The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo. FRIDAY, AUGUST 9, 1895.

Auckland Star, Volume XXVI, Issue 189, 9 August 1895, Page 2

The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo.

FRIDAY, AUGUST 9, 1895.

Sui Qia causa that lacks aasistaiiee, For th« men; that aoe&s rasUtante, Sot tiie futura In the distancu. AnS th« good tlmt ~vr« cau do.

The recent activity in mining speculation has turned a considerable amount of attention to the Stock Exchange and the Sharebrokers' Association, a s a matter of course, falls in for a full share of criticism. Of that it must not complain; every public body should be prepared to stand, and should indeed court, the keenest scrutiny. No doubt the Auckland Association has lately excited a measure of hostility through one or two unwise acts. The refusal of a minority to admit several candidates of unimpeachable reputation to the succession to Mr Vickcrs' seat, and the stoppage for a short time of the mid-day quotations, tended to create the impression that there was a disposition to make the Association a'very close corporation, and there is a certain amount of discontent with the exclusive character of the Association's daily meeetings, at which the quotations are fixed. It would be well for the members, in their own interests and in the interests of mining investment, to consider how the -simmering discontent which prevails in these respects may be met.

But when all the stress that can justly be laid upon these objections has been allowed, it really amounts to very little as against the.service which the Auckland Sharebrokers' Association has rendered to our mining industry. During years when the faces of many of their present critics were never seen on 'Change, and mining speculation was practically dead, the brokers kept open many of our most valuable mines that would otherwise have had to be closed down, by their exertions in raising the capital necessary to carry on operations, supplying a considerable proportion of it themselves ; and they have, by the confidence thuß displayed, materially helped to bring about the present revival. Their business is surrounded with many elements of risk, but in the whole history of the Association there has not been a single defaulter.

These facts ought not to be forgotten by persons who have benefited or who desire to benefit from goldmining speculations* Moreover, it especially behoves us as a community to beware of imperilling by meddlesome legislative interference the expansion of a

form of investment which is powattractiog a large amount of outside capital to our city. The , proposal introduced into the Legislative Council by the Hon. W. McCullough excluding sharebrokers, their wives and families or employees, from purchasing or holding shares, is of this kind. At first sight this proposal has a certain amount of attractiveness, and some plausible arguments can be urged in its favour; but close examination shows it in a very different light.' Indeed, no more mischievous interference with the course of mining transactions could be attempted at the present moment, and if those who are pressing it on have really at heart the welfare of our goldfields, they must be very shortsighted indeed to advocate a measure of this kind at a time when the whole prosperity of our goldfields and the buoyancy of goldmining stocks, depend upon the influx of foreign capital.

Look at the scheme, in the first place, from the point of common fairness. In every share transaction, the purchasing broker becomes in a sense a temporary shareholder, for although his client is at the back, the broker is personally reponsible for the carrying out of the bargain. It is a common occurrence lor investors to speculate beyond their means, and the broker, after purchasing, finds the shares left on his hands; he has no security but the shares, and if he is to be precluded from holding them, what is he to do in ,a falling market ? Give them away ? Under such a law, too, a broker, in order to protect himself, mnst enforce restrictions upon dealings with London, Australian and southern investors as would almost prohibit business outside the city. Who is to indemnify the broker against the risks incurred while transactions are in process of completion between Auckland

and distant places ?

So much for one aspect of the case, in which restriction of investment must follow the adoption of thet proposal which owns as its brilliant foster, parent the Hon. W; McCullough. But there is another large class of investors who would also be driven out of the market by it. We refer to those who will, not, (or various reasons, go into raining speculations in their own names, and for whom sharebrokers hold shares, buying and selling to order. The broker is always on the spot, can see. that a good transfer is obtained, and otherwise conserve the interests of his client, and the advantage to investors at a distance is obvious, There are many thousands of pounds invested in this way.

But if the strict enforcement of such a law would be of public advantage, which we disbelieve, the obstacles to carrying it out are so insurmountable that the placing of it upon the Statute Book would be a direct incitement to systematic evasion and trickery, in which the honest, straightforward man is certain to come out worst. The barring ot a wife,' which violates the financial independence of women guaranteed under the Married Women's Property Act, is going pretty far, but the promoters of this piece of legislative tinkering ought not to have stopped there—what about the sisters and cousins and aunts. To call such an abortive notion a protection to investors is an utter misnomer, it might more aptly be named " a Bill to promote chicanery and to kill mining investment."

The plain fact is that in share dealing, as in every other commercial transaction, men must rely upon the honesty of those they employ as their agents. With respect to the Auckland Sharebrokers' Association, we have neither seen nor heard anything to make us doubt that they will bear comparison with any other class ot business men in the city Nowhere else in the world, so far as we have heard, is such a regulation enforced as is proposed under this precious provision, and though New Zealand assumes to lead the world in some things, in matters of financial usage it may be very well content, with its tinpot transactions, to follow the practice which prevails in London and the other great exchanges of the world. If any abuses exist they assuredly would not be remedied by a scheme of the sort proposed by Mr McCullough. The most well-to-do men in the sharebroking business would probably be driven out of shaiebrokmg into stock-jobbing, and the public might have to deal with men of straw, instead of with men of substance and known integrity. It is reasonable to conclude that sharebrokers, their wives and families, are as deeply interested in the development of our goldmining industry as any others in the community. And it is also reasonable to suppose that sharebroking is not exempt from the rule which applies to all other businesses, that shady practices will in the long run bring the man. who attempts them to grief. A broker's best business in good times is done on commission, earned by the sale and purchase of shares for clients, and he is hardly likely to miss a chance of executing an order which brings substantial profit to himself, not to speak of the necessity to maintain a reputation for honest and straightforward dealing.

The Legislative Council will act judiciously in pitchforking this foolish and mischievous proposal out without further ceremony.