Commerce, Mining, Finance

Evening Star, Issue 23055, 6 September 1938, Page 6

Commerce, Mining, Finance

Gold Maintains Upward Trend Milne and Choyce's Year Rising 9d in a day to £7 4s Id, gold is now at its highest level since 1935. The market was very active in London yesterday, gold to the value of £1,816,000 being sold. The dollar rate has also moved, the rise being attributed to the recent flight of “ hot money ” from European capitals. Base metals opened slightly firmer, some good ground being gained. Silver proved an exception to the general trend, and closed fractionally easier. Quiet conditions continued to mark investment operations on the local Exchange this morning, although business was comparatively good. With both gross and net profits at the highest level since 1930, Milne and Choyce Limited record a healthy year. Net profit at £16,548 compares with £13,323 in 1937 and £344 in 1936. Dividends are at unchanged rates.

SHOCK FOR INVESTORS SOCIAL SECURITY TAXATION EFFECT ON COMPANIES Most startling news for the investing public is the annouMement that the social security taxation will be , applicable to companies. The extra shilling in the £ on net profits will mean a jump to 8s fid in the £ for all the larger businesses already paying income tax at the maximum rate of 7s fid, in addition to land tax dues (states the Christchurch ‘Star-Sun’)- .For companies owning valuable land l it is likely that total taxation rate in future will easily exceed 10s in each £ of net profit. The following example illustrates the effect which the new taxation will have. A company earns a net profit of ...£25,000, after allowing for depreciation, but before providing for dividends, reserves, and- carry-forwards. Divi‘dends absorb, say, £IO.OOO, on which the shareholders, as individuals, would pay £SOO in social security contributions, on the basis of Is in the £. Under the new system, however, the full £25,000 will be taxed to the tune of £1,250, which means that the shareholders —for they are the owners of the company—will pay 150 per cent, more than they would as individual taxpayers. They pay, in other words. 2s fid in the £ on the income (dividends) actually received by them. Here is the effect of the tax on the Kaiapoi Woollen Manufacturing Company Ltd., based on the accounts just issued:— Net profit, £12,643; land and income tax, £11,708. Assessable total, £24,350. Social security tax, £1,217. Percentage reduction in profits available to shareholders, 9.6. LOST MARKET CASEIN EXPORT TO JAPAN PRICE DROPS £3O A TON [Feb United Pbess Association.] WELLINGTON, Sept. 5. During the past 18 months the price of casein has dropped from £7O a ton f.0.b., New Zealand currency, to about £4O a ton, and the decrease is causing manufacturers concern at present. One of the most important buyers is Japan and the decrease in purchases by that country because of the difficulty in obtaining exchange permits is said to be the cause for the drop in price. Although diffident about expressing an opinion Mr H. E. Pacey. general manager of Joseph Nathan and Co. (N.Z.), Ltd., who are interested in the casein trade, admitted that there was concern about the drop in price. He said that at the last sale of which he had knowledge casein had sold to Japanese buyers for £4O a ton, and the appearances were that it might go a little lower From the point of view of the producer £4O was barely an adequate price, a reasonable return being considered as being between £SO and £6O. The producer expected to receiye about twopence a pound, for butter-fat. “ The decrease in the purchases by Japan is attributed to the effect of the war in China,” Mr Pacey said. “Ever since the war started the market for casein in Japan has been spasmodic. The market is in a depressed condition and it is difficult to assess its value.” The normal output of casein in New Zealand was about 3000 tons, Mr Pacey continued, but the trend was for less to be manufactured. The position had become more acute during the past two or three months. Casein is used in Japan principally as a dressing for art paper and as an adhesive for plywood. It is also used to a lesser extent for the manufacture of imitation ivories and plastic goods. Besides Japan casein is exported to England and occasionally to the United States and Canada. Germany was formerly a good customer, but economic and financial reasons have caused the export to that country to be reduced very much in recent years. It was used in Germany for making cheese, but the Germans are now producing their own casein. SHARE QUOTATIONS Press Association -By Telegraph—Copyrigh' LONDON, September 5. (Received September 6, at 1 p.m.) Share quotations: Clutha River—buyers Is 74(1, sellers Is 10Jcl; Molyneux—buyers 7jd, sellers 10]d.

BULLION MARKET HEAVY SALES OF GOLD SHARP RISE OF 90 RECORDED (British Official Wireless.) Press Association—By Telegraph—Copyright RUGBY, September 5. (Received September 6, at 11a.m.), Gold to the value of £1,816,000 was sold at £7 4s Id. GOLD AT £7 4s Id. LONDON, September 5. (Received September 6, at 11 a.m.)

Highest price in 1938, September 5, £7 4s Id; lowest price in 1938, January 3, £6 19s sd. Highest price in 1937, March 6, £7 2s 7£dj average, price in 1930, £4 5s an ounce. AUSTRALIAN ECONOMY PICTURE STILL FAVOURABLE MORE RESISTANCE TO OUTSIDE SHOCKS “ Australia still presents a picture that is favourable, despite the uncertainty as to export prices, the stilltoodieavy import, figures, and the unsatisfactory wool clip,” states the monthly market letter of an Australian brokerage house. “ Politically we have stability. Our London funds are of comfortable proportions. Money is fairly cheap. The position of the trading banks is still easy and accommodation has not yet had to be tightened. Prices for exports seem more likely to rise than to fall. Good rains have given crops a flying start, and only ordinary fortune in the matter of spring falls is necessary to ensure good yields. “If imports do not diminish in volume shortly, some action may have to be taken. That position, however, seems likely to rmht itself. The impetus of the opulent 1936-37 season must by now be failing. If not, Australia has now the experience of the first depression years to guide it in handling the matter. “ It bears s.ressing that our national economy is better balanced these days. Because of this, Australia is more happily positioned to pursue its own course, subject still to world influences, hut with more resistance and a better cushioning of the outside shocks.” MINING NEWS REPORTS AND RETURNS NEW RIVER The New River Company’s dredge recovered 450 z of gold from 7,500yds treated in 98 hours during the week ended on Thursday last. WHITE'S ELECTRIC The return from White’s Electric dredge for the week ended on Thursday last was 16oz of gold from 7,500yds treated in 100 hours. MATAKI [Per United Press Association.] AUCKLAND, September 5. The Mataki return for the week ended September 4 was 260 z for 105 hours’ work, 7,200yds being treated. CLUTHA RIVER DREDGE RECOVERY OF 165 OUNCES. Clutha River Gold Dredging Limited, Alexandra, reports that for the week ended September 2 the dredge worked 141 hours to recover 1650 z.

STOCK AND SHAREBROKERS. INVESTORS I IT will pay you to deal through the progressive and busy Urra who are in constant touch bv phone, radio, telegraph, and cable with all overseas markets. Place your next inquiry through us and be assured of skilled advice before buying, selling Stocks, Shares, or Debentures. THE SECURITIES CORPORATION (N.Z.) LTD., The Alliance Building, 20 Crawford street, Dunedin. Telegrams “ Toscol.” Telephone 11-777. NEW YORK SHARE INDEX DOW JONES AVERAGE

METALS FIRMER STANDARD COPPER UP 6/3 SPOT LEAD AND SILVER SLIGHTLY EASIER Press Association —By Telegraph—Copyrigh LONDON, September 5. (Received September 6, at 1 p.m.) Following are to-day’s official (middle) quotations on the London metal market, as reported by the Australian Mines and Metal Association, compared with those of September 2:— Sept. 2. Sept. 5. £ a. d, £ s. d.

DOLLAR AND FRANC Press Association—By Telegraph—Copyright LONDON, September 6. (Received September 6, at 11 a.m.) The dollar is quoted at 4.82 J. The franc is quoted at 178 5-16. RISE IN THE DOLLAR. LONDON, September 5. (Received September 6, at 11 a.m.) The rise in the dollar is attributed to the recent flight of so-called “ funk ” money from European currencies, owing to uneasiness on the Continent, to dollars, of which the pound bears the brunt. AUSTRALIAN STOCK EXCHANGES Press Association—By Telegraph—Oopyngbi SYDNEY, September 5. Buyers operated with caution on the Stock Exchange to-day, and the volume of business was limited. Values were easier.

COMPANY NEWS MILNE AND GHOYGE BEST YEAR SINGE 1930 INCREASE IN TURNOVER All round improvement is indicated in the annual accounts released by the directors of Milne and Choyce Limited. Both gross and net profits for the year ended July 31 are at the highest level since 1930, and the directors recommend dividends at unchanged rates. The accounts show trading profit at £33,878, from which has been deducted £11,086 for income tax and £6,244 depreciation on buildings, plant, etc., leaving £16,548. To this is amount brought forward, £25,006j and there is deducted the interim dividend paid in April, £6,425, leaving a balance of £35,119. The directors now recommend a further dividend for the year of 3 per cent, on preference shares, making a total of 6 per cent.; 3J per cent, on B preference, making a total of 7 per cent.; 2J per cent, on ordinary shares, and perpetual debenture stock, making a total of 5 per cent. This will absorb £6,435, leaving a balance to .be carried forward of £28,684. In their report the directors state:— “The total turnover for the 12 months has again shown a gratifying increase. Stocks on hand and in transit amount to approximately the same as 1937, and are in first-class condition and well assorted. During the year the opportunity occurred of joining the David Jones Limited overseas buying organisation, which embraces a number of the most important stores in Australia and New Zealand. _ Under the new arrangement and with the cooperation of one of the directors, Mr R. S. Milne, the initial selections of the new season’s goods have opened satisfactorily. The loss sustained by the recent flood damage has been taken into account in the year’s trading, STANDARD INSURANCE RESERVES AND DIVIDEND RATE The sixty-fourth annual general meeting of the Standard Insurance Company Ltd. was held in the company’s bead office, High street, _ yesterday afternoon. The address given by the chairman of directors (Mr W. F. Edmond), in moving the adoption of the annual report and balance sheet, was published in yesterday’s issue of the ‘ Evening Star.’ Seconding the motion, Mr G. W. Hutchison said it might appear that the net profit, which showed a high •return on the paid-up capital of the company, was fairly substantial, but it had to be remembered that the company was using, in addition to the capital, funds in the form of reserves, amounting to £295,000, and in the aggregate of the two—namely, £495,000 —the return was only 8.8 per cent. Shareholders might be tempted to think that some larger share of the amount earned by the reserves should be distributed to shareholders. It had to be remembered, however, that insurance companies had two interests to conserve—that of the shareholders and that of the policy holders—and while the legitimate business of every company was to earn a reasonable return for its shareholders, the interest of the policy holders was paramount. It was by the goodwill of the policy holders that the shareholders were able to earn profit, and that goodwill could only be maintained by assuring the policy holders that their policies afforded them absolute _ security. This was ensured by the policy of the company over the years of building up the company’s reserves and maintaining a regular rate of dividend rather than paying a fluctuating one, and in this he felt sure the directors had the shareholders’ support. Mr Hutchison commended the policy of the board in its generous treatment of the staff by grants to the staff provident fund, and said that in his position as an accountant it was gratifying to see to what a large extent employers of labour did take care of the future of their staffs in this direction. In this, too", he felt sure the board had the support of the shareholders. Mr A. M'Millan referred to the growth of the company, and congratulated the directors on the sound balance sheet presented, mentioning the difficulties with which companies would be faced in future with regard to taxation on reserves. The report and balance sheet were adopted. Messrs G. W. Hutchison and Herbert Price were re-elected! directors. , Mr J. G. Patterson was re-elected auditor. Mr A. C. Mathieson, who said that all knew from ordinary business affairs that the year had not been an easy one, proposed a x r ote of thanks to the directors and staff for their services, which was carried. On behalf of the directors, the Chairman thanked shareholders for their expression of confidence. The general manager, on behalf of the staff, thanked the board and shareholders for the very generous donation which had been made to the provident fund. This, he said, was very much appreciated, and the members of the staff recognised that the company was doing everything in its power to make their future secure. WHEAT MARKET Press Association—By Telegraph—Copyright LONDON, September 5. (Received September 6, at 11 a.m.) Wheat cargoes are dull. Parcels are easier. Futures—London; August, 24s lid; November, 22s Cd. Liverpool: October, 4s lOd, 7s 8d; December, 4s 9gd; March, 4s 9|d. The Chicago market is closed. BRADFDRD MARKET Press Association—By Telegraph—Copyright LONDON, September 5. (Received September 6, at 11 a.m.) The Bradford market is unchanged, but top-buyers will probably get a concession of Jd on business passing.

Fine gold is quoted at £7 ounce. 4s Id an September 2 ... £7 3 4 September 1 ••• ... 7 3 0* August 31 ... ... 7 3 3* August 30... ... 7 2 11 August 29 ... ... 7 2 8* August 26 ... ... 7 2 7 August 25 ... ... 7 2 ■6* August 24 ... • •• ... 7 2 6 August 23 ... • •• ... 7 2 6i August 15 ... ... 7 2 8 August 8 ... ... 7 2 3 August 2 ... ... 7 1 8 July 1 ... ... 7 0 9 ' ■ June 1 ... 7 0 7i May 2 ... ... 6 19 0* April 1 ... March 1 ... ... 7 0 0J • •• ... 6 19 0* February 1 ... 6 19 7 January 3 ... ... 6 19 6

Uailroads. Industrials Turnover. Sept. 3 27,78 142.58 360,000 Sept 2 27.33 141.48 550,000 Sept. 1 26.63 138.46 510,000 Aug. 31 27.41 139.37 460.000 Aug. 30 27.69 138.36 630,000 Aug. 29 27.48 137.16 1,250,000 Aug. 27 28.71 141,95 350,000 Aug. 26 29.31 142.94 820,000 Aug. 25 29.61 144.07 830,000 Aug. 24 29.95 143,53 1,140,000 Aug. 23 28.96 143.70 1,080,000 Aug. 22 28,25 140.92 400,000 Aug. 20 28.45 141.20 250,000 Aug. 17 27.94 139.03 600,000 Aug. 16 27.98 138.44 610,000 Aug. 15 27.76 136.98 590,000 Aug. 13 27.87 136.21 400,000 Aug. 12 27.68 136.51 1,480,000 Aug. 11 28.57 139.32 1,100,000 Aug. 10 29.56 142.40 810,000 Highest 32.33 145.67 Lowest 19.00 98.95 1937. Highest 64.86 194.40 Lowest 28.01 113.64

Copper— Standard, spot ... 40 6 10i 40 13 li Forward 40 11 10A 40 18 U Electrolytic, spot 45 15 0 46 0 0 Forward 46 15 0 47 0 0 Lead— Spot 14 1 3 14 0 n Forward 14 3 9 14 4 4i Spelter— Spot 13 0 % 13 2 6 Forward 13 5 U 13 V 6 Tin— Spot 191 10 0 192 2 6 Forward 192 7 6 192 15 0 Silver— Fine, per oz ... 19 l-4d 19 l-8d Standard, per oz 20 3-4d 20 5-8d

MORNING SALES. £ s. d. Commonwealth Bonds— 4 per cent., 1938 101 8 9 4 per cent.,-1941 102 3 9 4 per cent., 1947 103 17 C 4 per cent., 1955 103 13 9 Cash Orders 0 16 6 David Jones 1 18 6 AFTERNOON SALES. Bank of New South Wales 30 12 6 Comm. Bank of Sydney ... 20 1 0 Bank of Australasia (New Zealand delivery) 10 17 6 Colonial Sugar 47 10 0 Associated News ... 1 1 3 Adelaide Steam ... 1 14 0 Australian Gas (A) 7 5 0 Farmers 1 12 6 David Jones 1 18 6 Lustre 1 0 3 C. Neon 2 13 9 Australian Guarantee Corporation 1 3 0 W. Atkins ... 1 3 6 J. Fielding 4 6 0 Woolworths 1 0 lOi Sargents 1 6 3 W. R. Carpenter 1 5 6 Winchcombe, Carson 1 6 6 Mount Morgan 0 11 1 Mount Lyell 1 7 3 Broken Hill Proprietary ... 2 17 9 North Broken Hill 2 5 0 Oil Search 0 9 2 Loloma 1 4 0 MELBOURNE, September 5. The market is dull, with no definite trend. The turnover to-day was light. ' £ s. d. Comm. Bank of Australia 0 16 2 National Bank (£5 paid) 6 11 6 National Bank (£10 paid) 13 12 0 Howard Smith 0 19 8 Australian Paper Manufacturers (pref.; new; paid) Carlton Brewery 1 5 3 3 3 9 G. J. Coles 3 19 0 Aus. Iron and Steel (prof.) 1 7 9 Dunlop Perdriau 1 1 4 Dunlop Perdriau (pref.) 1 18 6 Melbourne Investment Trust 0 10 6 Felt and Textiles 1 13 0 Yarra Falls _ 1 18 3 Australian Foundation Investment Trust 0 5 3 Imperial Chemicals (pref.) Imperial Chemicals (paid) 0 10 0 0 11 6 Electrolytic Zinc (pref.) ... 2 5 3 Mount Lyell 1 7 3 Broken Hill Proprietary ... 2 17 9 North Broken Hill 2 5 0 South Broken Hill 1 10 0 Emperor 0 13 0 Loloma ... .... .... .... ....... 1 4 0