The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News,Morning News and The Echo. TUESDAY, AUGUST 19, 1913. OUR FINANCIAL STANDING.

Auckland Star, Volume XLIV, Issue 197, 19 August 1913, Page 4

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

TUESDAY, AUGUST 19, 1913. OUR FINANCIAL STANDING.

For the cause that -lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that tee can do.

In a recent issue of the '-'Economist" an interesting article on Trustee invest/ ments draws special attention to the changes that 'have taken place .in the •price and the yield of- the principal British stocks during the past twenty years. This comparison should he particularly interesting to .our readers, because it shows that colonial securities in general, and New Zealand stocks in particular, have not declined in value anything like so far as Consols and many other securities acknowledged to belong to the "gilt-edged" class. Coming from so iiigh a financial authority as the "Economist," this testimony to our financial stability is extremely . gratifying. In the old days of the "Investors' Beview" a powerful financial coterie in London seemed to take special pleasure in depreciating colonial investments and obstructing the flotation of colonial loans. But, happily for us, the mantle of Mr. A. J. Wilson has not descended upon the shoulders cf any. successor equally virulent~-an'3 equally prejudiced against colonial methods of finance. In recent years the English money market has offered us the best proof that could be expected of the desirability of financial connection with us by taking tip out loans unhesitatingly. And the reason is that experience has shown the leading financial houses at Home that colonial loans are a safe investment, while the return from them is higher than can be expected from the few; "gilt-edged" stocks which conservative, city opinion once classed in a category by themselves.

To illustrate the change that has come over the British financial world in thi3 respect, we-cannot do better than quote some of the statistics supplied by the "Economist" The. period taken for comparison in each case is the ' last twenty years, between 1593 and 1913. Taking, first of all, British Consols, Aye find that tbe 2J per cents bave fallen from 9S| to 725-, while 3i per cent India stock has fallen from 10SA to 87. There is, of course, a sufficient reason to account for this decline —the multiplication of other forms of investment, bringing in a higher rate of return than Consols or India stock, has diverted the demand in other directions, and so the market price -of the older securities has fallen. The same.decline is manifest in the price of British Corporation stocks; for example, Metropolitan" 3j per cents have fallen from 114 to 97J, and Liverpool 3i per cents from 117 to 92 during the same period. Jn every case these standard British stocks show a very substantial decrease in value. But with Colonial stocks tlie case is very different. In 1893 Cape of Good Hope stock stood at 100, New South Wales stock at 10.5. Victorian stock at 100, New Zealand «t 103 all

these, being 4 per cent flotations. Thi* year three of these stocks have fallen slightly; Victorian stock is still at 100, New Zealand and South African stock are at 100, and New South "Wales stock stands at 101. The heaviest fall'on the market price of these colonial stocks within twenty years has "been about 7 per cent, in the case of New Zealand the fall has been less than 3 per cent. But in the case of British Consols anyone investing in the 2i per cent in 1893 and selling to-day would lose nearly 26 per cent on his turnover, and an investment in India stock under the same conditions would have meant a loss of about 20 per cent on the ''deal.'' It is true that the colonial stocks pay a higher rate of interest than these English investments, but the extent to which the old gilt-edged securities have fallen proves clearly that the favour once con.fined to them alone has now been extended to the colonial stocks, which, as we have seen, have declined only to a small .extent in. relative .valnes.

Perhaps the most exact comparison for our purposes can be made between Colonial stocks .and British railway and preference shares, as .these' are., all uniformly 4 per, cent, investments. Since 180:1 Great. Western debentures have fallfcn from 140 to 103, Great" Eastern debentures from 134' to 100—in each case about 26 per cent; while Great Eastern, Great Northern and North Eastern preference- shares have all fallen uniformly to somewhere -betweo.n : 96 and 99—an average decline of about 27 per cent. If we contrast j with this the exceedingly slight Vail in j

the market value of " the principal Colonial stocks—from 3 to 7 per cent for the same period—we see at once how. absolutely-groundless a re - the complaints sometimes heard'"from quarters that should-.he -better informed of the low ■V.alue and unsatisfactory" status, of Colonial pubb'c .securities. The truth i« that there axe.few stocks on the British money market . paying the sam e deadends . that' are priced ' so bigh.' ..We may be well .content 'to know that.New' Zealand.4 per' cents are . at 100 when the best railway j■stocks in- Great Britain, all.paving. .4 pe pr r cent, range, from 06 to 101, and'" even Great Western debentures are at only iO3 . - .' .SssS* snch- C onditions we.ought to. he very well satis'ired with the amount" of confidence and support that our stock evidently commands at Home. The^ ■"'•Economist" tells, us that, "colonial--£hance ; is -cbming in --for- - 'a gdod-'deal -of! aj ptiMkvfi but the fact'

remains that our ' stock" is quoted on 'Change at a price equalto that of the best 4 per cent" investments -now available to the British financier. And, considering that even Consols ba've fallen about 25 per cent, and Bank of England stock has fallen 30 per cent in market value within the past 20 years, we have no reason to be, dissatisfied with our financial standing at Home when we remember that' -Sew Zealand'-4 per cents have fallen less than 3 per cent in market price during the same time.