FINANCE AND COMMERCE

Press, Volume LXXV, Issue 22800, 28 August 1939, Page 11

FINANCE AND COMMERCE

LONDON REVIEWS THE BUDGET

SIGNIFICANCE FOR BRITISH INVESTORS

(FSOJI OUR OWN CORRESPONDENT.) LONDON, August 3. [ The New Zealand Budget has a special significance for 1 British investors in the present circumstances, said the “Financial Times.” commenting upon the Budget speech. j “It will be scrutinised first of all for an/ suggestion that the j lessons of recent experience have been assimilated;” it was stated. “There is an explicit recognition, which will be welcomed, that the public works programme is not economically sound. It is declared to have reached its peak in New Zealand, but the avowed alternative of transferring the workers concerned into industries will entail its own drawbacks unless the industries themselves are economically sound.

"Artiflcia’ overstimulation of manufactures in countries which normally are primary producers is one of the manifestations of the economic nationalism which has done so much to disorganise ordinary trade channels. Apart from any effect on British exporters and the New Zealand import trade organisation, taxpayers in the Dominion will realise that any necessary support for unprofitable manufactures will fall upon tl-m.”

The "Financial Times” also added that the increases in taxes, while they night seem small in comparison with those in Britain, were proportionately substantial. "Full recognition has been, and is being, accorded to the Dominion for its Empire spirit and Its labours for defence, but the financial position with which it is now confronted emphasises the necessity for cutting the coat according to the cloth,” it added. "The Times” said: "The formal strength o' the budgetary position in Kew Zealand hah contrasted sharply with t|ie deterioration of the exchange position throughout the recent period of pressure on London funds. Last year for the third year in succession the ordinary Budget was closed with a surplus. Increased expenditure being financed without additional taxation out of the buoyancy of the revenue, This phase has now come to an end. as indeed it was bound to sooner or later if only by reason of the greatly enlarged programme of defence expenditure to which the Dominion is committed."

A MEMORABLE

WEEK

Vain Fight to Hold Sterling

MARKETS OPTIMISTIC AT CLOSE V pauntD pa ess association—coptxjobt.) . (Received August 27. 7 p.m.) LONDON, August 28. This week will be a memorable one In British financial history. A brave, fight to hold sterling.against tremendous odds failed,. Bear raids throughput the Week were so continuous that ..the authorities probably lost nearly ‘ £50,000.000 in gold since Monday. ' Simultaneously, sharp rises in the price of gold, amounting to 6s 7d in two days, revived interest In gold shares. It is estimated that every increase of 2s 6d In the price of gold adds £1,500,000 In profits to the South African gold mines alone,. : Stock exchange markets closed the week optimistically. Similarly a wave ■ •of optimism swept the marine Insur* Vance market on Friday afternoon. .■) Business in war risks is proceeding i .along normal lines.

1 THE DAIRYING SEASON

f PENINSULA COMPANIES’

YEAR

?'• Three of the principal Banks Penin- > gula dairy companies will hold their py annual meetings this week, and the annual .reports covering the last seaeon’s operations show that there was s*' a" considerable drop in the quantity of i‘ cheese produced. This was accounted for by the very dry autumn weather, when the milk supply fell rapidly / and the factories worked a much shorter season than usual. The payouts for butter-fat, however, show a considerable increase over the previous season. The figures for three faclories, compared with the previous season, are as follows: Output for Season ' 1937-38 1938-39. Factory. Tons, Tons. ! Okain’s Bay .. 257 228 Wairewa (Little River) .. 164 i 123J / Bgrry’s Bay .. 272 229 The average payouts, compared with the previous season, are as follows:' %Season. Season. 1937-38 1938-39, Factory. d. d, Okain’s Bay .. 16.62 .18.08 Wairewa (Little River) ' .. 16.5 17.00 , f Barry’s Bay .. 15.96 17.23 The paydut for Okain’s Bay was sub- ' ject to a deduction of ,203 d per lb but-ter-fat for herd-testing costs, and the Barry’s Bay company payout was less , ,4d per lb butter-fat for the purchase of new shares. ‘ , Whey Butter Production The Barry’s Bay Dairy Company produced 23 tons 15cwt 291b of whey butter from milk made from cheese, and 26cwt of whey butter made from f : whey cream received from other dairy companies. In addition, 14581b of full v cream butter was made. The Okain’s Bay Dairy Company made 2 tons 16cwt - 7fllb of whey butter. Cost of Manufacture ;, ' The cost of manufacture showed an increase for the last season, compared ' with the previous season. The rise for < the Wairewa company was 3.70 d per lb * butter-fat to 4£4 d per lb butter-fat to •. f.o.b. The Barry’s 0 Bay Dairy Company increase was .from 3.74 d per lb • butter-fat,to 3.8 d per lb butter-fat to ’ - f.o.b. '

LONDON PRODUCE MARKETS

After reviewing the salient features of the Budget. "The Times” concluded: "One way and another it would seem that the New Zealand Government Is coming to realise that it must limit the scale of its social programmes to the amount which It can afford. Mr Savage’s speech should help to reinforce the favourable response of New Zealand stocks to the announcement of the new conversion loan.” The "Daily Mail” said that the increased taxes gave the Impression that the Government meant business in restoring its finances, but added that there was little indication of any curtailment of spending. "This question of Government spending is at "ie moment the one' most closely watched by those who have invested capital in New Zealand, and is likely to have an increasingly important bearing upon the future of the country’s credit.” said the “Daily Mail.”

New Issue 'More. Attractive The city editor of the “Daily Telegraph” comments: "The important point in this Budget is that the Dominion is taxing itself to make the Budget balance and is spending part of the money on defence. This endeavour is one that puts a different complexion on New Zealand’s financial ideas, and note will be taken of the appreciation expressed of the help that has been given in London. A new chapter is opened in the finances of the Dominion and the salient features of the new issue become more attractive in consequence,”

COMPANY NEWS

C. L. INNES’ YEAR The accounts of C. L. Innes and Company, Ltd., brewers, Hamilton, for the year ended June 30 show a net prof' of £361 . against £4298 in' the previous year. Profit was struck after provldu." £2999 for depreciation, compared with £3467 in. 1938. The directors propose dividends for the year of 6} per cent, on both preference and ordinary shares, against a distribution of 8 per cent, in the previous year, when the capital was £7510 lower. The dividends require £3250. against £3400 in 1938. and. after the proposed transfer of £ISOO to reserve account. £llß7 will be carried forward. against £2318 brought in. The directors also recommend that £19.000 should be transferred from reserve account in order to dispose or the goodwill account of £ls 000. The retiring director.-Mr F. M. Watson. Is available for re-election. Results for the last three years eorfipare as follows: 1037. 1038. 1039. £ ,£' ' £ Brought forward .. 1.782 1.948* 2,318t Net profit .. 4,003 4.298 3.819 £0.688 £8.840 £9,037 To reserve .. 3,000 ifiOO Dividends— ■ _ Pref,, p.c. .. 6 2-9 8 04. Ord.. t>.c. ~ 8 8 0J Amount .. 2,330 ' 3,400t 3,290t Carried forward .. £1,388 £2,446 £1,187 •After adding £193 balance of Income tex. tAfter deducting £l2B - tax understated. {Capital Increased during these years. In December, 1937, the company made a bonus issue of 10,588 ordinary and. 800 preference shares in the proportion of one for two ordinary shares held and one preference for 12} preference shares held. In May. 1936, there was a further Issue at a premium of 2s 6d for 7510 £1 shares in the proportion of one for six..

DUNLOP RUBBER DIVIDEND UNCHANGED" The Dunlop Perdriau Rubber Company, Ltd.-, announces a final half-year-ly dividend of 3J per cent, for the six months ended June 30, making 7 per cent, (unchanged) for the year on ordinary shares. The usual preference half-yearly dividend of 5 per cent, (at 10 per cent, per annum) is also announced.

The dividends are payable on September 30. , The company’s net profit, subject to final credit, is £426,268.

BARNETT GLASS RUBBER

The board, of directors of the Barnett Glass Rubber Company, Ltd., Ms announced a net profit , for the year ended June 30 last, subject to final audit, of £87,207. It will recommend to shareholders the payment of a final dividend of 6 per cent, for the halfyear on cumulative preference shares, making 10 per cent, for, the year, and a final dividend of 8} per cent, bn the ordinary shares, making 12 per cent, for the year ended June 30 last, and. if approved, the dividends will be paid on September 30.

BRADFORD AT STANDSTILL

LONDON, August 25. An Independent Cable message says that the Bradford wool trade is almost at a standstill, in consequence of the international tension. There is a general disinclination to deal, pending clearer -conditions, and most firms refuse to quote new business. It is generally known that in’ the event of war the free wool market in Britain will cease to exist, and it is no secret that a control organisation is established, ready to function at a moment’s notice.

LONDON, August 26. Friday’s closing prices on the London produce market were:— Cotton—Spot, 5.52 d per lb; September, 4.97 d. Rubber—Para. BSd per lb; plantation smoked, 7|d, ' Jute—Nominal; no prices available. Linseed, oil —£29 10s a ton. . Turpentine—4ls per cwt. Copra—Sentember-October shipment, South Sea, £9 7s 6d a ton: smoked, £9 ss; plantation Rabaul, £lO 7s 6<L

GOLD AT NEW RECORD

ACTIVE

AGAINST STERLING

LONDON METALS MARKET

FOREIGN EXCHANGES

FURTHER APPRECIATION

RESULT OF WITHDRAWAL OF SUPPORT (UNITED PRESS ASSOCIATION—COPYRIGHT.) (Received August 27, 9.30 p.m.) LONDON, August 26. The foreign exchange market experienced an active session r a Saturday, this being the second day of the withdrawal of “control." In the absence of support from the Exchange Equalisation Account, there was a further appreciation against sterling. London on New York closing at a mean rate of 4.40.

A new record was nade by gold, which went to £7 15s a fine ounce, against £7 10s 6d yesterday and £7 8s 5d on Thursday. Standard silver was quoted at 20 l-16d an ounce spot and 19Jd forward. In banking ana financial circles, the decision to suspend the operations of the Exchange Equalisation Account in order to protect British gold reserves from the severe strain of the flight of foreign capital is still the subject of commendation.

There is. however, a tendency to emphasise what is understood to be the official view of the financial measures taken In the last few days—that they are essentially temporary measures to deal with special and temporary conditions.

INVESTMENTS IN AMERICA

LARGE BRITISH AND FRENCH HOLDINGS GERMAN AND ITALIAN ASSETS NEGLIGIBLE v (tnrrnm psess association—coptbiokt.) ' (Received August 27, 9.30 p.m.) NEW YORK. August 26. An interesting analysis of British and French holdings In the United States has been made by officials, who estimated that they * totalled 3.500.000. dollars, of which 2.625.000. dollars represents liquid assets, the remainder constituting direct investments, such as real estate, industrial enterprises, and trust accounts. Gold holdings are estimated at 500,000,000 dollars, German and Italian assets in the United States, however, are n'eliglble, being estimated below 100,000,000 dollars.

The momentary promise of negotiation between Germany and Poland encouraged Wall Street to buy stocks, resulting in an upward movement sufficient to erase losses for the week. Industrials gained 2.60 points. Steel shares, which traders said would profit. war or no war, were the leaders, with a four-point gain. United States bonds led a broad advance on the bond market, where foreign Issues also showed improvement. Wheat lost one cent a bushel in Chicago. Cotton remained steady. The Treasury declared that the Tripartite Monetary Agreement between Britain; France, and the United States is unaffected by the British withdrawal of official support for sterling, but worry over tile outcome is spreading. EXCHANGE DEALINGS SUSPENDED argentine banks take ACTION (trvrrxß racss association—coptbiohx.) BUENOS AIRES, August 25. The banks have suspended all dealings in foreign exchange. TREASURY BILL RATE ADVANCES SHARPLY IWTTRH PHEBS ASSOCIATION—COPTHIOKT.) LONDON, August 25. In view of the crisis and the financial measures taken, the Treasury bill rate jumped. The total amount applied for In tenders for £30.000,000 in Treasury bills was £50,405,000. The average rate per cent, for the bills at three months was 74s 5.44 d, against 15s 7.39 d a week ago. . •

COPPER MOVES UP SHARPLY OTHER PRICES ALSO FIRMER LONDON, August 25. The official quotations on the London metals market compare with those previously cabled as follows: —

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Aug. 24. Aug. 25. Copper— £ s. d. £ s. d. Standard, spot 44 0 n 45 8 9 Forward 44 3 y. 45 9 4i Electrolytic 49 5 0 50 10 0 to t . 50 5 0 52 0 0 Wire Lead— •• 50 5 0 52 0 0 Spot ■ ## 15 18 U 16 5 7i Forward 15 15 u 16 1 10i SpelterSpot 14 10 b 14 16 10J Forward 14 12 6 14 18 14 •Tin— 229 18 9 229 18 9 Forward . 223 0 0224 13 9 Silver— Standard, per 18 l-16d 19 l-16d Fine, per oz. 19Jd 20 9-16d Aug. 18. Aug, 25. t £ s. d. £ s. d. Pig iron T _ 4 19 0 —• (A Unit) Antimony— - British 9 t 70 10 0 70 10 0 Foreign . *49 10 0 ♦49 10 0 Molybdenite , , *2 0 0 ♦2 0 0 Wolfram •2 8 0 *2 8 0 ♦Nominal.