WATERED STOCK.

Auckland Star, Volume LIX, Issue 79, 3 April 1928, Page 6

WATERED STOCK.

A Committee of Industry under the direction of Sir A. Balfour has just published a report on British industrial and commercial efficiency, and its conclusions are of special interest to employers and wage-earners in the cotton trade. The report attributes tho depression from which this great industry Is now suffering largely to "the gigantic commercial operations" by which so many of the Lancashire cotton mills have been overcapitalised. Striving to pay dividends on their heavily watered stock, these mills are unable to support the intolerable burden, and their failure to make financial headway has naturally reacted in a most injurious fashion upon the condition of the whole industry. It is significant that, according to the "Economist," the present depression in the cotton trade is "almost entirely confined to the mills spinning American cotton and manufacturers using American yarns." The Egyptian branch of the trade is largely unaffected. It is the American branch whose prospects have been so seriously compromised by that practice of over-capitalisation\ vfhich is one of the outstanding traditions of American industrial finance. It may be remembered that in a manifesto recently published by the cotton spinning unions the workers attributed the depression pervading the industry largely to the huge inflation of capital in recent years; and this view of the case is strongly confirmed by the report of Sir A. Balfour's Committee. The greed of the speculator and the company promoter has over-reached itself, but unfortunately the worst consequences have fallen not upon these adventurous financiers, but upon the wage-earners.