TRADING LOSSES

Evening Post, Volume CIX, Issue 148, 26 June 1925, Page 4

TRADING LOSSES

AFTERMATH OF BOOM TIMES

A WARNING RECALLED

A MATTER FOR SERIOUS CON- \ SIDERATION.

OS? TELEGBAPH.-SPECIAI TO THB POST.) AUCKLAND, This Day. In view of the adjustments that kavt recently taken place or been proposed in regard to some of the leading commercial companies in the Dominion, a "Star" representative yesterday sought an ex- ( pression of opiaion from Mr. Peter Barr, president of the Associated Chambers of Commerce of Now Zealand. Mr. Barr stated that this -ivas a matter which in his-view called for most ' serious consideration on the part of those interested in mercantile affairs. Twelve tion, and had dealt with the matter at a meeting of the Dunedin Chamber tha?TT rCe- cHe had then P°inted on* that four or five years previously, not excifJlT ? f> d imeS but under «« had h • ■ f boi lT lS trade > investors toses issued by trading companies in the .Dominion to advance money at very *5? CvE -ral eS Of interesfc f°r eia/sion o: their businesses. Advances were made against bonds of debentures, which m some cases placed the hdlders without any specific security in a position tor? iT^ I han «»'-of ordinarj dX tors, in that payment was deferral for « rJ* ™ ye"S- He did «»t w^n to ter^ to w «?,ngs which were then ut° monty -ga + rdlng dan Ser o£ Fating money into such investments, nor to ' SvenTl^ I'^-^ 31 had ««ee been fn^ W? 6 A USti fication of su<* warnco^ise 0 & companies. Of course, there wS, many compames which took on these burdens of additional capital • or liabilities and." Vrt nd *° V6ry Ben'oUS loss^ - jot were now carrymg the load without am suggestion of endeavour to avoM their engagements,- and would continue to do £0 regardless of consequences. In J,VJ ej" cases > however, the holders of these bonds or debentures, and more serious still, even holders of preference v -hares, had had submitted Vthelr ac° ceptance proposals for varying and can celling certain .of their right! fa order andTttr 6 seri°US IOSS t0 *«*»« THE SACREDNESS'OF CONTRACT ■ w« , ™°v not^i^ feelin S that this was a position which, would involve much more serious consequences than mere monetary loss to ,the holders of eitherbonds or shares. -It certainly would mean, that mercantile houses would for years t 0 come fi Dd it esce edingly diffi! cult to raise money in either of thpsn ■ forms even when what appeared to be ample security is offered. Zi "nSe off" cated f rf>Va% the ,fact thab '"* indiunon tt« Pai'ti U'e frOm insistence upon the sacredness of contract, which t£rf 7 S bOeQ the Blory of' Brit bL trade and commerce. He fully remn.sed difficulties of' the position °fn LOSSES SHOULD BE WEITTEN OFP These opinions, voiced twelve monili, bfen Said, Mr-, Br' h uad «»fortSS , been confirmed by subsequent happen. " ngs. Adjustments to which his attention had now been drawa appeared to ' !^iiT lt? fatloDs o£ the same regrettable trend. It was, he said, much to be regretted that companies, part cularly co-operative companies, had su"-' er, ed.s-? £e"oasly through over-trad^o S.l I Xi V reCOgnise thaf conditions which'at the time seemed extraordinarily ' prosperous were not likely to last. Undoubtedly it was the best course, indeed the only possible one, to adopt, to face ■ the position by writing off losses which ' had occurred and redncing.properties and stocks to present-day values. There was nnr^ *???* f°r 3n honeßt man to pursue. At the same time, he was bound to say that he much regretted the wav m which some companies! were asking preference shareholders to ' forego their "v? tij °nly meant that ordinary shareholders were not prepared to carryout the' contracts they had entered into, ■fieference shareholders had put their money into various concerns on certain conditions, and ordinary shareholders were therefore in the position of borrowers The losses which had been | made should fall upon those who under contract were entitled to carry them.