CAUTIONS TO INVESTORS ABOUT NEW LOANS AND NEW COMPANIES.

Thames Guardian and Mining Record, Volume I, Issue 268, 17 August 1872, Page 3

CAUTIONS TO INVESTORS ABOUT NEW LOANS AND NEW COMPANIES.

Yesterday’s Herald says'The following remarks clipped from the Economist are equally applicable to this country as to England, especiallv to Auckland at the present moment :—“ It is becoming quite clear again that there is a great deal of restless money in the market. Political apprehensions and other causes checked somewli.it suddenly, three months since, a rush of new schemes which had begun, but the check appears now to have been taken off. What we now see is of course quite ‘ usual.’ During the past year people have made enormous savings, have comp ted for old investments to such a point that there is a material reduction in the return on the money invested, and are now craving for something which promises more profit. This is the very opportunity which foreign notions, desirous to borrow, but of doubtful solvency, and promoters of public companies, have long been waiting, and accordingly new schemes are offered to the public every day. There is some reason, therefore, for once more giving the public a few cautions about steering tluir course in the crowd of good, bad, and doubtful schemes. We need not say that the danger of losing money in new things increases with the prolongation of a period of prosperity, and the increase of excitement about the high profits ‘other people’ are making. As regards new companies, there is one caution which in reality embraces ever}' other. Investing money in new companies is in reality engaging in a business, and an investor should treat any new proposal as he would a proposal for a partnership. What is the fair profit to he expected ? Who are to be his partners ? What is the management to be, and what power will he have over it ? If the company is to be limited, he will also have to consider what his liability in .shares not fully paid up will be. These are the things a man thinks of when he begins an undertaking with anyone ; and to call the operation an investment does not alter the essence of the transaction."