DEALING IN MINING SHARES.

New Zealand Herald, Volume XXII, Issue 7403, 11 August 1885, Page 6

DEALING IN MINING SHARES.

' Some recent occurrences on the Stock Ex* change have directed attention to the faot that the present system of transacting mining business is both unsound and unsatisfactory. It throws risk upon those who are not entitled to bear it, and it enables those who should take upon themselves that risk to escape from it. Its every-day practice is— nay, more, its objeot is—to evade legitimate registration. It opens wide the door for fraud and triokery to enter in. It is opposed to every sound principle of business. In buying and Belling mining shares It is, perhaps, the exception rather than the rule for the purchaser to take the transfer and register the shares. Of course casual visitors generally do so, but the bulk of dealers in shares are persons whose transactions are frequent and numerous, mining entering largely into their business. The latter class do not appear on the share register more than they can help, if at all. Their object probably is to sell the shares in the course of a few days at a profit. But should the month allowed for registration expire, that fact does not trouble them; they throw the task of keeping the shares safe, and avoiding registration, upon the broker. The broker's task has not been difficult. He end his brethren in business bad so many shares amongst them that they could exchange transfers, for the brokers held thousands of shares, the property of clients, in their own names ; or if the sellers were considered substantial, and known to be obliging, the transfer was held over for renewal. It cannot be oontendod that this system is either safe or sound, still it has its advantages for those who employ it. It saves the dealer trouble and expense. But another weighty consideration must be recognised. It is unwise to place the powor of manipulating so many shares in the hands of the brokers. These could be converted into a powerful lever for bulling and bearing, and human nature is as liable to succumb to temptation here as elsewhere. No class or body of men has or deserves a better reputation than the sharebrokers of Auoklaud and the Thames have had since the opening of the field. Their losses in connection with clients have been grievous and numerous, yet the outside world knew it not. The defaulting brokers during that time have been few, very few indeed. Indeed, had there not been mutual confidence, such a system as that just described, involving as it does enormous risk, could not have existed. But there has been a rude awakening; the happy family is not so happy as it was until recently. The pleasant days of confiding trustfulness are over. Correct and exact business principles are spoken of as the order of coming days. The broker will be as glad as heretofore to be, for a consideration, the means of bringing buyer and seller together, but the purchaser will have to take the risk upon his own shoulders.

But law and usage have been largely, perhaps mainly answerable, for the deplorable system which has hitherto obtained. And matters will not work smoothly until the stamp duties are reduced, and the registration fees revised or abolished ; because, in transactions of small amount they arc unanimously regarded as too heavy to be borne. He who would trust to persons purchasing small lots, worth from £5 to £•25, hoping to dispose of them in a few lays, paying 3s 6d for stamp and registration, must be sanguine to simplicity. No, the registration fee should be abolished, as it has been in mosc stocks of a permanent character, except where scrip is issued. But in permanent stocks the fee is not nearly so heavy a drag upon business as it is where mining shares are concerned, for in the first instance investment is the object; in the second, speculation mainly. Why a secretary should receive a fee of 2s 6d for registering a transfer, is not apparent to the public; certainly the custom is not appreciated. It would be more sensible to give him some addition to his salary if the transfers were numerous, but it follows that the company's position would at such a time warrant it. No doubt a scrip spurt occasions more office work, but extra salary, while it lasts, will meet the requirements of the secretary. Again, it is not fair to place mining shares and permanent stocks on the same footing with regard to stamp duties. The former yield a much larger revenue, as the transactions are incomparably more numerous. Frequently the same parcel of mining shares changes owners a dozen times in the course of a month. If sixpence were substituted for the shilling, and a shilling for the 2a 6d stamp charges, and the registration fees abolished or reduced to 6d or Is, there would be no excuse for registration or evasion of the law. At present the sympathy of the community is with evasion of the intention of the law—an unhealthy state of things at any time—because public opinion condemns as oppressive the ruling duties and fees. If these were lightened the verdict ragarding anyone who suffered through non-registration, or relying solely upon his broker, would be "Served him right. ' The aim of law should surely bo to enable and induoe the people to protect themselves, but the effect of the Stamp Act as it exists is to cause them to shun it, regarding the protection thus acquired not worth the price. The advisability of issuing scrip for mining shares is worthy of consideration.