Untitled

Hokitika Guardian, 29 November 1929, Page 4

Rkcknt events have attracted attention to what has been termed the problem of the small investor, but the concern lor that individual expressed in some sections of the Dress suggests a considerable amount of loose t-iiinking. In recent months there- lias been a collapse in the shares of various new companies at Home, formed during last year’s Stock Exchange boom, and this collapse has involved, * somebody in neavy loss. A little while ago the “Economist” published an analysis of the market value in August last of the shares of new ventures issued in 1928. .oe par value of such shares is £30,0e0,099, hut in August last the mui’Ket, valuation was less than £17,000,000, of their par value, the paper loss in per cent When it is remembered that ( in nearly all eases tlie.se new shares reached a price very greatly in excess of' heir par value, he paper loss in August last from the highest points was very much greater. More recently London was staggered by the collapse ol the Ha try group of companies, which also involved serious losses. As a result there has been somclhing like an agitation, first, lor a .strengthening of trie Stock Exchange icgulations under which dealings in new shares are allowed, and, secondly, for action on the part of the Government for the purpose of protecting the s nail investor from losses incidental t-o such fluctuations in share values. People who have cried out for an amendment of the Companies Act appear to overlook the fact, says a financial journal, that a new measure, with somewhat far-reaohiiv provisions, will come into force next month, a measure that seeks to deal witn some of the shortcomings of existing legislation. There has also been a plea for giving the small investor greater facilities for buying British Government securities and even the Post Office has been attacked because it allows depositors an interest rate of only 24 per cent. In order to understand the position it would be necessary to know what exactly is meant by the term “small investor.” It may refer to an individual with £SO or £IOO ■of spare capital or one able to invest some thousands, It nmy be suggested further, that those who have lost money through the-collapse of last year’s industrial share boom and the events affecting particular groups of companies since cannot properly be placed in the category of investors. Such people are speculators, and the fact that they have lost money is the rere,suit of greed—the endeavour to reap profits by capital appreciation, or it would be more correct to say, a fortuitous turn of the market. The country may pass Acts of Parliament and the Stock Exchange may -tighten its regulations in regard to dealings iu new shares, but it is imnoss'ble to legislate for the fool against his own folly A little thought is sufficient to show that the investor of moderate means it well catered for in this country, in fl’hieh, indeed, he holds a really important financial .stake. At the International Thrift Congress last month Mr Snowden dwelt upon the enormous sum deposited by small savers with the various thrift organisations. Die amount being estimated at £1,500,000o:;o.