air Harman Beeves) in his ’address to the annual meeting of the Dunedin Stock Exchange yesterday afternoon. The change in the financial position of tho country in tho brief period of twelve months was most remarkable, proceeded Mr Reeves. The last quarterly banking returns, ended September 30, showed a surplus of deposits over advances of £7,476,500, as compared with an excess of advances twelve months ago of £3,600,000. In other words the banks had in hand over £11,000,000 more than they had twelve months ago. “ Money is more plentiful to-day in tho dominion than for many years past, and the trend of interest rates it downward,” _ declared tho Chairman. A big factor in creating this surplus of money, besides the inflow of money from the sale of our products, was the fact that the State had become a largo lender of money. Where years ago all the financing of farmers and others was dono through banks, Joan companies, trustees, and others, to-dry the great bulk of these advances was being made by tlio State. The trend of tlio State becoming tbo only lender might become dangerous to tlio wellbeing of tbo community, as some day borrowers from tbo Government might become so numerous that they might get a stranglehold on tlio Government of tbo country. Jn the last four years no less than £24,000,000 had been lent by tbo Advances to Settlers Department alone. The money market was from £ per cent, to 1 per cent, high of’ in Australia than in New Zealand. The Dunedin City Council was now raising Joans at 5j per cent, as - gainst tbo city of Sydney at 5i per cent. The mortgage rate, however, remained around 6 per cent. Less than two years ago largo sums of Australian money were invested in New Zealand public bodies’ debentures; but, during tho last twelve months, very little had conic to this country for that purpose. . Air Reeves said that it hud been’ stated that too much Now Zealand money was being sent' to Australia lor investment. Jlo was sure nobody regretted more than tho stockbroker the necessity for that, but their great difficulty was to find sound New Zealand investments for their clients. Jn their absence they had to look further afield, and naturally turned to Australia—their nearest neighbour—for their requirements, although quite a. largo amount also went to London. Ho did not think it was too much to say that at least anything from £2,00U,0t)1) to £3,000,000 of money had been going annually from the dominion for the purchase of shares in Australian banks, and for various Australian and English investments. Tlio most marked rises on tho local market during the year had been in the shares of companies connected with tlio pastoral industry—such as Dalgefy and Co., Ltd., tho National Mortgage, and Agency Company of New Zealand, Ltd., New Zealand Loan and Mercantile Agency Company Ltd., and others, ho continued. The shares of Dalgeiy and Co., Ltd., showed a rise of over £2 per share. It was gratifying to find that must of tlio farmers’ cooperative companies had improved their financial position. It was to bo hoped that the lessons of tho slump years would bear fruit and result in tho adoption of a sounder trading policy in future. Tho year had been almost free from now issues of contributing shares by existing companies. This had helped to keep tho market prices of investment shares at a high level. There had been very few prospectuses of now companies issued by the members of any of tho Stock Exchanges in Now Zealand during the year. A fairly large number of new ventures had been offered to the public by outside agencies, promoting companies and others, some of which he feared wore not likely to _ realise the glowing future and optimistic profits promised by tlicir promoters and the canvassers they employed to sell the shares.

Ho thought it had been buggcsl.ecl somewhere that the payment for Hie completion of their railways (a doubtful proposition in view of tho success of motor traffic.) could be paid for by the issue of New Zealand Government debentures to 11m. contractors. He expressed tho opinion that the Stock Exchange should strongly protest against the adoption of such a course of payment, Tho completion of tho railways—or any other Government works-—should bo paid for in cash only. It would be a blow at tho very foundation of tho finances of the dominion, and more particularly on the London market, if a form of “ green backs ” gob into circulation in the shapo of payment by debentures. Contractors, when they received their debentures, would naturally require to turn them into casli by selling them, and, if they happened to strike a weak market, they would bo forced to accept a considerable discount, with the result that all Government issues would immediately be correspondingly affected. The money market, as they knew, was tho most sensativo of all markets, and the forced selling of Government debentures would depreciate all other Government stocks; besides that, to issue such debentures would shatter their financial standing and good name on tho London market. The loans already issued in the dominion amounted to over £107,000,000, and, in justice and lairness to the lenders of these issues, it was not advisable to have further issues other than for cash. In conclusion, be added that ho thought the general outlook was never better, and that every branch of business and trade should look forward in tho coming year to prosperous times and increased business. The election of officers resulted:— Chairman, Mr E, R. Smith; executive committee—Messrs Harman Reeves, W. F. Sligo, W. J. Watson, J. H. Walker,'and W. H. M'Leod; auditor, Mr J. W. Smeaton; trustees, Messrs E R. Smith, H. S. Fenwick, and Harman Reeves. , A vote of thanks was passed to thei recorder (Mr E. R. Davidson) and to the readers, Messrs J. A. Haggitt and E If Dampen, and also to Messrs W H. M'Lcod, J. R. Laidlaw, and J. W. Smeaton, who had occasionally acted as readers. Tribute to the work of , tho secretary (Mr E. J. G. Johnston) was also paid by tho meeting, a vote of' thanks being recorded to him.