"WILD CAT" SCHEMES

New Zealand Herald, Volume LXXII, Issue 22126, 4 June 1935, Page 11

"WILD CAT" SCHEMES

ENGINEERS BLAMED CHRISTCHURCH DISCUSSION DEFENCE OF STOCK EXCHANGE The statement that failure of many goldmining companies was due to faulty engineering reports was made by Mr. H. Kitson, chairman of the Christchureh Stock Exchange, in an interview. Mr. Kitson's remarks were in reply to those made by Mr. J. Morrison, assistant Commissioner of Stamp Duties and assistant Registrar of Companies, in his address to the Institute of Public Administration in Christchurch. Mr. Morrison had spoken of "wildcat" schemes in connection with goldmining, and had referred to ways in which the public were misled into subscribing for some goldmining shares. Mr. Kitson said that he did not think Mr. Morrison was quite fair in loading on to Hereford Street the blame for the flotation of what he referred to as "wild-cat" schemes. In many cases the blame for such schemes should be placed on the engineers, who were supposed to be men of knowledge, and on their reports regarding the fields and undertakings generally. Often the provisional directors and the promoters of such a company were misled entirely by incorrect reports, and had gone to the public in good faith. The promoters had in many cases shown their faith in the reports by subscribing their own money to tho venture.

"No one deplores more than the members of the Stock Exchanges that the public is deceived in tho prospectuses of 'wild-cat' ventures," said Mr. Kitson. "The Stock Exchange Association has, as far as is humanly possible, brought in rules and regulations to prevent such schemes from being foisted on the public, by insisting that, before any prospectus is passed, an independent engineer's report is submitted. The Stock Exchanges have been just as much deceived by these engineering reports, when we believed that a man calling himself a mining engineer, and with letters after his name, was competent to report. "However, where the results have proved that a mining engineer's report is not reliable, we have refused to accept his report on any proposition that has been subsequently referred to us."

Mr. Kitson added that in many cases the results given by the engineers were the outcome of faulty boring, which denoted inefficiency rather than a deliberate desire to mislead.