WELLINGTON NEWS

Hokitika Guardian, 3 May 1928, Page 4

WELLINGTON NEWS

LOANS IN LONDON. (Special to “ Guardian.”) WELLINGTON. -May 1. Tim Western Australian 5 per cent loan lor .03.000,000 at LOS lias been over subscribed, and this bit of cabled information is of great importance to Australia and New Zealand, for it indi■ates that London is in better mood lor the reception of colonial loans. It is (be practice to have such issues underwritten, the principle of which is that the borrower is assured of the money, the underwriters accepting all risks. That is to say that for a commission of 2 per cent the underwriters guarantee the flotation of the loan, and if the loan is not taken by the public they make good the deficiency. The terms of the issue and the prospectus are submitted to the underwriters who must necessarily approve of the same otherwise they would not underwrite. Often the public fail to respond and the underwriters are left with a large proportion of the issue. For some time past Commonwealth and State issues have failed to receive public support, and the underwriters have had to finance the issues. The success, therefore, of the West Australian loan is significant. There were, of course, favourable features in connection with this latest loan. Western Australia is probably in the most fortunate position of all the Australian States. At a time when most other parts of Australia suffered from drought it bad an excellent season, and the wheat harvest is estimated at At,000,000 bushels, the largest in the history of Western Australia, and the largest of any of the states this season. By concentrating on agriculture instead of mining, as its principal source of production Western Australia has developed considerably in recent years. The State Treasurer was able to show a surplus of £29,000 for the year 1920-27. and a surplus of £lll,OOO is expected this year. As since 1910-11 there have been fifteen consecutive deficits varying from £58,000 to £7112.000. the balancing of the Budget and the return to stable finance must have favourably impressed London financiers. The New Zealand Government is due to go on the Loudon market in the course of a week or two, but before the loan is announced the Finance Minister will publicly state the results of the year’s revenue and expenditure, and no doubt a surplus will be included in the announcement. Such a proclamation will be needed for London consumption, and to give the proposed loan a chance of success. The New Zealand loan will he for five or six millions, probably more, for borrowing on such a large scale lias become chronic with the socalled Reform Government. Every such loan lessens the prospect of tax reduction.

BANKRUPTCIES. fn recent years the tendency lias been for the number of bankruptcies to increase. and the proportion is rather large compared with pre-war years. In 1925 there were in all 053 bankruptcies, exclusive of deeds of assignment. Oi this number, -105 occurred in the North Island and 188 in the South Island. In 1920 the bankruptcies numbered 752. an increase of 99 on the previous year, and of this 80 were registered in the North Island and only 19 in the South Island. In 1927 there was a further growth in the number of bankruptcies, the total for the year licing 808 or 110 more than in 1920 and 215 more than in 1925, which meant that in two years the number of bankniptcres increased by about 32 per cent. I.asl veai' there were 021 bankruptcies in the North Island and 211 in the South Island. Most of the recent bankruptcies were in the Auckland and Wellington districts. Last year there ueie 352 in Auckland against 289 in 1920. and 184 in Wellington agimst 154. these two districts accounting for 530 out of 80s! The bankruptcies have been very heavy since 1920. and one would imagine that all the lame ducks ”in business would have been slaughtered b\ now, but that does not seem to be the case. The figures for January of this year gave some hope that tilings were mending for there were only 37 bank I'liptcies during the month as against 01 in January last year. In Tebruaij. however, the number jumped to 70 as • impart'd with 00 in February last, the total for the two months being 10i against 121. In the two months of this year there were 25 deeds of assignment.