"LOADING" SHARE CAPITAL.

New Zealand Mail, Issue 1367, 12 May 1898, Page 39

"LOADING" SHARE CAPITAL.

The capitals of Australasian metal mines are shown by the recently-issued "Australasian Joint Stock Companies' Year Book " to be about £106,000,000. Of this, the " Year Book " claims, £60,000,000 is deadweight. For the " loading " the Englishfloated companies are mainly responsible. A concrete instanoe of flagrant overcapitalisation is given in these terms: — " A property on which about £4OOO had been expended required an additional £20,000 to briii* it into working order, say, with an ample margin for contingencies, £30,000 in all."- Oa that capital the prospacts were that it might pay handsomely. It was reported from Australia that it might yiold a fair return on double that amount. But it is floated in London with a capital of £lso,oot>, with an expensive directorate—that is, expensive according to Australian ideas—and it must turn out to bo remarkably rich, rich beyond expectation, before the shareholders can anticipate anything like a fair" remuneration for the risks incurred. In this case the 'loading' is £120,000, or four tim-s the active capital." The slump in the Bottomley group of Western Australian finance companies is a pointed illustration of the danger of over - capitalisation. Among the companies promoted by Mr Horatio Bottomley are the West Australian and New Zealand Market Trust, registered on January 26, 1837, with an authorised capital of £2,500,000; the West Australian Joint Stock, Trust and Finance Corporation, registered in November, 1895, with aa authorised eipiUl of JJJjO.OJJ ; and the West Au-lr.liai L «a-.i s\nd General Finance 0 >.• p >rali >n, registered in November, 189 1, with an authorised capital of £250,000. To expect a fair return to be earned on aa authorised capital of £3,000,000 was surely to expect a great deal too much.