Commerce, Mining, Finance

Evening Star, Issue 23127, 29 November 1938, Page 6

Commerce, Mining, Finance

U.S.A. MARKET WEAKER Producers and General Finance Meeting A further sharp fall marked the reopening of the American investment market yesterday, Dow Jones industrials losing 2.31 points to the lowest level for almost two months. Railroads also declined, while the turnover was the best since last , Wednesday. Better support at lower levels marked investment operations on the Dunedin Exchange this morning. New Zealand scrip received slightly more attention, but wide margins militated against business. Matters concerning the Producers and General Finance Corporation Ltd. came to a head at the annual meeting'when shareholders decided that the directors’ report he not approved and the balance sheet be received but not adopted. The meeting referred to the incoming board of directors the recommendation of the consulting accountant that the ordinary shares be written down by 10/- each.

DOWNWARD TREND COMMONWEALTH REVENUE RETURNS FOR FOUR MONTHS EFFECT ON GOVERNMENT BUDGETS Treasury returns, for October of the seven Australian Governments show for the first time in many months a fallingoff in revenue. The net deficit for four months’ working of all Governments is £6,762,000, compared with a deficit of £5,065,000 for the corresponding period of last year. For the four months July-October revenue of the seven Australian Governments was £58,500,000, compared with , £60,291,000 for the corresponding four months of last year. Expenditure is practically stationary, this year’s figure of £65,262,000 comparing with one of £65,356,000 last year. It is therefore the falling-off of revenue which has brought about a deterioration of Government finance over the last 12 < months. The tendency for the budgetary position to deteriorate has up to the present been caused by mounting 1 expenditure. Now expenditure appears to bo static, but reVehue is. tending to fall. Revenue and ; expenditure qf all Governments in the four months ended October 31 compare as under;—' >J * ..... Expen- . 4. Surplus. Four months., Revenue, dilure. —Deficit. July-6ct, .£ £ £ Cwealth ... 27,143,000 27,505,000 —063,000 Victoria ... ... 2,961,000 4,905,000 —1,944,000 N.S.W. ... ... 15,855,000 18,628,000 —2,773.000 Queensland ... 6,130,000 6,429,000 —299,000 South • Aust. .;. 3,268,000 4,061,000 —793,000 West Aust. ~. 3,245,000 3,697,000 —452,000 Tasmania ... 899,000 1,037,000 —138,000 Total ... 58,500,000 65,262,000 —6,762.000 Returns for four months cannot give any precise indication as to how the full year will finish, but it perhaps might be expected that in view of the unfavourable seasonal outlook and the change for the worse in the export position, some Governments may not be able to show as good a result on June 30 as they budgeted for. Already because: of drought and allied circumstances, including the falling-off in receipts by the railways and from settlers, an estimated State budgetary surplus of £12,000 in Victoria for the current year has been turned into an estimated deficit of £825,000. For some years most Governments, particularly the Federal Government, have been able to improve upon their burgetary estimates. Now, with the emergence of a number of unfavourable factors, the chief being the consequences of a sharp contraction in income from overseas and the need for vigorous spending on Public Works and defence works, it looks—at this stage at least—as if a period of rather more difficulty in Government finance may be expected. It should not be forgotten that over the last three or four years, which have been years of relatively great prosperity for the Commonwealth, Public Works spending has shown no slackening) and- Government expenditures have tended to mount rather than decline. Now, with the prospect of a change in the tide of economic affairs, which is likely to bring with it diminishing revenues and increasing expenditure, Goverments are_ being, and will almost certainly continue to be, forced to resort to loan money to bridge deficiencies in their public accounts. The major part of the deterioration in Government accounts this year compared with last is traceable to New South Wales, where the deficit for four months is £2,773,000, compared with £1,642,000 in 1937. Some recession is shown by the Commonwealth, South Australia, and Tasmania, while Victoria, Queensland, and Western Australia record some improvement.

Highest price in 1938, November 26, £7 10s; lowest price in 1938, January 3, £6 19s sd. Highest price in 1937, March 6, £7 2s 7}d; average price in 1930, £4 5s an ounce.

EASTERN MARKETS PROSPECTS FOR BUTTER The 70,000,000 people in the Netherlands East Indies did not provide the potential market that many people were inclined to believe, as _ the vast majority of them were natives, said the Assistant Trade Commissioner for Australia in Batavia, Mr C. J. Came, addressing Victorian members of the Australian Dairy Produce Board. Of the butter now purchased in that country, he said, 75 per cent, was Australian. The trade was hindered by the rapid growth in sales of margarine. In addition to locally-made margarine, which was manufactured from local

DECLINE OF STERLING DOLLAR NOW AT 4.64 i HIGHER COSTS TO IMPORTERS EFFECT ON UNITED STATES GOODS i The United States dollar continues to appreciate in terms of sterling, and is now quoted at 4.64} to the pound. In the last few months sterling has received heavy pressure from the flow of capital funds from Europe to New York, but in addition to this there is a strong weight of. opinion in British financial circles that sterling has been over-valued in relation to the dollar. In a recent article the ‘Economist,’ London, pointed out that “ nobody would argue that the commercial overvaluation of sterling has caused the recent depreciation, ih which it has played only a small pari. But the fall in the pound would hardly be justified, and would certainly nqt be long enduring, unless it reflected a shift in the real relationship of the two currencies on the ordinary commercial plane.” Immediate causes of the present commercial pressure upon sterling and the strength of the dollar are assigned to the changes in American trade with the sterling area, the significant fear tnres of which are an enormous drop in United States imports, not only from Britain, but also from such countries as Australia, New Zealand, Denmark, Norway, and Argentina. Meantime United States exports to these countries are higher in every case. In the middle of February last the pound sterling brought 5.03} dollars, the highest point since the tripartite currency pact of September, 1936. An irregular decline in the pound and a consequent appreciation of the dollar occurred from February to June, after which there was a sharp fall. From 4.87 dollars on August 30, the market dropped to 4.74, finally to touch a nominal a notation of 4.60 on September 28. With the passing of the crisis in Europe there was a sharp recovery to 4.83 on October 1. Since then, however, weakness has been persistent. PRICE OF GOLD Press Association—By Telegraph—Copyright 1 LONDON, November 28. (Received November 29, at 1 p.m.) Fine gold is quoted at £7 9s 9}d an ounce.

palm oils, there was a large importation of the product from the Philippines. Price factor, Mr Came continued, had a very definite influence on the market. Butter cost about 7s per 61b tin, while substitutes could be put on the market at just about half that price. He believed that appropriate action to check the margarine competition was being considered. The Australian Department of Commerce was very much alive to the problem of substitutes, and the advertising campaign for the benefit of Australian butter was being renewed with vigour. The Netherlands East Indies Government was encouraging increase in wage standards. Chinese in Java earned the equivalent of about 2s lOd a day, while natives’ earnings amounted to about 7d a day each. It would therefore be seen that there was not much margin for the purchase of butter.

NEW YORK SHARE INDEX DOW JONES AVERAGE

THE METAL MARKET Press Association—By Telegraph—Copyright LONDON, November 28. (Received November 29, at 1.30 p.m.) "'t'ollowing' 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

MOSGIEL WOOLLEN MOST DIFFICULT YEAR INCREASING COSTS, HEAVY IMPORTATIONS COMPETITION FROM BRITAIN AND AUSTRALIA Increasing costs and competition from heavy importations, both from Great Britain and Australia, had made the Mosgiel Woollen Factory Company’s sixty-fifth year of operations most difficult, stated the chairman (Mr J. S. Hislop), at the annual meeting this afternoon. “ The sixty-fifth year of the company’s operations has been a most difficult one. Wo are still faced* with increasing costs and the heavy importations both from Great Britain and Australia make the selling of our goods more difficult,” said the Chairman, moving the adoption of the annual report and balance sheet. “ That our sales are as large as they are is due to the very energetic and loyal work of our staff. We are still hopeful that very soon something will he done by our Government to help the secondary industries in their difficulties. As an example of what the New Zealand woollen mills have to contend with it may interest shareholders to know that for the months January to August, 1937, there were 4,626.000 square yards of woollen and worsted piece goods imported into New Zealand, as against 1,319,000 square yards imported into the whole of Australia.” ALTERATION TO ARTICLES. For some years the directors had had under consideration the adoption of a new memorandum and articles of association. The originals issued in 1875 had not been altered since 1897, and were now not altogether in conformity with the Companies Act, 1933, and restricted their trading to practically the making of woollen or part-woollen goods. The proposed new memorandum would give the directors a more open field in which to further the interests of the company. ““ BALANCE SHEET ITEMS. A few explanatory comments on the figures in the balance sheet and profit and lass account were given. On the liabilities side paid-up capital remained at £95,380. As had been the practice for the last few years, the sum of £2,000 had been transferred to general reserve, which now stood at £50,088 2s 6d. Sundry creditors were within £ls 16s 4d of last year’s figure. On the assets side land, buildings, and machinery had had additions of £4,389 0s 6d, which had been occasioned by the purchase of new machinery. After provision for the usual amount of depreciation (£4,000), this group now stood at £35,460 11s, 3d. New Zealand Government l loans, other investments, and cash on deposit appeared at £87.757 11s Id, a slight reduction of £2,990 11 on last year’s figure. Sundry debtors at £16,427 13s 3d were reduced by £3,867 10s Bd, this being chiefly due to a drop in the year’s turnover. "Bills receivable at £248 7s 3d called for no comment. As in past years the last two items were clean and caused no concern to the board. Stocks at £44,631 4s 3d were increased by £8,607 8s 7d, but, being of a fluctuating nature, were influenced by the trend of sales and market conditions.

In the profit and loss account at £10,898 5s 9d the net profit showed a reduction on last year of £2,305 2s 3d, which was mentioned in the annual report as due to increased production costs.

On behalf of the meeting he conveyed to the general manager and his staff, both at the warehouse and at the mill, thanks for their co-operation and their keen interest in the general welfare of the company. He had pleasure in moving the adoption of the report and balance sheet and profit and loss account. This, if approved, carried with it the payment of a dividend of 3 per cent, from trading and 3 per cent, from revenue from investments.

COMPANY NEWS PRODUCERS AND GENERAL BALANCE SHEET NOT ADOPTED DUE TD “ APPARENT UNCERTAINTY " OF POSITION At the annual meeting of Producers and General Finance Corp. Ltd., in Sydney, shareholders decided that, “ in view of the unsatisfactory position and the apparent uncertainty of the company’s position the directors’ report be not approved and the balance sheet be received but not adopted.” The company made a loss of £69,381 for the year ended June 30, compared with a profit of £63,446 for the previous year. The loss for 1937-38 was shown after providing £70,679 for losses by a subsidiary and for bad debts. The meeting decided to refer to the incoming board of directors the recommendation of the consulting accountant (Mr C. A. Le Maistre Walker) that the ordinary shares should be written down by 10s each. It was decided also to increase the number of directors to seven, and a poll was taken for the election of six. The candidates were; —Sir Harry Budge and Mr W. H. Allen, the two retiring directors, and Messrs E. R, Griffin, D. Levitus, R. A. M'William, W. B. Rainsford, G. Scarf, and W. J. Wilson. A poll was also taken for the election of auditors, the candidates being the retiring auditors, Messrs Wynne-Lewis and Co. and Messrs Chas. A. Law and C. R. M. Shannon. A motion that these two firms be appointed to act in conjunction was defeated. The results of both polls have not yet been announced. One shareholder said that the auditors’ task' in the last year had been a very unpleasant one. ADVANCES TO DIRECTOR. The chairman of directors (Sir Harry Budge) said in his address that, given normal conditions and sound management, the future prosperity of the company was assured. “We must console ourselves with prospects for the future,” he said. A shareholder said that an investigation of the company’s affairs “ past, present, and future ” should be made by a governmental statutory authority. “ How can any intelligent person adopt this balance sheet?” he asked. “It has been,negatived by the consultants’ report.” Another shareholder contended that the company had been extending too rapidly without regard to the profit earned. Others said that the payment of an interim half-yearly preference dividend in March had been unwarranted. In reply to questions by shareholders the managing director (Mr A. H. Pellow) said that the accounts included an advance to Mr J. Woolcott-Forbes, formerly managing director of the company. “ The amount is not a secret,” he said. It is about £36,000, No money changed bands, however. . The advance was in respect of calls payable on shares and the security was by deed over property. The board was told by its solicitors that it had the power to do this. Mr Woolcott-Forbes is still indebted to the company. About two-thirds of tho indebtedness was in-, curred in the last year, and the remainder in the preceding year.” FOREIGN EXCHANGES (British Official Wireless.) Press Association —By Telegraph—Copyright * , RUGBY, November 28. (Received November 29, at 1 p.m.) Paris, franc to £1 ... .. 1.78 19-32 New York, dollar to £1 4.65 Montreal,' dollar to £1 4.67| Brussels, belgas to £1 27.48^ Geneva, francs to £1 20.47 Amsterdam, florins to £1 8.54| Milan, lire to £1 83g Berlin, reichmarken to £1 11.60 j Stockholm, kroner to £1 19.41 Copenhagen, kroner to £1 22.40 Oslo, kroner to £1 19.90 Vienna, schillings to £1 Prague, croVfns to £1 ... 135 g Helsingfors, marks to £1 226 J Madrid, pesetas to £1 nominal Lisbon, escudos to £1 HO 1-8 Athens, drachmae to £1 ... ... 54? i Bucharest, lei to £1 ... 655 Belgrade, dinars to £1 211 Warsaw, roubles to £1 25.62 *Kio de Janeiro, ponce to milreis 3 1-16 Buenos Aires, pence to dollar ... 20.60 Montevideo, pence to dollar ... 18$ Bombay, pence to dollar 17 15-16 Hongkong, pence to dollar ... 15 Shanghai, pence to dollar 81 (nom.) Batavia, florins to £1 8.51£ “Sellers.

MINING NEWS STAFFORD GOLD CLAIM FOR DREDGE LOSS SETTLEMENT FOR £10,500. Advice has been received from the London agents of Stafford Gold Dredging, N.L. (West Coast), that the company’s claim against Lloyd’s for the loss of a dredge has been settled for £10,500 in New Zealand curx-ency. Payment is expected to be made in a week, and consideration is now being given to the future policy of the company. The company’s dredge at Stafford, near Greymouth, sank in about 20ft of water on March 9 after striking a submerged log. The plant, which was electrically driven, was fitted with line buckets with a 4ft cubic content. It is operated by a Melbourne company. The company was formed in 1934 with a nominal capital of £37,500 in 150,000 shares of Ss each, and operations commenced in 1935. MOONLIGHT GOLDFIELDS DIVIDEND OF U PER CENT. The directors of the Moonlight Goldfields Company Ltd. have declared a dividend of 7£ per cent, on the paidup capital of the company, payable to shareholders on December 9 next. REPORTS AND RETURNS MATAKI [Per United Press Association,] AUCKLAND, November 28. The Mataki return for the week ended November 27 was 50oz for 132 hours’ work over 8,300 yards.

November 25 ... £7 9 104 November 24 ... 7 9 2 November 22 ... 7 8 9 November 21 ... 7 7 iii November 14 ... 7 6 8 November 7 ... 7 6 U November I ... 7 6 34 October 31 ... 7 6 04 October 28 ... 7 5 10i ' October 21 ... 7 6 24 October 13 7 6 94 October 7... 7 5 0 October 3 ... ... 7 4 84 September 1 « ... 7 3 04 August 2 ... ... 7 1 8 July 1 ... 7 0 9 June 1 ... 7 0 74 May 2 ... 6 19 64 April 1 ... 7 7 04 March 1 ... ... 6 19 94 February 1 ... 6 19 7 January 3 ... ... 6 19 5

Railroads. Industrials. Turnover. Nov. 2828.95 • 146.14 1,250,000 Nov. 26 29.89 148.45 690,000 Nov. 25 30.43 150.10 810,000 Nov. 23 30.42 149.88 1,600,000 Nov. 21 30.77 150.26 940,000 Nov. 19 30.94 150.38 440,000 Nov. 18 30.80 • 149.93 1,420,000 Nov. 17 31.75 152.78 990,000 Nov. 16 31.20 151.54 1,790,000 Nov. 15 31.95 154.66 1,470,000 Nov. 14 32.36 155.61 1,650,000 Nov. 12 33.17 158.42 1,010,000 . Nov. 10 33.17 157.48 2,180,000 Nov. 9 33.12 158.03 3,100,000 Nov. 7 32.04 154.91 1,760,000 Nov. 5 31.78 152.12 430,000 Nov. 4 31.76 152.10 1,200,000 Nov. 3 32.56 142.31 1,070,000 Nov 2 31.66 152.21 780,000 Nov. 1 31.50 151.39 1,280,000 Oct: 31 31.49 151.75 1,090,000 Oct. 29 31.89 151.36 610,000 Oct. 28 32.13 151.07 1,560.000 Oct. 27 31.94 152.09 2,000,000 Oct, 26 31.58 152.40 1,700,000 Oct. 25 32.00 154.17 1,490,000 Oct. 24 31.73 154.11 1,130,000 Oct. 22 31.59 154.41 1,130,000 Oct. 21 31.13 152,15 1,720,000 Oct. 20 30.99 151.52 1,620,000 1938. Highest 64.86 194.40 Lowest 28.01 113.64 1937. Highest 33.17 158.42 Lowest 19.00 98.95

November 25: — Nov. 25. Nov. 28. £ s. d. £ s. <i. Copper— Standard, spot 45 2 6 43 12 6 Forward 45 5 . T s 43 16 104 Electrolytic, spot 51 5 0 49 0 0 Forward 51 15 0 50 0 0 Wire Bars — Spot ... ... .. 51 15 0 50 0 0 Lead— Spot 16 6 104 15 16 10A Forward ... ... 16 8 li 15 18 l| Spelter— Spot 14 3 9 15 16 3 Forward 14 5 74 13 18 14 Tin— Spot 218 1 3 214 12 6 Forward 217 2 6 215 7 6 Silver — Fine, per oz ... 20 l-8d 20 l-16d Standard, per oz 21 ll-16d 21 5-8d