FORESTRY BONDS.

Auckland Star, Volume LXI, Issue 64, 17 March 1930, Page 4

FORESTRY BONDS.

POSITION AS INVESTMENT. N.Z. PERPETUAL FORESTS. Forestry Bonds! What are they worth? Although the term has a wide application, for a number of companies have issued forestry bonds and are still offering them, the purpose of this article is to deal with those issued by the pioneers in this field, N.Z. Perpetual Forests, Ltd. Because 'the bonds of one company may •be deemed satisfactory that is not to say all forestry bonds can be recommended. The bond is just as good and no better than the organisation which stands behind it. Each company's issue must therefore be considered by the investor separately and purely upon its merits. N.Z. Perpetual Forests first started selling bonds in 1925, and through its selling organisation, Smith, Wyllie and Co., has to date disposed of £3,400,000 worth of bonds. This is an immense sum of money to be sunk in one form of enterprise in such a comparatively small country as New Zealand, and under the control of one organisation. The magnitude of the operations renders it essential that the whole 'business shall be carefully examined and constantly watched with the utmost vigilance. The nature of the proposal put forward by the company has been such as to appeal with special force to the small man" rather than to the wealthier section of the community. The hard working artisan struggling week by week and year by year, yet still barely making ends meet, •has listened eagerly to the assurance ot the bond salesman that if be can only get bold of £25—payment spread over tour j years—he can look forward to reccn ing | £250 in 12 years' time, or as an alternative £500 in 20 years. Here is provision for himself and wife in their declining years; or maybe a nest egg for one or other of the growing family. Out in the country it has been the same. Wherever bard work and straitened circumstances have been accompanied i as they so often are with thrift and selfsacrifice the promises of the forestry bond salesman have had a wonderful pull, lhis has been the case not only in this count!y. but also in Australia. Great Britain and many Eastern countries. The companies bonds have been freely placed in South Africa, India, China and Japan. - With such a spread of" business the fair name of this Dominion is directly involved. It as has been actually suggested, these bonds are fraudulent, or even under suspicion, it is a matter in which the l\ew Zealand. Government should take action without waiting for individuals to seek legal redress. The Bond Contract. The actual wording of the undertaking given by the company reads as follow. "N.Z. Perpetual Forest, Ltd., contracts to plant with softwood trees an area equalling one net undivided acre tor each bond sold prior to the closing of this issue, and to care for the forests under properly qualified management, either until the forests are realised at the direction ol the bondholders' '"trustees, or for a period ot 20 years from the planting of the seed,, whichever is the shorter period. Further details are supplied, but the above comprises the These °utline' quite clearly the obligations of the company. Recently the writer was shown over the company's forest areas, and the .-results of 'that inspection, have already ibeeti published in the "Star.' In brief, they demonstrate quite clearly that the company has and is thoroughly fulfilling its obligations. The land has been bought as promised, the trees are already planted and the provision for maintenance appears to be as thorough as.human ingenuity can devise. In this respect the company seems to have "gone the limit" in its effort to give the holder of the bond a fair r u n for his money. "Perpetuate bona fides in this respect, appear to have been completely established when they appointed as trustees for the bondholders such nien as Sir Herbert Matthews, one of the most distinguished agriculturists in Great ■ Britain, Sir Henry Barwell, ex-Premier of South Australia, now South Australian Agent-General in London, and other prominent gentlemen. These trustees have the widest powers in the precautions they take on behalf of the bondholders, enabling them to certify, from time to time that maintenance is being carried out satisfactorily, and that N.Z. Peipetual Forests, Ltd., is in a position financially to fulfil its undertakings to.bond holders. Holding Out Hopes. So much for the actual wording of the bond. There is, however, something more. In its prospectus the company state:— "Forestry . experts are. agreed that the profits will 'be considerable. Based upon investigation and the statements and . calculations of experts, as under, we ' estimate the value of the crop at £-50 per acre if marketed as pulp wood in approximately 12 years, or £500 per acre if marketed as general timber in 20 years, lhis is clearly not an undertaking; not a guarantee, but the bait of £-50 in - years or £500 in 20 years is dangled, before - the public, and the onus is on the company to justify "it, which it sets out to do with facts and figures. At this point the position is one of an ordinary business venture. All new flotations are speculative; some more than others. It is all a question of degree. _ ■ ■ ■ ' When the bonds were first offered to the public ferities might well have been excused for adopting a cynical attitude. "Who can tell," they asked, what the trees will be like in 12 years or 20 years., to say nothing of the still more speculative . point, "What will timber be worth at that time." N , . , ' "Where will the company get the land cheaply enough to make the project sound economically?"/ - v .j Father Time Has Helped. To-day, however, the position is vastly different. Cheap land has been bought, the trees have been planted and some with five years' growth are well oiV the j road to maturity. In other words, a bond •holder has tangible evidence of where his money has gone, which is more than can be said in the ease of many companies : that have been promoted within the same | period. • j Moreover, the passing of the five years has emphasised rather than diminished the grounds upon which the company based the hopes for generous returns to bond holders. The world-wide demand for pulp growing timber has steadily increased and experiments on a commercial scale have demonstrated that pinus insignis, which comprises ninety per cent of the company's plantings, is eminently suitable for manufacture into newsprint and wrapping papers. From the point of view of sale as ordinary timber pinus insignis is a much more marketable commodity than it was. Columns could be written upon the present position of the timber and the pulp industries so far as it affects pinus insignis, sufficient be it to say that the outlook is promising. Bonds Are Speculative. Forestry bonds, as issued by N.Z. Perpetual Fores. ;. Ltd., are still definitely speculative. 2so one can say with positive certainty what financial results will accrue from those millions of trees which are beginning to feature' the landscape in the Putaruru-Atiamuri-Taupo country. The trees are growing rapidly, even at a greater rate than was anticipated, and already the Sjk trustees are investigating the marketing aspect. A few years will answer many quervjs/'' ■

That public opinion is viewing the prospects more confidently is shown by the fact that bonds which have, through forfeitures or any other reason, become available in respect to areas planted in the past readily command a premium. Thus 1924 bonds, representing areas which now . have five-year-old trees thereon, are selling readily at £45. The company claims to use every possible means to assist any bondholder who defaults in his payment to keep on the register. Meanwhile it may be said definitely that the company has honoured its bond contracts, and that it has reasonable grounds for the statements made in its prospectus as to the probable financial results. OVERSEAS MARKETS. FROZEN MEAT. PRICES AT SMITHFIELD. The New Zealand Meat Producers' Board has received < the following cable from its Loudon ofiice, dated March 14, 1930, advising that the following are the approximate average prices realised for the week, based on actual transactions of wholesale quantities of the descriptions of meat mentioned and are for representative parcels of the goods offering during the week, being for business done on the basis of delivered to Smithfield market and/or ex London stores:— Mutton— Canterbury and North Island crossbred wethers and maiden ewes, 48sGlb, V/A; 57-641b, 7Vid; selected, 65-721b, 6%d'; North Island crossbred wethers and maiden ewes, 48-oGlb, 7%d;, ;17-G4lb, 7d:. 65-721 b, GVkl; ewes, 48-641b, GVzcl; ewes, 63-721b, 6 ] /4d. Lambs. —Canterbury, 361b and under, B%d; 37421b, B%d; 43-50 Ib, SM; secoid ( i;aiity, average 331b, SVfcd; selected isoi'th Island brands, 361b and under, B%d; 37-421b, B%d; 43-501b, 8M; second quality, average 311b, B%d; other North Island brands, first quality, 361b and under, 8V&d; 37-421b, B'/i11; second quality, average, 3llb, Bttd". Australian: Victorian,first quality, 361b and under, BJ/4d;8 J /4d; 37-421b, Bd. Argentine: First quality, 38lb and under, B%d; 37-421b, 'Bd. Beef. —New Zealand: Ox fores, sd; ox hinds, 6d; cow fores, 4'/4d; cow hinds, sVid. Argentine chilled: Ox fores, 5%d; ox hinds, 7 1 /2 d. Australian frozen: Ox hinds, over 1601b, 6d. Pigs—New Zealand prime porkers, 601001b, lid; 101-1201b, lOHd; New Zealand prime baconers, 121-]Bolb, lOd. Lamb steadier at lower values.^ Mutton. —Market is easier owing to larger quantities arriving ' and also to • much lower prices quoted forward delivery. . Beef. —Market steady but trade slow. Pigs—New Zealand porkt'ij: Good demand with firm prices. Baconers: Arrivals being disposed- of as heavy pork. DAIRY PRODUCE. THE BOARD'S REPORT. The New Zealand Dairy Produce Board has received the foHowing market report from its London office, dated March 14:— Butter. —New Zealand: Salted, 139/ to 1 142/; unsalted, 148/ to 154/; first whey, 132/; second whey, 140/. Deliveries New Zealand this week, 1500 tons; in store, 6650 tons. Australian: Salted. 134/ to 138/; unsalted, 138/ to 142,/. Argentine: Unsalted, 130/ to 134/. The market is quiet after some activity. Danish: F.0.b.-, 152/; spot, 158/ to 160/. Polish: 126/ to 134/. The market is slow with retail prices unchanged. 01 Cheese.—New Zealand: White, 83/ to. 85/; coloured, 85/ to 86/. Deliveries New Zealand this week, 29,500 crates; in store, 90J380 crates. Australian: White and coloured, 83/. Canadian: White, 96/ to 100/; coloured, 96/ to 08/. Deliveries of Canadian, 3600 boxes; in store, 126,194 boxes. The market is steady, with retail prices unchanged. Newton King, Limited., have received the following cable report from R. and W. Davidson, Limited, London, dated March 14:—Butter: The market is quieter. Salted, 139/ to 141/; unsalted, 148/ to 154/. Wheys, firsts, 132/; second grade, 130/. Cheese: The market is steady; coloured, 85/ to 86/; white, 83/ to 85/. Amalgamated Dairies, Ltd., have received the following cable from their London manager under date Marclr 15: — •Butter.—Butter market, weaker under strong bear movement. Anchor price unchanged, 144/; other finest grade for immediate delivery, 141/; next week 140/. Danish, 158/ spot, 152/.f.0.b. Deliveries New Zealand, 1498 tons; stock, 6846 tons. Retails unchanged. , Cheese. —Prices unchanged but quiet at advance (white 84/, coloured 85/). Canadian unchanged, nominal. Retail unchanged. Messrs. Leonard and Son are in receipt of cabled advice from Mr. A. C. Rowson, London, dated March 14, as under:— Cheese.—New Zealand, white, 84/; coloured,.Bs/; • Demand moderate. Market steady. Cannot advise op. outlook, but think market will not change much for the present. Butter—New Zealand, first grade, 139/; finest, 141/. Demand falling off. Market again dull. Think market will go lower unless improved denfand. . COTTON, RUBBER, JUTE, ETC ( . (Last week's prices in parentheses.) Cotton. —April delivery, 7.73 d (8.14 d) per lb. Rubber—Para, B%d (B%d) per lb; plantation - and smoked, IVsd (7%d) per lb. Jute. —March-April shipments. £23 (£25 2/6) per ton. Copra—March-April shipments, South Sea, £19 10/ (February-March £20 10/) per ton; plantation, Rabaul, £19 15/ (£2O 15/) per -ton. Linseed 0i1,—£.38 (£4O) per ton. Turpentine. —43/3 (43/6) per ton. SHEEPSKINS AND HIDES, WELLINGTON PRICES. The fortnightly hide and sheepskin 6ale was 'held in Wellington on Friday, with a good attendance of buyers. Catalogues were not large, and prices for sheepskins were a little easier than a fortnight ago, 'being a farthing in sound pelted lots and halfpenny to three farthings easier in inferior pelted-lots or dry skins. Hides were well competed for, but at. a lower range of values in sympathy with recent advices from overseas markets, where all values are lower. Cow bides were Ad to %d lower, and ox %d to Msd lower. Yearlings and kip also declined up to y 2 d per lb. There was little demand for tallow, and the odd lots offered were mostly passed in at very low bids. The range of prices was as follows:— Dry sheepskins: Halfbred,—7%d to B%d; fine crossbred. 5%d to 89id; medium crossbred, 6d to BV4d; coarse crossbred, 6%d to 7%d; half wools, to quarter wools, • 5%d to 7Vzd; pelts, 3d to 7Vul. Salted skins: Pfelts, 2/ to 2/6; quarter wools, .2/6 to 4/1; half wools, 2/6 to 4/6; three-quarter wools, none offering; full w0015,;5/ to 7/; lambs, 1/6 to 2/8. Hides: Ox, 331b to 441b, 5%d to 5%:1; ox, 451b to 521b, 4%d to 6%d; ox, 531b to 591b. 5%d to 6%d; ox, 601b to 691b, 4%d to 6%d; ox, 701b and over; 6%d to 7d: cow, 331b to 391b, 4%d to 5%d; cow, 401b to 481b, 4%d •to .5%d; t cow, 491b arid over, 4%d to 5%d; kip, 251b to 321b, 5d to kip, 171b to 241b, to 8d; yearling, 111b to 161b, 5d to B%d; calf, 91b to 101b, od to 7%d; calf, 61b to 81b, sV*d to lOd; calf, lib to 51b, 6%d to 13% d. Tallow: In casks, 18/ to 25/6; in tins, etc., 18/6 to 22/.