New Zealand Loan and Mercantile.

Manawatu Herald, 25 August 1894, Page 3

New Zealand Loan and Mercantile.

In tba course of an interesting article on the New Zealand Loan ami Mercantile Agency Company, London fkfrjphty, July 19, says i— Bom"c three months ago— on 20th 1 il, 1804 — we dealt at length with E reconstruction 1 schenie , which just been sanctioned by the Court, and we strongly advised shareholders, both on this side and in the Colony, not only to accept but to support it. At the same time we wrote considerable, and perhaps reasonable, doubt existed as to the amount of financial support Which wduld be forthcoming. The Colony had been hard hit, and •while it was obvious that the sharenolderß ih the defunct tJompatiy ■would naturally welcome any scheme which promised to improve their position, great doubt 3 existed as to the ability, at any rate of the colonial shareholders, to give effect to their desires by commensurate subscriptions. These doubts have been effectually removed. The Company expected the subscriptions to amount to £500,000, of which it was anticipated that £850,000 would come from British shareholders, and £150,---000 from the Colony.. The actual subscriptions are £620,000, via., £870,000 from this side and £250,---000 from the Colony. This result, especially as regards the colonial subscriptions, has come as a surprise, and is probably due in no small degree to the confidence placed in Baron Schroder and the new directors. That confidence can scarcely be regarded as unfounded. While the Barings, Muriettas, the Bank of England, and a host of minor fry were rushing down the fatal incline of Argentine finance, some to perish in the waters, and others to escape damaged in means and reputation, the Baron stood aloof. On the other hand, he took up the Estates Company of the Bank of New Zealand, and now the New Zealand Government, by virtue of its recent arrangement with the Bank, practically guarantees that transaction, and adds, for. what it may be worth, the Government guarantee to the existing securities. So far, then, as the subscriptions are concerned, the reconstruction scheme, 'promises well. It starts with a subscribed capital of, roughly, £620,000, which will no doubt be paid up. It has power to raise £SSdC^oOr and will . thus have the coimjnand of £800,000 to £900,000 in the most liquid of all assets— -hard cash. It will be the business of the new Company, which has no obligations of any kind to meet, to keep these assets liquid, and to religiously avoid following the example of its predecessors by not locking up its funds in plain and fancy investments which, whatever general merits they may possess, were highly unprofitable in the working, and rigidly inconvertible in the end. The time no doubt will come when the financing of estates may once more be profitably indulged in in the colonies, but, for this Company at least, that time has not yet arrived, and its chief efforts, for the present will undoubtedly be confined to dealingto th'tf best advantage with the Bedurities it now holds. It has, in fad^,;, been called upon to take over a wreck, and make the best of it. Another year or two will clear the air, and show how and where auisfcanae may most advantageously be given; either in starting new or assisting established enterprises. At the outset the Company is wrthfcr embarrassed by the action of Mr Justice. Vaughan "Williams in respect of the directors of the old Ctottpftny* . Whatever may have been the- demerits of the Mundella trmiptf the Board of the new Company,., feel * that their funds should not fee expended in furtherance of an object which is rather suggestive of animus against the old Board than of sympathy with the shareholders, who certainly stand to gain nothing by. the transaction. Ii the old Board have been guilty of fraud, as is suggested, and if in the interest of commercial morality it is considered desirable to prosecute them, it is for the Public Prosecutor to take the matter, up at the public expense ; b&t'it is obviously unfair to force the new ; Company to spend its shareholders' money in proceedings to which the shareholders themselves are strongly opposed. It certainly is not in' the interest of the new Company, nor of colonial credit, that mu^dj.j water should be stirred up unnecessarily, and that will be the on}y, effect of persistence in Mr Justice Vaughan Williams' present line of action. . . . In the meantime, ii is satisfactory to note that Sir John Hall, the late Premier, wb^o has been a heavy loser by the old Loan and Mercantile, has given proof of his confidence in the new Companychy resuming business with

it, and his example will no doubt be generally followed throughout the colonies. It has no doubt not been overlooked by Sir <Tohn Hall that a clause in the articles of the new Company provides for the absolute security of goods consigned through the Company. Competent and independent men will be Eent out to look into and to report on the value of the assets and properties taken over, and it is generally understood that. arrangements will bo made with the Land Company, to rim the two concerns on identical lines; Wider biio management ; the old staff, so far as may be found possible or desirable^ being retained,