THE DREDGING SLUMP.

Evening Star, Issue 11656, 17 September 1901, Page 3

THE DREDGING SLUMP.

SOME CAUSES THAT HAVE CONTRIBUTED TO IT. INTERVIEW WITH MB A. HERDMAN, EX-CHAIRMAN OF THE DUNEDIN STOCK EXCHANGE. In connection with developments that are taking place in tho dredging industry, and the market slump in dredging stocks, wo yesterday interviewed Mr A. Herdmnn (exchairman of the Dunedin Stock Exchange), who courteously consented to reply to any questions our representative desiral to .ask. The result of the interview (the first of a series we purpose publishing) is appended, and it may be accepted as a fair indication of the views of brokers and Stock Exchange members renerally upon the situation. After the exchange of some preliminary observations of a general character the following conversation too., place : Reporter: I understand, Mr Herdman, that you were chairman of the Dunedin Stock Exchange during what I suppose we may call the boom period of the dredging industry? Mr Herdman: That is correct, I was chairman up to tho end of September of last year. Reporter: Can you say how many dredging companies were floated and the" amount of capital involved dming vour period of offico ? Mr Herdman: T. cannot tell that from memory. Those particulars could be obtained from the secretary of the Exchange. The great bulk of the' companies floated were listed with us. Reporter: Did the Exchange "list" eveiy company that applied'.' Mr Herdman: Before any company was listed 1 was very particular, as chairman, to read over the prospectus to members, and I did what I could to discountenance any company being listed until provisional directors' names and full particulars were given. That procedure was carried out in even- instance. Later on the Exchange insisted upon a list of shareholders being also supplied before companies were registered for quotation. Reporter: There were a large number of companies put. upon the market during the excitement period? Mr Herdman: Yes; there were far too many. Wbeu I go over the figures now I wonder how the people who floated companies and those who took up shares expected to raise the immense capital necessary to put dredges upon all the claims. If there had been larger dredging areas and fewer companies the industry would now be on a more solid and lasting foundation. Reporter: Some of the prospectuses Issued were very rosy. In tho light of to-day's experience do you think these highly-colored statements were justified? Mr Herdman : In a number of cases they were not. I think some of the engineers who reported upon claims were very much trt_ blame. Their estimates of the cost of suitable dredges for claims have proved to be far short of requirements, and hence it is that so manv companies are now appealing to shareholders to provide further capital. In addition to the under-estimates of engineers, other persons—persons wbo were directly interested in the flotation of companies—are also to blame for making, statements in prospectuses that have nob been borne out by experience. The statements I refer to were not, I think, deliberately misleading; they were in some cases the result of insufficient inquiry on the part of those who were over-anxious to get their particular companies floated. The temptation to float a company, take up shares, and dispose of them at" a premium was very great. Reporter: Do yon think share premiums went up too high? Mr Herdman •. There can be no doubt of that. At a time of great mining excitement such as we are referring to that was to be expected. Looking at the matter, calmly, as we are now doing, one can have little hesitancy in srtying it would have been better for all concerned if the public had displayed more caution. Reporter: What mainly influenced the public in the matter? Mr Herdman : Last winter was a particularly favorable one for dredging on the Molyneux and Kawarau Rivers, and tbe phenomenal returns of gold obtained from one or tiyo of the claims no doubt, justified many people in the belief that large returns would also be obtained from other claims on those rivers. Reporter: There is a. very decided slump in the value of dredging shares at present. Is there any special reason for it? Mr Herdman : I think there are a. number of reasons. To b?gin with, there is a shortage of money. People who bought stock merely for a rise have been forced to hold it, and they have the utmost difficulty in paying up calls. Some of those thus" circumstanced, beinc; unable to meet their calls, are compelled to roll at almost any' price. That is one reason for the fall in prices. Another reason is this: Companies have been floated, directors and secretaries appointed, and a large amount of capital called up, and there is no prospect of dredges being upon the claims for a considerable time to come. Some of these companies appear to be watching their neighbors before they venture to do anything themselves. Meanwhile, office and other expenses are going on, and the capital tliat should be employed in winning gold is not only lying idle and unproductive, hut is also being exhausted. A third reason is that those who hold good stock are compelled to dispose of it in order to meet engagements upon stock that may or may not turn out to be good. Another thing that has assisted the slump is that far too many companies are in the hands of one secretary and one set of directors. Th c se officials have more work and respon-. s biiity than they can efficiently overtake, and the consequence is the stock of some companies, owing to unreasonable delay, has depreciated in price. In this connection I might ment : on that I think it would be an improvement if directors of companies were not allowed to draw fees until the dredges were at work. Reporter: Do you not think that our sharebrokers and stock exchanges have contributed their quota towards hastening the slump'? Mr Herdman: I think far too much is being said and written against brokers and stock exchanges. The public have themselves principally to blame for the present pos'tion of affairs. They have over-specu-lated, and it' seems to me they- now desire to 'houlder all their misfortunes upon the exchanges and brokers. The Dunedin stock exchanges and brokers, I think, will bear favorable comparison with exchanges and brokers in any part of the world. Reporter: What do you think will bs the ultimate outcome of the dredging industry? Mr Herdman: I think it will settle down to a. very fair thirg, and that it will for many years to come give a good return upon paid-up as d stinguished from speculative capital. The returns of gold for the four weeks ended August 31 justify that belief. According to the Stock Exchange list, tho value of gold won during that period was over £4o.ooo—that is to say, at the rate of £IO,OOO per week. What the public want at the present juncture is a little mote confidence and faith lin the futurj. The industrv is a safe and good one, and holders of good stock would do well to hold on if thev can. Personally. I have very little sympathy with the panic now existing, and very little patience with ths hysterics displave'd by many of tho-e who air their so-called mining grievances in the columns of the newspapers.