Finance, Stocks, and Mining.

Free Lance, Volume II, Issue 55, 20 July 1901, Page 5

Finance, Stocks, and Mining.

THE bala-uce-sheet of the Wellington Meat Export Company will staggoi the agitators for State Freezing Works. The balance-sheet is for the yeai ending 30th June, 1900, and shows a profit of £4412 14s 2d, as against £20,133 14s 9d for the previous year. This is a big drop, and the suggestion will be made that the true profits are not shown. This, of course, is nonsense, because the directors would have to get behind the auditors, a difficult task; furthermore, it is not likely that even if it were possible to secrete profits that the company would voluntarily make such a poor showing. • * • The trouble arises from the numerous fluctuations of the frozen meat market. The company, to keep its machinery and plant at work, is obliged to freeze on its own account, and, as there is always an interval of about twelve or thirteen weeks between the period when the sheep axe purchased and when the carcases are sold in London, the risk is exceedingly great. • • * It is an open secret that most of the freezing companies have lost money. The market has gone against them almost every time, and when you calculate the difference a farthing per lb makes it will be seen that a lot of money can be lost in a very little while. • * * Last year the market was constantly tending upwards, not merely for frozen meat, but also for tallow, hides, sheepskins, and the other by-products of the freezing works, and heavy profits were made. This year the position is reversed. • * * If freezing companies could make sure of a steady market, at a fixed price, it would be easy enough to regulate the prices of live stock; but there is nothing certain as to the trend of the tieirminal market, hence shipping frozen meat is always more or less a speculative affair. • * • The freezing companies are called upon to take the risks of this speculation, and it is not to be wondered that in some seasons they make big profits and in others heavy losses. It is possible for any farmer to take the risks, of the market by shipping his meat himself — the companies are always ready to freeze at low charges. # The gross profit of the Wellington Meat Export Company on freezing, sales, and manufactures, totalled £15 308 17s lOd, while last year it amounted to £44,953 5s 3d. The company was just able to pay its usual dividend of 8 per cent. Nothing has been added to the reserve fund out of profits. The Wellington Meat Export Company has had a bad year, but its financial position is in no way impaired, and the chances are that it will in the current year make good profits — that is, if the market does not fluctuate. • • • The Union Bank balance-sheet for the half-year ended 28th February has just been issued in London, and this bank, like all the others, has had a good halfyear. The shareholders get 8 per cent., or 1 per cent, more than at the corresponding date of last year, and £25,000 is added to the reserve fund. • « * This, bank is pursuing a very cautious policy in New Zealand, and is taking a diametrically opposite course to that of the other banks in some of its operations. Thus,, -while all the banks have advanced money freely to customers, the Union Bank has gone the other wayCompared with a year ago, its discounts and advances are less, whi'e the other institutions show fairly substantial mcreasee. # It is hard to tell what is influencing the bank authorities, but when wool and meat are down a cautious policy cannot be condemned. In the opinion of some people a period of depression is coming for Australasia: if so, a policy of caution is desirable. • ♦ • Imperial Consols dropped rather heavily towards the end of last week. The quotation cabled to the colony on Monday was £91 17s 6d, a fall of 30s smco tho previous Friday. » • • Consols have been declining ever since the war in South Africa commenced, but £91 17s 6d is the lowest point touched, and is the lowest since about 18G4, when the average price for the year was just over £90.

Consols have been affected in two ways. There has been, an enormous issue of fresh loans by the Imperial Government, and the redemption has been stopped by the suspension of the operations of the Sinking Fund. Furthermore, the interest rate drops automatically to 2} per cent, on the Ist April, 1904, and this has greatly influenced the market price of the stock. • • • The heavy fall of last •neck was probably due to the Stock Exchange settlement. These settlements are made fortnightly, and money is generally in demand then to square accounts. The banks usually lend the money required, accepting gilt-edged securities as cover. • « » But Consols have been steadily declining, and the lending margin has been consequently reduced. It is quite possible that some holders haye been forced to quit through banks insisting upon a wider margin. Anyhow, the fall is not a healthy sign. • • * It looks very much as though money was going to be hard again in London. It is just about this time of year when the demand is felt, and rates move up. The Bank of England return will indicate the trend of the money market very clearly, and for this purpose it is necessary to watch the proportion of reserve to liabilities. When this ratio goes below 40 it is generally a bad sign. » * • The stiffening of the London money market will make things awkward for the various Colonial Treasurers of Australasia. Nearly every colony is pledged to a huge public works expenditure, or money is wanted for schemes of one kind and another, and how this money is to be found remains to be seen. • • • Local borrowing is becoming difficult, because the market has been pretty well drained already of its loanable credit, and the produce markets have not been buoyant enough to bring in fresh capital. Future loans will have to carry higher rates of interest. • • • The underwriters are much agitated with respect to the State Fire Insurance Bill. They have suffered pretty well in fire losses during the past two years, and the current year promises to be quite as bad as its predecessors. • • • During the first six months, according to the statistics compiled by the "Mercantile Record," there were 187 fires in the colony, involving an insurance loss of £241,332, and of this the North Island is responsible for the loss of £160,022 in 125 fires. • * * When there are these continuous and heavy losses, the only course open to the underwriters is to raise the rates, although it is not the happiest mode of applying a corrective. • » • Some people believe in furnishing expensive fire brigades and fire appliances, but these are of no use when the incendiarist is at work, and many fires are caused criminally. • • • Insurers want to be more careful than they are, but when a property is insured it seems the right thing to be careless. The best, safest, and proper corrective to check the excessive number of fires in the colony is to hold an inquiry every time there is a blaze, whether it is big or small. • • • When people realise that their affairs will be publicly inquired into whenever a fire occurs on the premises or property, a great deal more care will be taken, and when the risk of fire is reduced the rates of insurance will fall also. State fire insurance is open to many serious objections, but if the people demand it, they must get it. Experience alone will demonstrate to them the risk nature of fire underwriting. • ♦ * The returns from the Otago dredges last week totalled 1171oz, against 1004oz in the previous week. This i& a satisfactory improvement, and the returns will go on expanding. • • • The market is improving, and prices show a tendency to advance. In another two or three weeks speculators will have forgotten all about the slump, and will be buying the better class of dredging shares with confidence. • • • The Enterprise Gold Dredging Company paid a dividend of 2s 6d per share on Monday last. This makes the fortyeighth dividend paid by this company. • • • More encoui aging reports have been received from the Dart River Dredging Company's claim. The dredge has. overcome all its troubles, and is steadiU working, and good returns are expected.

The Waipuna Company's dredge is laid up, and a meeting of shareholders is to be held to consider the advisability of raising funds to pay off existing liabilities, repair the dredge, and prospect the claim. * ♦ « The Long Valley dredge has been taken over bv the company, and work was to have commenced early this week.