Commerce, Mining, Finance

Evening Star, Issue 23373, 16 September 1939, Page 10

Commerce, Mining, Finance

WARTIME INVESTMENT SPECULATIVE ACTIVITY IN METALS WAITING FOR GOVERNMENT'S FINANCE PROGRAMME PART TO BE PLAYED BY MONETARY SUPPORT With calm confidence marking the mobilisation of men and finance by the Allied forces, it is not surprising that most financial' markets have also maintained comparative steadiness. Speculative activity has provided the only item of note on Australian and New Zealand Exchanges, and that was restricted to metal scrip, for other sections continued to reflect the opening cautious hesitance. Over all, if there is anything worthy of satisfaction it is the firm front the investment markets have presented to the tension. Overseas, however, financial markets reflect a different story. Wall Street speculators have set the pace with operations on a large scale, but the inevitable attack of “ jitters ” (as President Roosevelt once very neatly described' it), allied with profit-taking, have swept the market within recent days. Conservative London has dis-played-more caution, partly due to the rigid control imposed by the Exchange Committee in fixing minimum prices for certain securities.

After being held at just above 4, sterling in terms of United States dollars, slid sharply on Thursday to 3.76, but gold remains stabilised at £8 8s a fine ounce. While the latter item has been held, probably on Bank of England operations, sterling has apparently been, allowed to find its own level.

Market Movements. The second week of war finance found New Zealand market movements only slightly affected. Banks eased with general declines of up to 6d on a £1 basis, New Zealands dropping to the low level of £1 18s 3d. On the other hand, D. Morts. improved 3d to £1 7s, the additional security afforded apparently attracting the support. Insurances firmed fractionally, but chief interest in the section was afforded by tb~ n- .movica"v hpPor having snpnnr + . Dominion industrials were mostly Ulictiuim, operators uoidrug olt unui details of the Government’s war finance programme were released. That increased taxation is inevitable and must hit business hard has already been discounted, but the scale of the additional charges on different industries caused some speculative comment, although it was barely reflected in the purely industrial section. Breweries lost way, however, Dominions showing a 2s fall and New Zealands the loss of Is. The movement was no. doubt caused by the threat of increased taxation, which will hit these concerns more severely than some other stocks. , Australian industrials wavered. Sydney Woolworths gained Is, but the other large chain store organisation, G. J. Coles, showed a 3s decline. Broken Hill Proprietaries showed an advance of 3s, probably in anticipation of war contracts,! in which this leader of industrial Australia would be certain to have a large share. Metal scrip enjoyed a period of buoyancy during tjie earlier part of the week, some substantial rises again being recorded. _ There is some justification for the rise in these issues, for not only will Britain need all she can obtain, but, what is'equally important, she can send and get them, while the producers will not be materially affected by inflation progress. Towards the end of* the week profit-taking introduced easiness, but the section retained strength.

Economic Cataclyism. It must be realised that the present terrible and terrific conflict, apart from human loss and suffering, represents an economic cataclyism; an enormous waste of human effort that will have to be paid for sooner or later in decreased purchasing power (states the Auckland ‘Star’). The possibilities of a world-wide slump comparable with that of the 1929-1933 period cannot be ignored as a possible aftermath of the present war, particularly if it should last for_ a lengthy period. Any suggestion that Germany or any other particular country can be compelled to make good the damage to the economic machinery can also be ruled out. Past experience has shown that in a general sense the world must be considered as a single unit and harmful pressure to a particular na-' tion is inevitably reflected in difficulties for the others. New Zealand could no more,expect to be immune from the effects of a world depression than was the case in the last slump. This aspect, it must be noted, is taking a long-range view, in the present the outlook might easily have been worse than it is. Quite apart from the military aspect, Britain is entering the present war as leader of democracy against the forces of autocracy well prepared financially. Already, with well-devised plans, her bankers, merchants, and statesmen have their arrangements well in hand to ensure that the whole resources of the Empire shall be so mobilised that her soldiers, sailors, and airmen shall be supported in the maximum of effort bv organisation ensuring production in all of its far-flung States. In this connection our Dominion can chiefly play its part hv bringing production of its primary industries to their maximum and arranging for its own defences.

SeconJ Line of Defence. The foreign financial resources of Great Britain make <i striking contrast with those of Germany, whose foreign credit is completely bankrupt. Apart from Britain’s huge fixed investments in every quarter or the globe, Britons own privately very substantial sums in foreign banks and foreign securities, principally in America. These would tom an extremely useful reserve for the purchase of supplies from America in case of need. In an emergency the British Government would probably buy the securities from the holders, but would pay for them in sterling to the equivalent of the ruling Wall Street price. From 1935 to 1938 the net outflow of capital from Great Britain to the United States was 1,186,000,-

COMPANY NEWS BARTHOLOMEW TIMBER ‘ DIVIDEND UNCHANGED AND BONUS The accounts of the Bartholomew Land and Timber Company Ltd., Hamilton, show a net profit of £3,337 for the year ended July 31, against £3,607 in the previous year. A dividend at the rate of 5 per cent, (unchanged) for the year was declared, and in addition a bonus of 1 per cent, is recommended. WHITTGME, STEVENSON HIGHER PROFIT, LOWER DIVIDEND A steady improvement in the results of Whittome, Stevenson, and Co. Ltd. was maintained in the year ended June 30, when the net profit amounted to £3,078. This compares with £2,839 in the previous year. A dividend at the rate of 6J per cent., free of social security tax, compared with 7 per cent, last year, was declared. PUKEMIRO COLLIERIES SHARP FALL IN EARNINGS The net earnings of Pukemiro Collieries Ltd. in the year ended August 31 were £4.956, compared with £7,153 in the previous year. There is no provision for depreciation this year, whereas £2,669 was allocated last year. The directors recommended a final dividend of 2i per cent., making 5 per cent, for the year, against 7 per cent, in the previous year. MINES AND METALS REPORTS AND RETURNS Nokomai Gold. The Secretary of the Nokomai Gold Mining Company Ltd. reports a further wash-up of the present paddock, which yielded a return of 4140 z Bdwt. This, with the return of 4200 z 6dwt previously reported, makes a total return of 8340 z 14dwt irorn the paddock. . A further small .return from the lower boxes has still to come to hand. Mataki Junction. The Mataki Junction return for the week ended September 14 is 390 z of smelted gold for 62 hours, 9,000 yards being treated. PROPERTY SALE Messrs R. S. McKenzie Ltd., land auctioneers, report having sold Mrs Hughes’s brick bungalow at 19 Minto street, Anderson’s Bay, to a cash buyer for £1,140. BANK OF ENGLAND RETURN LONDON, September 14. The following is the Bank of England return —lssue Department.—

Ratio of reserve to liabilities is 16.73 per cent. The "Bank of England discount rate is 4 per cent. SILVER QUOTATIONS LONDON, September 14. Silver: Spot, 21|d; forward, 23 3-16 d,

OOOdoL according to the figures of the United States Treasury. Except in 1936 and the early part of 1937, when the short-lived American boom was accompanied by considerable foreign buying in Wall Street, most of the lands from Great Britain have been accumulated as bank balances. In the four years, 1935-38, 47 per cent, of the funds have gone into bank balances and 40 per cent, into securities. Last year only 12 per cent, of the money was used to buy securities, compared with 80 per cent, in 1936. Though these funds were transfers from London, it does not necessarily follow that they all belong to British persons, as some portion represents foreign-owned balances in Loudon which were later transferred to New York. Nevertheless, the drift of English money across the Atlantic has been considerable for the past lour or five years, and the large accumulation of ready funds in New York forms an invaluable war chest.

Latest Sales. Sales since the last review have been as follows: — New Zealand Government Loans.—4 per cent. Stock, 1940-43, £99 10s (2) ; 4 per cent. Stock, 1943-46, £9B (2) ; 4 per cent. Stock, 1946-49, £99. Banking.—New Zealand, £1 18s. Insurance. —National, 16s 7d (3); Standard, £2 14s. Shipping.—Union Steam (pref.), £1 ss.

Meat Preserving.—New Zealand Refrigerating (cont.), 8s 3d, 8s Id. Coal.—Kaitangata, £1 Bs.

Miscellaneous. —Australian Consolidated Industries (rights), 4s (2), 4s 7d, 4s 6d (odd lot); Brokc(n Hill Proprietary, £3 13s 6d; D.I.C. (pref.), £1 Is 9d; New Zealand Drug, £3 7s 9d 12). Breweries. —New Zealand, £1 15s.

Australian Mining.—Broken Hill South, £1 13s; Electrolytic Zinc (pref.), £3 Is; Mount Lyell, £1 14s, £1 14s Gd (2) ; Mount Morgan, 11 s (3) ; North Broken Hill, £2 14s 3d, £2 14s.

Now Zoaliind Mining.—Nokomai, Is E)d.

diversions of shipments of wool from ports through which they were usually shipped to other ports.

In New Zealand a Government gazette dated December 21, 1916, notified that it was necessary for further supplies of wool to be obtained for the clothing and equipment of His Majesty’s Forces and for other purposes of the war; and, further, that all wool ef the New Zealand 1916-17 clip was requisitioned, _ subject to certain regulations which specified, among other things, the delivery of wool by owners “as soon as practicable ” to the wool store of a Government broker; all wool in the store at date of the proclamation to be examined, classified, and valued before shipment by expert valuers appointed by the Government and by the Government wool broker holding the wool. A supervising valuer was appointed to settlg any differences of opinion as to values that might arise between the Government valuer and the brokers’ vainer.

Full provision was made for New Zealand manufacturers’ requirements of wool.

The purchase price of Australian and New Zealand greasy wool for 1916-17 was made on the basis of the average prices realised during the 1913-14 season, plus 55 per cent. These prices for

* The authority for these figures is the. Australian National Council of Wool selling Brokers. The quantity of wool produced in New Zealand for the vear ended dune 30, 1939, was 921,121'bales. Of this total 803,831 bales was greasy wool and 117,290 scoured and freezing works slipe wool. VALUE OF LAST CLIP. Woo! sold in New Zealand for the period in review amounted to 720,202 bales of a total weight of 245,613,1821 b, valued at 9.17 d: a lb, of a gross realisation of £9,386.375. Wool shipped on account of growers amounted to 94,862 bales, which were additional to the 720,202 sold in the Dominion. New Zealand wool held over from sale at June 30, 1939, amounted to 45,601 bales, made up as follows: Greasy, 28,868 hales; scoured and slipe. 16,733 bales; total, 45,601 bales unsold. The authority for these returns is Dalgety's statistical department. Since June 30, however, several winter sales of crutchings and other wools have been held in the New Zealand centres, and as some part of the holdover greasy wool would consist of crutchings, it is safe to assume that the carry-over of 28,868 bales of greasy wools (as at June 30) has since been reduced. Although the Australian wool-selling season of 1939-40 was to have opened in Sydney on August 28, present circumstances compelled postponement of the Sydney and Adelaide sales, opening the season. Hut the British Government has now arranged 1 the purchase of the Australian clip. '

Note issue in circulation £553,500,000 Bank department 26,600,000 Government securities 567,000,000 Other securities 1,500,000 Silver coin ... 500,000 —Banking Department Rest 3,700,000 Public deposits 12,000,000 Bankers’ deposits 109,600,000 Other amounts 40,800,000 Government securities 123,700,000 Discounts and advances 3,900,000 Other securities 25,900,000 Notes and coins 27,100,000