INVESTMENT LOSSES

Auckland Star, Volume LXVI, Issue 130, 4 June 1935, Page 9

INVESTMENT LOSSES

MINING VENTURES.

STOCK EXCHANGE MISLED.

ENGINEERS BLAMED Tlie statement that failure of many gold-mining companies was due to faulty engineering reports was made by Mr. H. Kitson, chairman of the Christchurch Stock Exchange, in replying in Christchurch to the remarks by Mr. J. Morrison, assistant Commissioner of Stamp Duties and assistant Registrar of Companies, in his address to the Institute of Public Administration.

Mr. Morrkon had spoken of "wild cat" schemes in connection with gold-mining, and had referred to ways in which the public were misled into subscribing for gold-mining shares.

Mr. Kitson said that he did not think Mr. Morrison was quite fair in loading on to Hereford Street the blame for the flotation of what he referred to as "wild cat" schemes. In many cases the blame for "wild cat" schemes.should be placed on the engineers, who were supposed to be men of knowledge, and their reports on the fields and undertakings generally. In many cases the provisional directors and the promoters of such a company were misled entirely by incorrect reports and had gone to the public in good faith. The promoters had in many cases shown their faith in the reports by subscribing their own money to the venture.

"Stock Exchange Precautions." "No one deplores more than the members of the Stock Exchanges that thp public are deceived in the prospectuses of these 'wild cat , ventures," said Mr. Kitson. "The Stock Exchange Association has, as far as is humanly poasibio, brought in rules and regulations to prevent such schemes from being foisted on the public, by insisting that, before any prospectus is passed, an independent engineer's report is submitted. The Stock Exchanges have been just as much deceived by these engineering reports, when we believed that a man calling himself a mining engineer, an.l with letters after his name, was competent to report. .However, where the results have proved that a mining engineer's report is not reliable, we have refused to accept his report on any. proposition I that has been subsequently referred to

Mr. Kitson added that in very many cases the results given by the engineers were the outcome of faulty boring, which denoted inefficiency rather than a deliberate desire to mislead. Mining Engineer's Views. A well-known goldmining engineer, in commenting on the statements by Messrs. Morrison and Kitson, said that more money had been lost in real estate and what were retarded as gilt-edged securities and other sharpy than in gold-

mining, Thla engineer said that Mr. Morrison's criticism applied to all classes of investment, ami in ftH cases it wne necessary to sift the good from the bad. He know of one gold minor who aonio year.* cago invested in bank shares, which were now valued at, nearly 50 per cent less than what he paid for them. Another person who had paid over £0000 for brewery shares estimated their present value at £4000, while yet another investor had lo.st £100,000 in real estate in G'hristchureh. Beside those figures the losses irugoldmining were a mere bagatelle. During a depression the value of gold tended to rise, whereas Industrial investments were of less value. Practical Experience. The shares of every successful goldmining company were at a high premium, Gold ventures were very open to criticism because there was something about gold which caught the public imagination. The question of success j often depended upon whether those in oharge of a mine were practical men, Some of the worst mistakes and failures were due to 'engineers, often with the highest credentials, not' knowing the practical side of their job. Book learning was not of the same value as practical iexperience. Mining engineers were required to go through a course of study: to obtain certificates, but the best recommendation was practical • knowledge! Some of the most reliable gold miners who had been successful had acquired their experience as they went along., "To my mind there is no better investment to-day than a mining claim that has been well tested and set out,' , declared the, engineer. "It is only the unscrupulous persona who deserve to~be flogged, and they are in every avenue of business."