WELLINGTON NEWS

Hokitika Guardian, 11 December 1928, Page 3

WELLINGTON NEWS

OPINIONS ON CURRENT CONDITIONS. . LSruciAL To The Guardian.] WELLINGTON, December (I. It is becoming quite a regular thing lor men in positions to address shareholders and others not only on the affairs of the company or organisation over which they preside, Imt- also on the economic conditions of the country, and this practice deserves to ho encouraged. for thereby we get a concensus < f opinion which is valuable to the business community. But those who deliver such addresses and deal with such matters should give the subject some close consideration. So far very few speeches have come up to expectations, they appear to’ have been hurriedly put together and lacking in educative value in many respects. In some cases a strained effort is made to lake an optimistic view of matters that do no'."limit of opt imism, while oliers again make use of the annual to advertise and boost, their organisations. • A lew days ago the annual mootin'’of the Wellington Stock Exchange was held, and the Chairman of the Cham her departed 'from his self-imposed''pol-icy of severe silence, and made a spec--! that was very welcome, and il mi ’is ha<-(• been ilionglit a very good speech for if was published in full in one ni ihe city papers. Looking through th< report of that speech one is struck wile Ihe omission from, rather than wha' was referred to in the speedt. It, was pointed out that the season just ended was a prosperous one lor tin* Pominioi’ generally. Ihe exports showing an in crease of ton million over I lie previnim x-r, and that the hanking returns (fur the past quarter showed that, the hauls had in hand some eleven millions more than they had a year ago, and conseniK'iilly there is more money available for invesl nionl. now.

The trading hanks lie staled at Co I,(100,(I0n of deposits, i lie P.O. Savings Bank C 17.0(10. O' If), and private savings hanks CM,000,000, besides do posits with investment companies From this it would appear Llial Ihe deposits amount to a huge sum. o v (ceding C100.000.00P. for mosl people will be iii'-lined to add the figur. s to gel her which of course is quite wrong If allowance is made for ovorlappmj the deposits amount ton eomporalivoK small sum. The money deposited p the' i’.O. Havings Bank does not rema e (!,(-r('. for what is not invested in Gov ei-nnieut '■■eciirities is lodged with the Bank of New Zealand, and Ihe same tiling occurs with private banks, in vesting companies and all other concerns accepting deposits. J lie bank* are the final repository of all loos' funds, so that of the C 71,000.000 of deposits hold by the banks C 20.0,10,0 H are lixed and only C22,0(l0,000 I roc, and if is this amount that is available loi the various purposes ol trade, com mercc, industry, etc. But of course the figures were giver to show that ihe owners of the de posits could invest their money to be! tor advantage by buying stock's and shares. No doubt some ol them could, hut then' an* very many hundreds o' investors who can show very hea\\ losses through dealing in shares. Stock Exchange investment is no more sale than investment in other directions. At one Lime an investor bought shares for an investment, that is for an in- .•()!!)(» return, and no doubt many still pursue that course, but Hie aim ol in vestors now is to buy shares that arc Bk'elv to appreciate in value through Hie distribution of bonus shares and in other ways. This point was brought out bv Ihe Chairman of the Wellington Slock Exchange when he said: “’While many of the best shares on our list return about 7 per cent or less on the purchase price, here is the tact which brokers should bring home to investors that Hie best sound shares, such ns hanks, insurance, etc., are practically Lilt-edged investments, and are morally ( or tain in the long run to increase in value, a lid thus ultimately produce 1 a l etter return than mortgage debeii lures or fixed deposits.” , The ‘buying of Stock Exchange securities is .passing from strict- iuvestmen! („ speculating on the capital increase in III" value of the shares. One misses from the speech of the-Chairman of the Wellington Stock'Exchange any relercn<j* to the Company Law ol New Zealand. It is many years since the law has been revised, (for it needs tightening in many directions. The British Rnrliameiit has just passed a new Compa ii ies’ Act. which should serve as a model for New Zealand legislation. Tn the English' Act Hie share-pusher, or lowlier of shares, gets short shrift and that is badly needed here. Many shares are placed on the market and not l>v members of tin* Stock Exchanges, that arc of questionable .-..tent in I value. Then again the duties of directors and auditors require- to be uior-e dearly defined, and above all the construction of the balance sheet- requires to he improved. The balance sheet of to-day is not very informative, some balance sheets are pnrticu--1-,,-lv remarkable 'for the information that is concealed. And public companies should lie made to issue public balance sheets.