ESTABLISHED 1875. Manawatu Daily Times. The Oldest Manawatu Journal. Conducted by E. D. HOBEN. Published Every Morning. FRIDAY, MARCH 18, 1910. RUBBER.

Manawatu Times, Volume LXV, Issue 966, 18 March 1910, Page 4

ESTABLISHED 1875. Manawatu Daily Times. The Oldest Manawatu Journal. Conducted by E. D. HOBEN. Published Every Morning. FRIDAY, MARCH 18, 1910. RUBBER.

Our London cabljs the other day told of a boom iu the flotation of rubber companies consequent up6n the continued riss of theoommodity, which would suggest that there is a possibility of something like the famous "South Sea Bubble" of a generation past having a uew inspiration. It is not that rubber growing is not likely to be a solid investment for a considerable time to comel- - in fact, a synthetic rubber is discovered by the chemißt-but the shade of the company promotor threatens to fall tipon the rubber world, aud it will be well that investors should be wary. We know how overcapitalisation has crippled many a promising coLuial proposition, and how.New Zealand mining fields, but to au infinitely greater 'degree, West Australian fields, have been littered with sines whose modest potentialities were wreoked by tlio ; weight placod upon them by the oompany promoter. Rubber, of. course, we are not likely to grow in New Zealand, That requires the Tropios, but New Zealand investors are being asked to contribute to the boom, and New Zealand names figure in it. A TYPICAL OOMPANY The other day we received the prospectus of a rubbergrowing oompany with a proposed capital of £1,500,000 in £1 shares, winch soemed out of proportion to the work to be accomplished and the privileges to be acquired, . These prospeotnses were widely distributed • in New Zealand, and au analysis wliioh the ■ Sydney Bulletin has made of the situation should be of decided interest to anyone who feels inclined to speonlato modestly in the new vpgue. The Bulletin points out that The first issue of shares to the public numbers 500,000; and the idea i 3 to use the proceeds to pay for 112,000 acres of land in various parts of Papua, and to. work it. There are millions of aores of land) said by good judges to be precisely similar to this land, and these millions of aores can be taken up by anybody who oan pay the'survey fee, which runs to about £2OO per 10,000 aores'. An area of 110,000 aores, then, could be taken up at a oost of £2200; and no rent has to be paid on it for five years Yet for its 112,000 acres this million and a , halt' company is paying no less than £52,000 in oasli and £223,000 in shares! On most of the leases for wliioh the company is to pay £275,000 in cash and shares, there is no cultivation of any kind whatever, The promoters of this oompany, who are draw-, ing £52,000 iu cash out of it, besides £223,000 in shares, paid or are to pay for the whole 112,000 aores, barring only 10.000 acres, the total iu oasli ot £IBOO, along with 06,250 shares. - Let us put it into figures

Gash. Shares. Leaseholders get £I,BOO 00,250 Promoters ... 50,200 156,750 The leaseholders darod not ask more than £IBOO, because they knew that if they did the promo, teis oould simply go and peg oat equally good country lying in millions of aoros around" them; yet, having bought these leases for £81,009 the promoters pass them on to, the British, (Jontinental and Australasian public for £52,000. And besides the £52,000 in cash and the £156,750 in shares which the. promoters grab meroly for passing on those uuimproved loases from the leaseholders fca the publio, they do some more grabbing as underwriters, the grab in this case representing another £50,000, half payable in oash and half iu shares. The present issue of oapital, therefore, amounrs to £723,000; and, as nearly as cau bo got at, this is what is going to happen to that £723,000: Cash to the people who now hold

the land £I,BOO Cash to the promoters as pro-

motors 50,200 Gash to the promoters us under-

writers 25,000 Shaves to tlui promoters as pro-

moters 150,750 Ditto as underwriters 25,090 Preliminary expenses 20,000 Shares to the people who hold

the land 00,250 Various trifles (sub-uudorwriting, brokerage, special services, etc.) 20,000 Cash left for tho business of the co 358,000

Total £723,000

So that £1)58,000 lias to struggle to oarn dividends for £723,01)0; which means that every £1 has to oaru dividends (if it can) for more than £2. The public pays, oue way and another, £3(i5,000 in cash aud shares—£3(io,o(Jo, for which all there is to show is 112,000 acres of oouutry oxactlv like milliotis of acres of other country to b» had for less than 5d per acre, It all sounds very like the House that Jack Built, Now, that oompany has a most imposing directorate, including an ex-Governor of New Zea-. land, Lord Raufurlj (ns chairman); an ex-Ageut-Getieral of Now Zealand, Sir W'estby Percival; Mi T, J. Brassey, a well-known New Zealand insurance manager; aud an exPrenher of South Australia, the Hon. J, G. Jenkins, all worthy men —but the ship seems to be moßt woefully ovfer-rigged, and the naked Papuau who will have to plant aud save the rubber might well marvel at the structure that lias betn raised npon him aud his land.