Prospectus of New Zealand Home Builders, Ltd.

NZ Truth, Issue 472, 4 July 1914, Page 2

Prospectus of New Zealand Home Builders, Ltd.

Sort of Things Investors are Asked to 1 Sink Money ; m. ■„ ' Class of Company that Banka With the Quasi State Bank. Time -Such Schemes Were Stopped . By Law. vs ■■■ ; .- •■'■-■- '■ ■ From far. away Aitutaki, Cook Islands', comes the above prospectus. It is sent r t or review by one of this paper's niany thousand constant readers. The remitter mentions how useful "Business and Boodle" has been to him, as a cautionary guide m matters of investment. This gives the simpleminded "Cambist" cheer. This amazing proposition is to have an authorised capital of £250,000, m ■£ 1 shares, of which £ 10,000 is now offered to the grullible public at par. All other issues will be at a premium, so look out. If anyone carefully reads the prospectus and thinks the venture a sound one, well, this would come ac a surprise to the writer. The prospec-. ■ : - - -\/>' '■ -:. ■■■■ '■■■-' ■'■ -• '■■■■-'. •••■■-■

I tvs reads like the ravings of some ! financial maniac, and the objects of the proposed company are so extensive that it would require many millions to get them going. It is wonderful what an optimist dreams of, if only he can get his hands on £10,000. But what a splash such a person could make with £250,000! The strange thing about this appears m the fact that five provisional directoss appear to think it possible ,to carry' out the tremendous programme of "objects" for which the company is to be formed. Here are some of them (there is not ENOUGH SPACE TO STATE THEM - ■-■ ■• . ALL '■;■•'■ -•■ • ■ , m this small column):— "purchase all kinds of trading stocks," also, "stocks and shares, leases, mortgages, land, houses, businesses, etc. To purchase lands for subdivision, guarantee pay-, meat of dividends, etc. To do all kinds of mining manufacturing, et<v etc.'.' Butas-the name bt'ihja 'wide spreading' i concern indicates, the real object is to ] enable people to buy "homes" from the company on all sorts of terms, mostly very profitable to the company. The ' promoters seem to have drawn most of their ideas from th© great "United States, as theY .quote the. results of a few Home building . companies over there. They seem to forget that here there is a land and income tax which would tax the properties and mortgages of the company. In America the position is different, but why be so particular about such small matters? The reason that is notitied, is because this concern proudly announces that "It is not a building society," Strange, indeed, would a building society be with such a list of "objects."

By the Articles of Association, the company may pay a commission of fifteen per cent, for brokerage on its shares, and may pay. not exceeding fifty p£r cent, of premiums (if any). If people put money into the venture they will have the satisfaction , of knowing that some one makes a good fat commission out of them. This Is' more expensive than raising the money m London. :

It, is passing sirange that a company with such "objects" should be able to print upon its prospectus, "Bankers, Bank N.Z." One wonders if tho bank knew what was going ( ori. Has the bank sanctioned its name to be used m this matter? To most people the name of a banker on a prospectus is a direct hint that all is right, for the bank is supposed to Hava looked into the matter and satisfied itself that everything is quite square. All banks should keep a "vigilant look out for prospectuses and see that they are not used as a draw. Before a company is actually .floated, the name of the bankers, . "■■ ' '■■■""■■

'sHqULDNOTaB PRINTED upon such documents. When one comes across such a gem as the following, "What does the banker do with the money de&oslted with him? He pays tjiree per cent, or four per ceht for iti and loans it out on real estate at five per cent.' or six per cent., making for the bank tfie difference.'* This"; is what the promoters* of tlits company allege. It is really very nasty "of them to give the sho"w away m this manner. The least they could have done was to have kept quiet. Joking apart, there is a gteat deal of truth In this wild statement, the wilderness is In statins that the banker pays as much a? three per cent, or four per cent., that being a gross over statement of the cost of bankers' borrowings. The truth is that for many years past bankers have been bolstering up a lot of land speculators, and by so doing have robbed thousands of people of vast sums of money, wh\> had to purchase farms and homes m New Zealand. If the Bank of New Zealand, or any other bank, gets many more advertisements of this nature it will cause a senso of Insecurity to ,come over tho depositors. Therefore, all bankd should be jealous of their reputations, and keep their eyes open to the tricks of company promoters of every kind,