THE OTAGO DAILY TIMES FRIDAY, DECEMBER 15, 1933. MINING COMPANIES

Otago Daily Times, Issue 22137, 15 December 1933, Page 10

THE OTAGO DAILY TIMES FRIDAY, DECEMBER 15, 1933. MINING COMPANIES

Some very unflattering things were said in the Legislative Council this week with reference to mining companies. That a good deal of cause has been given for the use of language such as was employed by Mr Fagan and Mr M'Callum is to be admitted. There are many people who seem to be peculiarly liable to succumb to the enticements offered by the promoters of mining companies. Too often, moreover, they do not possess the knowledge and have not enjoyed the training that would enable.them to gauge with any degree of accuracy the value of the statements that are contained in the prospectuses of companies. And it is to be feared that numerous instances may be cited in which these statements have been made with a recklessness that would be charitably described* as unfortunate. Mr Fagan said that “there had been so many swindles in the mining industry that it was a wonder that any investors were left with confidence in mining ventures.” The necessary implication from this observation and that of Mr M'Callum, who, having expressed a doubt whether more than five out of every hundred mining companies that were floated paid dividends, asserted that." by fraud and chicanery people were taken down ” is that the “ swindles ” were deliberately perpetrated by dishonest people who set out to exploit unsuspecting and innocent individuals. Unfortunately, swindlers of this class in New Zealand have escaped the penalty which their conduct merited, and their immunity from punishment has simply offered encouragement to others to follow in their footsteps. Whatever the proportion may be, however, of mining companies that- have not paid dividends, it would plainly be erroneous to suggest that those that have failed to yield any returns to the shareholders have necessarily supplied evidence of fraudulent promotion. Gold mining is precarious in the sense that it is impossible, without tests of a very exhaustive and prolonged nature, to estimate with any degree of definiteness the* extent or the richness of a claim which it is proposed to work. It is probable that the speculative element which, in consequence, is never entirely absent from a gold-mining project gives to it a fascination in the minds of a good many people. They are attracted by what they would call “a legitimate gamble.” Admittedly, however, the law as it affects companies has been insufficiently effective in the past to prevent the occurrence of abuses in the promotion of companies and to provide safeguards against the flotation of concerns that were not at any time attended with even moderate' chances of success. It is to be hoped that the tightening-up of the law, as provided in the carefully-drawn Companies Bill which will be passed this session, will have the desh’ed effect of protecting the public against the danger that it may be of set purpose

a taken down ” by designing rogues. An additional measure of protection is, it is to be recognised, now being afforded to the public through the existence of companies which have been established with the object of testing mining properties before investors are invited to subscribe capital for the working of the properties. As long as the companies that are formed on the basis of favourable reports secured by the investigating corporations from their engineering staffs are not subjected to a “ loading ” that is excessive, the adoption of a system of exploration of properties by a responsible company as a preliminary to their being placed on the market must commend itself to those persons who, unlike Mr M'Callum, have not entirely lost their faith in mining companies and are still prepared to invest money in them.