H.—2sb

2. INADEQUACY OF OFFICIAL STATISTICS. We have been seriously hampered in our inquiry by the paucity of official statistics relating to the types of company referred to above. There is no complete list of companies operating in NewZealand, no adequate record of areas planted, nor of the amount of capital raised. There is no official information relating to the distribution according to the territories from which they have been raised, of the bond-moneys received, nor of the objects on which bond-moneys have been expended. The economic importance of the operations of land-utilization companies, the large amount of capital involved, and especially the peculiar significance which should be attached to the manner in which they raise their funds in the form of contracts made, usually with small investors, are such as to justify a greater measure of publicity than is required of ordinary industrial or commercial undertakings. We feel, strongly that all land-utilization companies raising capital for use in New Zealand should be required to furnish adequate statistics of their operations. This is desirable to enable a drift to be detected, and to provide the basis for an informed public opinion or for Government policy. We recommend, therefore, — (1) That all companies raising capital for the purpose of planting land with trees or other crops in New Zealand shall be required to furnish to the Government Statistician an annual statement covering the information as set out in Appendix I, (2) That this shall apply to such companies registered in other countries as well as in New Zealand. (3) That the Government Statistician shall publish an annual table, or tables, summarizing the information thus obtained. 3. GENERAL SCHEME OF OPERATION. In this section it is proposed to describe in outline the scheme of finance and control adopted by land-utilization companies. Later in the report the methods described are discussed in greater detail under separate headings. _ The companies investigated apply the joint-stock principle, with or without modifications, to the planting of areas of land, and the harvesting, processing, and marketing of the crops. The first companies were formed for the purposes of afforestation, about the year 1923, so that few, if any, companies are more than twelve years old. The application of the company form of organization to flax tobacco, and tung-oil is more recent. By 1925 or 1926 the idea was being applied to flax and tobacco, and by 1929 to tung oil. The areas acquired or planted vary very much in size, the largest being an afforestation company with a planted area of over 150,000 acres, and an aggregate capital, including both " bond " and share capital, of nearly £4,000,000. Another large company has a total paid-up capital, including bond capital, of over £841,000 at the present time, and has about 69 000 acres in planted trees or native bush. The remaining companies are much smaller, and few represent an aggregate investment of over £100,000. In most cases, provision is made for the issue of shares or bonds, particularly the latter, substantially greater than the number so far taken up and fully paid. With the exception of banks and insurance companies there are few types of business enterprise operating in New Zealand in which the normal unit has so large a capitalization. The majority of companies are registered in New Zealand, but -about ten companies, including two or three of the largest, are registered in Australia. _ The company form of organization possesses some advantage over ordinary farming methods m the types of enterprise under consideration. This applies particularly to afforestation. Normally, the farmer, whose main income is from the soil, requires an annual return from his crops, commencing at an early date. The initial returns from planted forests are delayed for a period of from twelve to thirty years. The returns from tobacco, flax, and tung oil may be expected within a period of from two to five years, so that.they are more suited to ordinary farming. Nevertheless, in these cases, as well as in afforestation, the joint-stock company possesses certain advantages. It enables the accumulation of a considerable capital which can be directed to large-scale enterprise, because the investor who would not be prepared to embark his whole resources of labour and capital on an untried venture may be persuaded to risk some portion of his savings. Under proper conditions the company form of organization permits of cheaper and more efficient management of the plantations and enables an economical realization and marketing unit to be established. The preparation and marketing of the crops may be undertaken more cheaply and efficiently. , . . Land-utilization companies conform to two types—those which apply the ordinary joint-stock principles and raise the whole of their capital by means of shares and those which raise the bulk of their capital by selling contracts, variously described as bonds, debentures, or certificates. Ihe former are usually public companies : the latter may be either private or public. In very many cases bond-issuing concerns are formed as private companies and are later converted into public companies with an enlarged nominal capital for which they may invite the public to subscribe. While the purely share companies are not free from certain objectionable features, there is nothing peculiar about their system of finance and control, and the difficulties applicable to them are equallv applicable to the bond-issuing companies to which our mam attentions have been directed, and which exemplify certain other undesirable tendencies as well. Hence no special consideration need be given to purely share companies.

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