New Zealand Loan and Mercantile.

Pahiatua Herald, Volume II, Issue 193, 24 August 1894, Page 3

New Zealand Loan and Mercantile.

In the course of an interesting article on the New Zealand Loan and Mercantile Agency Company, London Fairplay, July 12, says:—Some three months ago —on 20th April, 18911—we dealt at length with the reconstruction scheme which had just been sanctioned by the Court, and wo strongly advised shareholders, both on this side and in the colony, not only to accept but to support it. At the same time we wrote considerable, and perhaps reasonable, doubt existed as to the amount of financial support which would be forthcoming. The colony had been hard hit, and while it was obvious that the shareholders in the defunct Company would naturally welcome any scheme which promised to improve their position, great doubts existed as to tho ability, at any rate of the colonial shareholders, to give effect to their desires by eommensurate subscriptions. These doubts have boon effectually removed. Tho Company expected the subscriptions to amount to L 500,000, of which it wae anticipated that L3f*o,ooo would come from British shareholders, and L 150,000 from the colony. The actual subscriptions are L 620,000, viz., L 870,000 from this side and L 250,000 fron: the colony. This result, especially as regards the colonial subscriptions, has oome as a surprise, and is probably duo in no smalll degree to the confidence placed in the sagacity of Baron Schroder and the new directors. That confidence can scarcely be regarded as unfounded. While th© Barings, Mariettas, the Bank of England, and a host of minor fry were rushing down the fatal : acline of Argentine finance, some to perish in the waters, and others to escape damaged in means and reputation, the Baron stood aloof. Ori the other hand, he took up the Estates Company of the Bank of New Zealand, andnow the New Zealand Government, by virtue of its recent arrangement with tho Bank, practically guarantees that transaction. and adds, for what it may be worth, the Government guarantee to the existing securities. So far, then, as the subscriptions are concerned, the reconstruction scheme promises well. It starts with a subscribed capital of, roughly, 1.620.090, which will no doubt be paid up. It has power to raifce L 250,000 and thus will have the command of LBOO,OOO to L 900.000 in the most liquid of all assets —hard cash. It will be the business of th® new Company, which has no obligations of any kind to meet, to keep these assets liquid, and to religiously avoid following the example of its predecessors by not locking up its funds in plain and' fancy investments which, whatever general

merits they may possess, were highly unprofitable in the working, and rigidly incoHvertable in the end. The time no doubt will couie when the financing of estates may once more be profitably indulged in the colonies, but, for this Company at least, that time has not yet arrived, and its chief efforts for the present will undoutedly be confined to dealing to the best advantage with the securities it now holds. It has, in fact, been called upon to take over n wreck, and make the best of it. Another year or two will clear the air, and show how and where assistance may most advantageously be given, either in starting new or assisting established enterprises. At the outset the Company is rather embarrassed by the action of Mr Justice Vaughan Williams in respect to the directtors of the old Company. Whatever may have been the demerits of the Mundella troupr, tlie Board of the new Company feel that their funds should not be expended in furtherance of ;.n object which is rather suggestive of animus ag;iinst the old Board than of sympathy with tho shareholders, who certainly stand to gain nothing by the transaction. If the old Board have been guilty of fraud, as s suggested, and if in i the interest of commercial morality it is , considered desirable to prosecute them, it is for the Public Prosecutor to take the matter up at the public expense ; but it is obviously unfair to force tho new Company to spend its shareholders’ money in proceedings to which the shareholders themselves are strongly opposed. It certainly is net in the interest of the new Company, nor of colonial credit, that mudd . water should lie stirred up unnecessarily, ami that will he the only effect of persistence in Mr Justice Vaughan Williams' present line of action. ... In the meantime, it is satisfactory to note tha Sir John Hall, the late Premier, who had boon a heavy loser by the old Loan and Mercantile, ha* given proof of his confidence in the now Cempany by resum- , ing business with it. and his example will ! no doubt be generally followed throughout the colonics. It lies no doubt not been I ' overlooked bv Sir John Ilall that a clause J | in the articles of the new Company I provides for the absolute security of goods consigned through the Company. Competent and independent men will be sent out to look into and to report on the value of the assets and properties taken over, and it is generally understood that arrangements will be made with the Land Company to run the two concerns on identical lines, under one management; tho old staff, so far as may be found possible or desirable, being retainod.