COMMERCIAL

Southland Times, Issue 19346, 11 September 1924, Page 2

COMMERCIAL

FINANCE AND TRADE. (From our Financial Correspondent.) GERMANY’S FOREIGN LOAN. WELLINGTON, September 9. The Bank of England has been authorised to arrange the flotation of the £40,000,000 loan recommended" in the Dawes report as necessary for the establishment of the new German bank on a gold basis. The fact that the Bank of England is to undertake the issue of the loan may be accepted as an indication that London is recognised as the world’s monetary centre. The Americans have been endeavouring to get the German loan issued on a dollar basis in order to make New York the world’s financial centre but they have evidently failed in their efforts. The United States is to find 50 per cent, of the loan that is £20,000,000, Britain is to find £16,000,000, and the rest of Europe £4,000,000. It is obvious that the issue of this loan is going to have far reaching effects. The loan is to be issued on October 15 and until it is out of the way, other borrowers on the London money market must be inconvenienced. £16,000,000 is not a very large sum for Britain to find, but the trouble is that it is such an attractive 8 per cent, security that every investor will be anxious to get a cut at the loan, and in the meanwhile will button-up his pockets and wait for the prospectus. Mr Massey announced in the House not long ago that New Zealand would issue Treasury Bills in London for a million and a half sterling and as yet we do not know whether the issue has actually taken place. If they have not been placed on the market then it is just possible that their issue may have to be deferred until the German loan is out of the way. Then again there arises the question as to whether money is going to be dear as the result of the issue of this German loan. The London money market has been somewhat nervous for some time past anticipating a rise in the bank rate. Some economists believe that the Bank of England must resume specie payments immediately otherwise the pound sterling will be squeezed out of international currency by the dollar and the gold mark. If the Bank of England resumes specie payments what is going to be the effect on trade and commerce, assuming that money becomes dearer? But apart from this aspect of the matter British manufacturers and industrialists are apprehensive as to the future, fearing German competition. They seem to think that with her financial rehabilitation Germany will be in a position to dump her manufactures in all markets and undersell all competitors. There does not appear to be much warrant for these pessimistic pronouncements. Germany will certainly offer very keen competition, keener perhaps than was the case before the war, but Germany would also be severely handicapped by the Reparations burdens, and Customs barriers which should, to some extent, neutralise her competitive efforts.

To appreciate the position it is necessary to examine the conditions imposed upon Germany by the Dawes Committee: The efforts of this Committee were not directed to making things easy for Germany, but to ensure Germany paying up to the full measure of her capacity. It was held by the Committee that as a result of the war the creditors of Germany were paying taxes to the limit of their capacity, so also must Germany be encouraged to pay taxes from year to year to the limit of her capacity. Germany must balance her Budget, and is to be allowed two years for that purpose, as no reparation payments are to be made out of the proceeds of the Budget, for two years; but in the third year £4,400,000 must be paid out of Budget receipts, in the fourth year £20,000,000, and in the fifth year £50,000,000. This latter amount is called the standard payment and becomes obligatory from that time forward, with additions determined by a set of indexes intended to relate the increased payments to the state of general prosperity and tax paying power. The Transport Tax which is estimated to yield £10,000,000 to £12,000,000 annually is permanently pledged for reparations. The railroads owned by the German Government are to be leased for a term of years to a private corporation, and are to be capitalised by the issue of (1) £440,000,000 in bonds bearing 5 per cent, interest and one per cent, amortization charge; (2) with £Bo*ooo,ooo of preferred stock to be sold to the public, and (3) £520,000,000 of common stock. The bonds are to be applied to reparations, the proceeds of one-fourth of the preferred stock, and all the common stock go to the German. Treasury. After the fourth year the reparation fund will receive £26,400,000. Another source of income for reparations is to be obtained from a bond issue of £200,000,000 secured by mortgages on corporation propertiees and the industries of the country. The position summed’ up is that after the fourth year when “standard” payments are to be made will be as follows: From— Revenue£so,ooo,ooo Railroad Bonds .. 26,400,000 Industries .. .. 12,000,000 Transport Tax .. 12,000,000

£100,400,000 This approximates to 2,500,000,000 gold marks which is fixed upon as the “standard” annual reparations payment. It is provided in the Dawes report that all payments for the accounts of reparations must be paid in gold marks, or their equivalent in German currency into the new German Bank to the credit of the “agent for reparation payments.” This agent is Mr Seymour Parker Gilbert, formerly Under-Secretary to the United States Treasury. Germany pays the amount fixed for reparations to the agent in Berlin and it will be the business of the agent to transfer the amounts due to the several creditors and that is where the test will come. International payments must be made in gold or commodities. The amount which Germany actually can pay therefore, is limited to the surplus of Germany’s exports over imports, with due regard for the invisible items. Germany will naturally endeavour to do a large export trade, but to accomplish that she must be a consistent and heavy purchaser of raw materials. She will not have any advantages from low taxation or depreciated currency. Her people may work longer hours and at lower than those in competing countries, but even the German worker will want a living wage. Customs barriers will be an impediment to the expansion of German export trade, so that all things considered there does not appear to be any serious grounds for believing that German competition in the world’s markets will be of such a character as to permanently cripple British commerce. There is certain to be new developments and judging by the past it is probable that these developments will be such as to add to the world’s prosperity and add to the sum of human happiness and comfort. THE COMMONWEALTH LOAN.

This week the Commonwealth Government is issuing on the Australian market a loan for £10,300,000. The loan is being issued at £9B 10/-, that is at a discount of 30/- per cent, and the rate of interest is 6 per cent. Redemption including the effective rate of interest would probably work out to £6 2/6 per cent. This is a high rate of interest for a Government loan, but Australian investors have now such a wide choice of gilt-edged securities yielding excellent returns, that the Commonwealth Government had no option but to make its loan prospectus as attractive as possible. Commonwealth stocks dealt in on the Stock Exchanges of Australia show that the 44 per cent, maturing next year yield, at current prices, 7.13 per cent; the 5 per cents maturing in 1927 yield 6.82 per cent, and the 6 per cents due 1930 yield 6.34 per cent. It will be seen from this that borrowers in New Zealand are in a more advantageous position than those of Australia. Our larger local bodies are able to market their 54 per cent, debentures at par, and even the smaller local bodies have secured loans on a 6 per cent basis or on terms quite as satisfactory as those of the Commonwealth. The reason for this marked

difference is that monetary conditions in Australia are stringent. Everyone in Australia is grumbling at the tightness of money and with consumers curtailing purchases business is very quiet. Interest rates on overdrafts impose a heavy burden on those carrying stocks of merchandise. It is stated that the troubles that have arisen over financing the export trade of the country have been reflected in most directions. They have compelled banks to restrain traders, with the result that the general conditions have become affected. Australia cannot suffer a financial crisis without the effects being felt in New Zealand because the trade relations of the two countries are very intimate. The Australian banks have recently raised the exchange rates on London and the new rates are 22/6 above those ruling in New Zealand. The Australian producer is receiving 22/6 per cent less than the New Zealand producer, but the probability is that the margin will be reduced as the New Zealand banks will be forced to put up their rates also. Australia should have plenty of produce to export this season for the climatic conditions have been very satisfactory. INVERCARGILL STOCK EXCHANGE. YESTERDAY’S TRANSACTIONS. Sale reported:— N.Z. Drug Co., 68/-. Quotations: — Bank of Australasia, s £l3 19/-. Commercial Bank, s 30/3. Bank of New Zealand, b 57/-. Union Bank, b £l4 10/-. N.Z. Coal and Oil, s 2/9. Westport Coal, b 36/3. N.Z. Insurance Co., b 29/3. South British Insurance, b 42/3. Standard Insurance, s 43/6. N.Z. and River Plate, b 20/-. Perpetual Trustees (Dunedin), b 40/-. Trustees’ Executors (Dunedin), b 55/-. Wright, Stephenson and Co., (ord), s 28/-. Southland Frozen Meat (£1 ord.), s 34/9; (10/- paid), s 17/6; (£1 pref.), s 34/9. Bruce Woollen Milts, b 32/-. Kaiapoi Woollen Mills (pref.), s 20/-.

Wellington Woollen Mills (ord.), s £7. Milburn Lime and Cement, b 37/-. N.Z. Drug Co., s 68/-. N.Z. Express Co. (pref), b 17/-. N.Z. Milk Products, b 26/-. War Bonds, 1930, s £97 10/-. Inscribed Stock, 1938, s £97 10/-. War Bonds, 1938, s £97 10/-. Inscribed Stock, 1939, s £97 10/-. War Bonds; 1939, s £97 10/-. Post Office Bonds, 1927, b £9B. P.O. Inscribed Stock, 1927, b £9B. P.O. Inscribed Stock, 1929, b £9B. Soldier Settlement Loan, Inscribed, 54 per cent., s £lOl 15/-. DAIRY PRODUCE. LONDON MARKET QUOTATIONS. The New Zealand Loan and Mercantile Agency Co., is in receipt of the following cable from London:— “Butter: Choicest salted is at 206/- to 210/- per cwt. “Cheese is at from 90/- to 95/- per cwt. The market is quiet. THE MEAT MARKET. LONDON QUOTATIONS. The New Zealand Loan and Mercantile Agency Company, Limited, have received the following cablegram from their London house: — “Lamb and Mutton: Quotations are unchanged. The market is steady. Lamb: Last quotations 30/8/24—12d per lb (average). Mutton: Last quotations 22/8/24. Wether and maiden ewe: Light i.‘ at B*d per lb, heavy 7<d per lb; ewe, 1 6fd per lb, heavy sgd per lb. GORE STOCK SALE. TUESDAY’S AUCTION. There was a fair attendance at the fortnightly stock sale held at the Gore Corporation yards on Tuesday in fine weather. SHEEP.

Some good quality fat wethers were penned, for which there was fair demand at rates about equal to last sale. A pen of four very prime wethers was sold for 56/-, while prime sorts made 42/- to 45/-, and mediums 35/6 to 40/-. Only one pen of fat ewes was on offer, and realised 26/6. A pen of store wethers made 31/9, and hoggets went for 19/9 to 29/3. A fair number of breeding ewes were on offer, and good quality sold at fairly firm rates. Six and eighttooths realised up to 38/11, sound-mouths 31/-, good conditioned full and failing sorts 27/7 to 28/3, and poorer quality 17/1 to 23/-. CATTLE.

The fat pens contained some pretty good quality beef, particularly cows, and practically everything was cleared at firm rates. An outside dealer secured a truck load and helped to improve the market. Medium weight fat bullocks went at from £8 5/- to £9 15/-, and light and unfinished sorts at £1 15/- to £6 10/-. Good prime cows made from £6 7/6 to £8 2/6, heifers to £1 15/-, and light and unfinished cows to £3 15/-. A fair number of dairy cows were offering, but there was nothing of any great quality. Fairly good cows close to profit realised from £4 10/- to £6 10/-, and aged and shady sorts from £1 to £3 15/-. Empty cows and heifers realised from 5/- to £1 16/-. Calves made 6/-, and a bull £1 10/-. BURNSIDE SALES. A GOOD MARKET. (Per United Press Association.) DUNEDIN, September 10. There was a good market at Bumside today. Sheep advanced, and cattle were easier as compared with last week’s enhanced prices. Fat Cattle.—A yarding of 248 head, compared with 221 last week. They were a fair to average lot with, however, a good sprinkling of unfinished bullocks. The sale opened fairly well, but soon eased about 15/- a head on heavy cattle, with lighter sorts about the same as last week. Prime heavy-weight bullocks sold at from 40/- to 44/- per 1001 b, second quality 40/- to 42/6. heavy-weight bullocks 37/- to 40/-, medium quality 37/6, extra prime heifers 33/- to 35/-, and cows and light heifers 27/- to 32/6. Extra prime bullocks brought up to £2l, prime £l6 10/- to £l9 10/-, and lighter from £l3 10/-. Prime heifers sold up to £lO 10/-, and lighter sorts from £7 to £9 5/-. Extra prime cows brought up to £9 10/-, and lighter animals from £5 to £7 5/-. Sheep.—A short market, with an entry of 1457 head, compared with 2182 last week. The quality was not up to that of recent offerings, although a fair proportion of prime, heavy wethers and ewes was included. There were also the first pennings of shorn wethers, the quality of these being good. The demand opened well at an advance of about a shilling a head for heavy sheep, and firmed a trifle more. The rates for average weights were unchanged until well on in the sale, when there was a strong finish at a 2/- advance. Exporters at the close were paying in the vicinity of BJd for first quality wethers. Prime heavyweight wethers sold at from 7id to 7fd per pound, prime extra heavy wethers to light and fiiedium quality wethers 6jd to 74d, extra heavy ewes (very prime quality), 6d to 6id, prime ewes 6d, light and aged ewes 44d to 54d. Extra prime heavyweight wethers brought up to 65/-, prime from 46/- to 54/-, medium 43/- to 44/6, unfinished 38/6 to 41/-. Extra nriine

heavy-weight ewes sold up to 55/-, prime 37/- to 40/-, lighter sorts 33/- to 36/6, inferior to 26/-. The two pens of prime, shorn wethers brought from 31/3 to 35/9. Lambs and Hoggets.—Two lots of spring lambs, the first of the season, were forward, and realised 45/- to 55/- a head. Hog-, gets sold at from 31/- to 39/- per head. Store Cattle.—A yarding of 220 head, compared with 150 last week, and consisting chiefly of cows and young animals of indifferent quality. A yard of three-year-old bullocks brought £6 10/-, and another of medium to fair, two-year-old steers sold at from £3 5/- to £4 12/-. Yearlings brought from 25/- to 27/6, and other sorts were unchanged. Pigs.—Fat pigs numbering 130 head, and stores totalling 108, were offered. The greater proportion of the entry consisted of porkers, and these sold at about last week’s rates. Baconers had a brisk sale, and there was a rise of some 5/- per head above last week's prices. Porkers sold at from 84d to 9Jd, and baconers at 7jd to B}d per pound. ADDINGTON MARKET. YESTERDAY’S STOCK SALES. (Per United Press Association.) CHRISTCHURCH, September 10. At the Addington market to-day the entry of fat cattle was again heavy, about 30 per cent, coming from the North Island. Fat sheep were in rather short supply, and the result was an easing in beef values, and a hardening in mutton. Store Sheep.—A small entry, which however, included a few consignments of ex ceptional ewe hoggets. One pen of 74 Corriedales, with a good breeder’s name behind them, sold at the exceptional price of 54/-, and another pen of 370 half-breds at 42/-. The sale of adult wethers and ewes, and ewes with lambs, showed little alteration. Extra good Corriedale ewe hoggets sold at 54/-, good half-bred ewe hoggets 42/-, ordinary haff-bred ewe hoggets 32/6 to 40/3, three-quarterbred ewe hoggets 34/11, threequarter bred wether hoggets 27/- to 28/2, halfbred wether hoggets 27/-, cull halfbred wether hoggets 21/7 to 24/5, crossbred 26/-, mixed sexed halfbred wether hoggets 28/11, 4 and 6-toothed halfbred wethers 36/3 to 38/7, lower conditioned 4 and 6-toothed wethers 33/3 to 34/6, aged halfbred ewes in lamb 21/3 to 25/-, aged three-quarter-bred ewes with 100 per cent, lambs 18/6 to 21/6 (all counted). Ten spring lambs made from 35/6 to 42/6 a head.

Fat Sheep.—A small entry of 84 races, and a firming sale throughout, values being in advance of last week by 1/6 a head. Graziers with feed were in the market, but with little success. The sale concluded firmly. Extra prime wethers brought 55/to 59/9, prime 48/6 to 52/6, medium 44/to 47/6, light 39/- to 43/6, extra prime ewes 50/- to 58/9, prime 42/6 to 46/6, medium 38/- to 42/-, light 33/- to 37/6, old 27/- to 32/-, prime hoggets 38/6 to 42/9.

Fat Cattle.—Another heavy yarding of 455 head, of which 126 came from the North Island. The quality was good, but the over-supply caused an easing in price of about 20/- per head. In a few cases prime beef made to 44/- per 1001 b, but generally from 39/-to 42/-was paid, medium bringing 33/- to 38/-, and light and rough from 32/down to 25/- per 1001 b. Extra prime steers sold from £l9 17/6 to £24, prime £l5 5/- to £l7 10/-, medium £l2 10/- to £l5, light £9 to £l2, rough £6 10/- to £8 10/-, extra prime heifers £l5 12/6 , prime £9 10/- to £l2 5/-, ordinary £7 to £9 5/-, light cattle, £4 10/- to £6 10/-, extra prime cows £l4 5/-, prime £8 10/- to £ll, ordinary £6 to £8 5/-. Vealers.—A large entry, but a big proportion were quite unfit for butchers’ purposes. Good calves sold well. Runners brought £7 17/6, good vealers £4 10/- to £5 15/-, good calves £2 15/- to £4 5/-, small 12/6 to 37/-. Store Cattle.—A large entry, mostly cows. There was a good demand for cows for potting, and bulls also sold well. Best cows fetched £2 17/6 to £3 10/-, medium £1 10/to £2 15/-, inferior 15/- to 20/-, bulls £5 17/6. Dairy Cattle.—A yarding of 141 head, most of the cattle being in poor condition, and hard to quit. Anything good sold well. Best second, third and fourth calvers brought £6 to £ll, medium £3 to £5, springing heifers £2 10/- to £6. Fat Pigs.—A medium entry of pork, and a small entry of baconers. There was a good demand all through for bacon, and the pork market, though sound, was inclined to fluctuate. Choppers were sold at £3 10/to £9 17/-, light baconers £4 to £5 5/-, heavy £5 15/- to £6 8/-, average price per lb 84d to 94d; light porkers 50/- to 65/-, heavy 70/- to 78/-, average price per lb, 94d to IOJd. Store Pigs.—There was a large entry, and until near the end of the sale prices were on a par with late rates. Weaners, brought 23/- to 30/-, small stores 31/- to 35/-, medium 30/- to 35/-, large to 53/-, sows in pig £6 10/-. RABBITSKINS. SALE AT DUNEDIN. The Dunedin Woolbrokers’ Association report as follows:—Large catalogues were offered at Tuesday’s sale to the usual attendance of buyers. Competition was much better and prices were, if anything, a shade firmer. Bucks depreciated slightly towards the end of the sale. Winter does sold pretty well up to late rates, and all other grades may be taken as firm at recent quotations, although the general class of skins is gradually going back. The following are the prices realised:—Light racks, 31d to 33fd; summers, 29£d to 33d; prime racks, 33 J to 353 d; early autumns, 403 d to 48d; late autumns, 50d to 56d; incoming winters, 65d to 693 d; winter black, 37d to 74d r ; winter fawn, 44d to 69d; early winter bucks, 64£d to 743 d; early winter does, 56|d to 704 d; second winter bucks, 55|d to 88jd; first winter bucks, 65d to 923 d; prime winter bucks, to 94d; second winter does, 433 d to first winter does, 70{d to 88d; prime winter does, 81jd to 88d; spotted winters, 51d to 65d; outgoing does, 39{d to 56d; summer Broken, 26Ad to 293 d; first winter broken, 30|d to 47d; springs, 373 d to 43jd; milky, 35d to 433; hareskins, 26d to 31d; horsehair, 20d to 21d. THE SHAREMARKET. YESTERDAY’S TRANSACTONS. DUNEDIN, September 10. Sales: Bank of New Zealand 56/6, P. and 0. (deferred stock) £295, New Zealand Breweries (debentures) 21/10. Sales reported: Mount Lyell 20/6, National Insurance 75/3. CHRISTCHURCH, September 10. Sales reported: New Zealand Government, 54 per cent. Bonds, (1933), £lOl 10/1, New Zealand Breweries 10 per cent. Bonds 21/9, Bank of New Zealand 56/9 (three parcels), National Bank of Australia £l5 9/3, Goldsbrough Mort (old issue) 45/9, Manning’s Brewery 34/9, Ward’s Brewery 52/9, Bartholomew Timber 23/-, Mason and Struthers, Ltd., (6/- paid), 7/6. Sale on ’Change: Goldsborough Mort (new issue) 44/9. WELLINGTON, September 10. Sales reported: New Zealand Government Loans, Inscribed Stock £97 10/-, LeylandO’Brien Timber £2 4/6, New Zealand War Bonds £97 10/-, Bank of New Zealand £2 16/10, Wellington Woollen Mills (pref.) £6 19/-. AUCKLAND, September 10. Sales on ’Change: National Insurance 75/-, Bycrofts 24/6, Kempthorne and Prosser 68/9, Tonson and Garlick 13/-, New Waiotahi (cont.), BAd.

THE WOOL POSITION. RECOVERY OF VALUES. THE BRISBANE SALE. The wool selling season has commenced in Australia with the sale at Brisbane, when 40,000 bales were catalogued, and according to the cabled reports the wool offered was attractive, and prices showed an advance of 74 per cent, to 10 per cent. At the July sales, both in Brisbane and Sydney, there was a drop in values, so that the advance now recorded is more in the nature of a recovery, and accords with what has taken place in Bradford recently. Since the close of the last London sales on July 11, liberal purchases of merino wool have been made at 10 per cent, advance on prices then ruling. This upward movement was explained as being largely due to the desire to secure supplies before the season opens in Australia. However, it is added that the chief consideration lying behind the advance is the depletion of visible supplies of wool in the West Riding. The fact that the Note Issue Board of Australia has decided to furnish the banks with more currency has no doubt proved a stimulating factor in the competition at Brisbane. Instead of rationing the foreign buyers, the banks should now be able to allow them up to the full amount of their letters of credit.

The market has yet to feel the beneficial effects of the acceptance of the Dawes Report. Germany will certainly secure the foreign loan of £40,000,000, which is to be issued by the Bank of England on October 15, and in anticipation German credit will be restored. Germany has been described as holding the key to the wool position in Europe, and if Germany comes into the market, as undoubtedly she will, a vast quantity of wool, including crossbreds, will be lifted at the Australian and New Zealand sales. It is also stated that the United States will shortly become a much more important factor in the overseas markets, and it is to be hoped that this forecast is correct. The American wool industry has been in a depressed condition for some months past, and the prices offered for the domestic clip were much below last year’s prices. There was very little movement in piece goods owing to high prices. By the time wool sales begin in New Zealand—and the first sale of the season is to be held in Wellington on Monday, November 17—the economic conditions should be more settled than they are just now, and the probability is that our wool growers will obtain as high prices for the current season’s clip on the average. It would be unwise to expect any sharp advance.

Fate .. .. Stores .. . Aug. 26. Sep. 9. .. .. 97 317 . .. 1057 1368 1154 1685

Fats .. Stores .. .. Aug. 26. Sep. 9. .... 27 28 59 54 ca 86 82