LOAN FAILURE

New Zealand Herald, Volume LXXIII, Issue 22608, 22 December 1936, Page 5

LOAN FAILURE

AUSTRALIAN BORROWING HIGHER INTEREST RATES DEMANDS OF INDUSTRY The wisdom of the Commonwealth Hank in declining to underwrite the last Commonwealth loan was emphasised by the Melbourne Argus in commenting upon the failure oi the issue, which was announced in a cablegram published last week. The loan was for £7,500,000, and with about £2,000,000 undersubscribcd it was the least successful of any loan oilcred since borrowing was resumed just alter the height of the depression. The result of the loan, which was issued at £O7 10s, bearing a coupon interest rate of ;S:J per cent, and giving a return, including redemption, of £.'} J!)s 'ld per cent, shows clearly that the money is not available from the savings of the people, states the.Argus. Economic recovery in Australia has been proceeding apace in the last two years, and the demands of industry lor capital for the furtherance of expansion have been so great that the point is rapidly being reached when, in the absence of any further augmentation of the credit base, money will be obtainable only at dearer rates. The trend toward clearer money lias been very apparent since March, when the trading banks increased their rates for fixed deposits by 10s per cent. Recent months have seen an appreciable increase in the return on Government bonds, in rates charged on overdrafts, and in interest rates on first mortgages. To carry through its amended programme the Loan Council will need to raise £7,000,000 some time in the new year. It is certain, if the money is to be obtained from the market and not from the resources of the Commonwealth Bank, that a return more attractive than £3 19s 4d per cent will need to be offered. The average yield on the ten 4 per cent issues on December 12 was £3 19s 9d, establishing a new high level for 1930. A new loan will tend to raise interest rates still further, and at the same time will exert, further pressure on the trading banks, which have been keeping up with the demands of industry for accommodation, in spite of the fact that there is a disproportionate increase in the amount of deposits. Unless some early alleviation is given the banks will be bound to preserve a safe degree of liquidity by increasing again rates of interest chargeable on deposits and advances.

REID RUBBER MILLS INCREASE IN TURNOVER INDUSTRIAL LEGISLATION The third annual meeting of shareholders of Ueid (New Zealand) Rubber Mills, Limited, was held yesterday. The chairman of directors, Mr. A. M. Seaman, presided. .Mr. Seaman said the year had been one of great activity, and turnover had nearly doubled, as compared with that of the previous year. It was now wejl in excess of the figure of £20,000 estimated in the prospectus, it was estimated that a paid-up capital of £IB,OOO would be required for the conduct of that volume of business, but actually £1(3,000 had sufficed. Allowing for the fact that £926 had been written off for the balance of flotation expenses, and that income tax had had to be provided for on a scale higher than was in operation when the company was floated, the profit shown was comparable with the prospectus estimates. Early in the year a further issue of 4000 shares was made. The issue was very much over-subscribed by existing shareholders, and allotment was made in proportion to their former holdings. The additional capital had been sufficient to provide for more plant and for the carrying of the increased turnover. Further extensions, to both plant and buildings, were in progress, and it was hoped to finance these without the issue of further capital. The industries gazetted for licensing under the Industrial Efficiency Act included the "manufacture of rubber tyres for vehicles." It was anticipated tbat there would be no difficulty in the company, as the pioneer of the rubber industry in New Zealand, securing the necessary licence, and immediate steps had been taken in that direction. Industrial legislation passed during the year had resulted in an increase in costs, both by increase in individual wages and by the shortening of the working week. However, such charges as were made were effected without any dislocation or friction with employees, and the factory was running smoothly and efficiently. The report and balance-sheet, details of which were published in the Heiui.d on December 9, were adopted. The retiring directors, Messrs. E. G. Bridgens and F. W. L. Milne, were re-elected.

CARTAGE CHARGES TRANSPORT OF LAMBS COUNTY COUNCIL'S STAND [by tet.egkaph—OWN correspondent] PUKEKOHE, Monday That charges are now being fixed by the Pukckohe and Waiuku Carriers' Associations was disclosed at to-day's meeting, of the Franklin County Council. No exception was taken to prices for carrying fertiliser from the Pukekoho station, which, it was stated, comprised the only rate from the l'ukekohe Association of which the council yet had knowledge, but the rate fixed by the Waiuku Association for the carriage of fat lambs and sheep to the Waiuku railway station was the subject of a spirited debate in tho case of one firm which applied for permission to exceed the road classification in order to carry loads of 100 milk lambs from Awhitu to Waiuku. Council members agreed that, while it was in the interests of settlers to give permission, provided such heaw carting was done in dry weather and at a reasonable speed, the charge of .CO 5s for the trip of 30 miles could not be countenanced. The council decided to refuse permission until tho firm advised that it was prepared to reduco the charge. BUTTER IN LONDON REPORT FROM DEPARTMENT [by TELEGRAPH —Pit ESS association] WELLINGTON, Monday Tho following information is supplied regarding London markets by the Primary Products Marketing Department, which received it by cablegram from London: — Butter.—New Zealand, salted, 99s to 100s; unsalted, 106s to 108s (exceptional 110s). Deliveries: New Zealand. 1910 tons; in store, 3680 tons. The market is slow. Tho New Zealand retail price is unchanged at Is Id a lb., and the Danish retail price is reduced to Is 2d. Cheese. —New Zealand, white and coloured, 63s to 63s Gd. Deliveries: New Zealand, 17,712 crates; in store, 20,0-14 crates. The market is quiet and retail prices are unchanged.