FINANCE AND COMMERCE

Timaru Herald, Volume CXXV, Issue 18636, 4 August 1930, Page 7

FINANCE AND COMMERCE

REVIEW OF THE SHARE MARKET. There was an absence of animation on the share market last week, ana the number of sales recorded was considerably below the average. While conditions are unsettled there is not likely to be much improvement, investors are willing to buy good sound shares and stock, but canot their minds that rock bottom has been reached, and are therefore quite willing to wait and see what the coming months will bring. The closing sales of the Australian wool season showed a decrease of 153,465 bales, and a decrease in value of close on twenty-four million pounds- on the previous year s clip. The average price per lb. was 10.4 pence, against 16.7 pence m 192829 The wool averaged £l3/5/6 per bale bale, while the preceding season’s wool realised £2l/12/6 per bale. The base metals, which have been a great source of wealth to the Commonwealth, are at lower figures to-day than they have been for many years. The chief trouble will be to get the cost of production down to such figures as will leave a reasonable proht for the producer. . In the banking section, Commercial of Australia was the most popular stock. A dividend of ninepence per share is due next week, and several thousands were turned over at up to 21/4. The prefs. were sought at £6/11/-, cum div. For the first time for some weeks, Adelaides had a sale at £6/11/-. This is a heavy fall from £lO ruling twelve months ago. Australasias were easier, with a buyer at £ll/12/6, and a seller at £ll-17/-. Australian Bank of Commerce ex div. of 3J per cent., eased to 21/9 to 22/-. Commercial of Sydney, cum div. of 12/6 per share, sold up to £2O/5/-. Ex. div. buyers offered £l9/15/-, sellers wanting £2O. English, Scottish and Australian Banks fell to buyers at £5/16/6, sellers £5/17/-. National of Australasia, £5 paid, were steady in the neighbourhood of £7, while the paids were sought at £l4/3/-. National of New Zealand, ex. div., were firm at from £5/14/- to £5/16/-. Bank of New South Wales rose sharply from £35/15/- to sales at £37/5/-. New Zealands had several sales at 55/6 to 56/-, and closed firmer, with sellers asking 56/2. Union of Australia were ex. div. of 6/3 per share, and fell to £lO/16/- sales. Comparatively few sales were made in the insurance section, which always been a favourite medium for investment. Nationals were steady at 14/-. New Zealands, cum div., dropped from 46/- to 45/-. More were wanted at 44/6, but sellers required 46/-. Standards were asked for at 57/-, but holders required 60/-. South British were steady at 59/6. A.P.A. Insurance were offered at 6/5, but 5/6 was the best bid.

Very few sales were recorded in the loan and agency section. Dalgetys receded to sales at £lO/2/- and £lO/3/-. Goldsbrough Morts sold at 27/6, with buyers and sellers three-pence on either side of that figure. Wright, Stephensons ordinary were offered at 22/-, and the prefs. at 15/2, without tempting buyers. Perpetual Trustees were wanted at 68/-, and Trustees, Executors at 60/-, but none were offering.

The run on Westport Coals, which began about a fortnight ago, was not so apparent last week. After reaching 33/6, a sale was made at 33/-. Buyers now offer 32/6, while holders are firm at 33/-. Stockton prefs. are wanted at half-a-crown. Grey Valleys sold at 23/9. Hikurangl prefs. realised 3/9. After many misfortunes this .mine seemed in a fail’ way to recovery, when it was again flooded. Renown and Taupiri were firm at last quoted prices. A steady demand set in for Kaitangata at 5/- discount, but none were available.

Breweries accounted for a large proportion of the sales. New Zealands sold at 49/9 and 50/-. Timaru Brewery, 5/- paid, brought 7/-, down to 6/6, and more were wanted at 6 4. Staples were better at 45/-, with further buyers at 44/11. Tooth's came in for larger business at from 28/3 to 28/10, with the closing quote one penny on either side of the last-named figure. In the miscellaneous section, Colonial Sugars realised £37/10/-, an improvement of £1 on last sale. Until the position of the sugar industry has been thoroughly reviewed by the Federal Government, there can be little Improvement in the price of shares. British Tobaccos moved up to sales at 37/6, with a buyer and seller one penny on either side. Customs duties will not affect the profits of this company to a great extent. New Zealand Farmers’ Fertiliser were easier, with buyers at 18/9, and sellers at 20/3 cum 1/9 3-5 div. The heavy stocks which this company were carrying are being steadily reduced. It is not anticipated that the demand for artificial manures will be as great this year as last. N.Z. Drugs remain very steady at 62/6. The interim dividend Is payable next month. Milburn Cements were strong with sales up to 34/-. The same price is offered for Donaghy’s Rope and

CHRISTCHURCH STOCK EXCHANGE. SATURDAY'S QUOTATIONS. (Special to the “Herald.") CHRISTCHURCH, August 2. The following quotations were current on ’Change to-day:— Buyers Sellers £ s. d. £ s. d.

Twine, but the market was bare of sellers. The firm market for Government ! bonds and stocks was well maintained. \ Four and a-half per cent., tax-free j stock. 1938 and 1939, was very steady , at £99/12 6. The bonds were very firm at the same money. Five and aquarter per cent, inscribed stock, 1941, was offered at £96/15/-, but there were no buyers. Five and a-half per cent, bonds due 193 G changed hands at £99/5/-. For municipal and local body debentures the market is very good. Five per cent., 1935, Timaru Borough were j offered at £97/10/-, but there is no demand at that figure. Six and a-half ; per cent., Christchurch Trams, 1934, j were wanted at £lOl, but sellers would j not go below £lO3. Auckland City 51 per cent, debentures, 1940. realised £96. The issue of 1949 brought £95. ! Auckland Harbour Board, 6 per cents., j 1941, were parted with at £lO2. Business in the mining section was j small. Waihis maintained their price at 14/-. Grand Junctions were practically weaker, and changed hands at 1/10. There are a few enthusiasts anxious to give Mahakipawa a chance, and they were buying at twopence. Kawaraus were sold at fivepence. No results have yet been made known of the recent efforts to locate gold in the bed of the river. Paddy’s Point were easier, with sales at 3/-. Okaritos were very steady with sales from 6/9 to 6/11. The Australian companies’ .shares were very low, and must continue depressed until some upward movement in the price of base metals is apparent. A few of the wealthiest of the Broken Hill companies have combined, and are making an effort to extract oil from shale. The prospects are said to be good. Mount Lyells were selling freely up to 23/8, and the rights brought two shillings. Electrolytic Zinc prefs., cum div., brought 24/-. The ordinary were sought at 20/1, but fourpence more was needed. There were very few sales in any of the Broken Hill stocks; the mines of most of the companies are closed, and will remain so until better I prices prevail.

SPUR TO PROSPERITY.

VALUE OF ADVERTISING. The idea that the problem of hastening the revival of business activity is one of distribution rather than production, and that therefore advertising will play a large part in solving it, has recently been advanced by a leading banker and by a leading statistician. “Well-directed advertising can do more than any other one factor to hasten economic recovery in the United States,” says Roger W. Babson, in the Philadelphia “Bulletin.” The time to advertise, he counsels business men, “is when sales are hard —contrary to the general practise of advertising when business is good and sales are easy.” According to this statistical and investment authority, advertising offers a double opportunity: First, it enables individual business men to meet effectively the unusually severe competition of the present period, and second, it renders the country a great economic service. From a purely selfish standpoint it pays to keep up one’s advertising, as thousands of individual experiences have proven. The general economic benefits to the country as a whole, however, are just as real, but are not so generally recognised. In 1929, we spent about two billion dollars on various kinds of advertising. This seems like a huge sum. However, when we consider that this two billion dollars’ advertising was a prime fotce in moving about forty billion dollars’ worth of goods to the consumers, the proportion does not seem large. As a matter of fact, advertising has reduced prices rather than increased them.

It has done this by making possible mass production and mass distribution. Machinery brought us mass production, but only through advertising have we achieved mass distribution. Hence, instead of being a factor to increasing the cost of living, advertising has been one of the most potent factors in reducing it.

Advertising has been largely responsible for the growth of our new industries, including radio, new foods, and rayon.

It will continue to develop new industries, and also to promote new uses for the products of existing industries. All this means additional employment for those who are deprived of their jobs either by business depression or by labour-saving machinery and methods. Hence by assisting employment, advertising gives a vital impetus to business progress. Instead of increasing the costs of production and selling goods, advertising has greatly decreased such costs, declared Francis H. Sisson, vice-presi-dent of the Guaranty Trust Company, at a recent meeting of the New York Merchants’ Association. As Mr Sisson explains : The efficient producer quickly gets the bulk of the trade, expands his plant, becomes an industrial giant, and lay his very growth is enabled to reduce his costs and his prices still further. Thus advertising facilitates the mass production, which, through its almost unbelievable economies, has worked hand in hand with higher wages in bringing new comforts within the financial reach of the great body of the population. WHY PROSPERITY WILL RETURN. TEN POWERFUL ANSWERS. All “wishful observations” aside, “what is the process of business recovery?” The question is asked in “The Review of Reviews” by Merryle Stanley Rukeyser, a well-known writer on business and finance, who gives his entire discussion the optimistically positive title, "Why Prosperity Will Return.” Mr Rukeyser makes ten answers to his timely query. We here produce them slightly abbreviated: First, a first-hand survey among representative manufacturers and contractors in the building trades indicates that there has been since the recession an increase in operating efficiency, resulting in decreases in cost of production. Secondly, timidity has the operations of retail and wholesale merchants, and there has doubtless been some tendency toward reduction of inventories. However, at the beginning of the recession, such inventories were not excessive because of the new tendency toward hand-to-mouth buying, which is rendered feasible by swift freight deliveries by the efficient railroads. The wide-spread use of the instalment plan, however, did increase the inventory of commodities in the hands of consumers; and decreased buying by consumers during the last six months, as measured by published figures of retail and mail-order sales, indicates a gradual working off of such inventories, and hence a gradual accumulation of demand for ships, and shoes, and sealing-wax. Thirdly, there has been some liquidation of business debts, though in this respect business was not in an unhealthy condition at the beginning of the recession. The wide-spread period of unemployment has challenged the soundness of the increased use of the instalment plan. Thus far, indications are that the new and wider use of this form of consumer financing has demonstrated its soundness. Fourthly, there has been a worldwide decline in interest rates. This decline has gradually percolated into all phases-of the money market, and will tend to increase the availability of mortgage money for sound construction purposes. Fifthly, the demand for bonds on the part of investors has risen sharply since the turn of the year, laying the basis for financing important developmental and constructional work. Sixthly, with prospects for the tariff bill getting out of the way, an important political influence which has being retarding business will be removed. Seventhly, business is not only free from open hostility, but is receiving the active cooperation of the Administration in the joint adventure to restore prosperity. Eighthly, the general commodity price-level, after a precipitous worldwide decline, has recently given evidence of stabilisation. Ninthly, automobile production, though 38 per cent, below the figure for the corresponding months of last year, has been attuned to demand, and the hazard of over-production has been I removed. Recent reports indicate an ! improvement in consumer demands. Tenthly, seasonal factors, such as I spring house-cleaning and painting, i planting of crops, and new construcI tion, will alleviate unemployment, and thus improve the purchasing power for consumable goods.

FINANCIAL INDEPENDENCE OF CANADA.

DOMINION’S AMAZING PROGRESS. So close are the economic ties between Canada and the rest of the Empire, that recent reports of Canada’s present prosperity and coining financial Independence created nearly as much interest on the American side of the Atlantic as on the other. But it has remained for an expert of the United States Department of Commerce to predict that Canada will “at no very remote future, join Britain and the United States as one of the creditor nations of the world,” and this is backed by the announcement of the Canadian Minister of Finance that Government loans maturing last year will be paid out of the treasury, instead of through borrowing from the American market. At about the same time a Toronto dispatch appears in the New York “Evening Post,” beginning as follows: “Unprecedented mining and building activity, increased employment, a noteworthy volume of external trade, heavier car-loadings, and, most important of all, the prospect of a bumper wheat crop, all contribute to an unusually bright outlook for the second half of the year in all five of Canada’s economic areas.” Canada’s record of prosperity during the present summer has seldom been equalled in any similar period in the ■ Dominion’s history, declares J. C. Royle, in one of his financial dispatches for the Consolidated Press. To a large extent, he explains, “this is due to the production of grain, and the prospect for the remainder of the year is exceeding bright.” Indeed, this authority hears that in the wheat-growing prarie provinces “employment has reached a peak of 127.3, taking one hundred as the five-year average from 1922 to 1926.” “So far as the future is concerned, Canada is ‘sitting pretty,’.” writes Charles L. Shaw in “Forbes”: “Its most serious problem of all continues to be sparsity of population and the lack of an immigration policy that gets immigrants, but the people now resident in Canada are, by and large, enjoying a moderate but sound prosperity. The exodus from the industrial centres to the United States, which threatened alarming consequences a few years.'ago, appears to have petered out. Labour conditions are better to-day than they have been in years, the tide of industry is rising fast, and almost every sign worth noting points to a continuance of business betterment without our Northern neighbour.” Raw materials furnish the key to Canada’s future greatness, we read on, “for there arc few countries in the world with access to such a colossal treasure chest of undeveloped resources.” American capital is helping Canada develop these resources, we •are reminded. It has been estimated that 3,031,000,000 dollars of United States money is now invested in Canada as against British investments of 2,110,000,000. Nearly half a billion dollars of American money went into Canadian investments last year, and “during the last five years a single New York financial house has marketed Canadian securities in New York worth 1,200,000,000 dollars.” One American financial group, according to Mr Shaw, is planning to spend 50,000,000 dollars in what has hitherto been regarded as a barren stretch of wilderness—the so-called Flin-Flon mining area in Northern Manitoba. Much of the Dominion's recent prosperity is due to its mines. In fact, “the value of the country’s mine output was 240.000.000 dollars in 1926: it has trebled since 1907.” But Canada’s mining development makes a long story by itself, and Mr Shaw goes on to note the extent to which United States dollars are being invested in Canda’s pulp and paper industry. An unnamed Canadian business man is quoted as saying: “We will in a few years be the leading gold-producing country in the world We are already the dominant factor in the world wheat market, and supreme in the production of pulp paper and several other commodities of increasing importance to humanity. No wonder Canadian investments are popular in the United States to-day.” Further evidence of Canada’s increasing economic importance is set down as follows: “In 1914 Canadian citizens owned no government securities; today a large percentage of Dominion and Provincial government bonds are held by the people. Spectacular evidence of the present prosperity of the country is seen in the purchase by Canadians during the past year of 159,000 motor cars, valued at 150,000,000 —a fact which in itself demonstrates that Canada, besides being a ready absorber of American investment funds, is a customer of no mean consequence. A nation’s backbone of prosperity is usually to be found in its farm lands, and in this respect Canada runs true to the usual form. For three successive shears the farmers of the Canadian West have enjoyed reasonably good harvests and have received fair prices for their produce. Canada labours under the disadvantage of not having a cheap coal supply near its main industrial zone, but this is offset in part by the great possibilities of water-power, and, besides, “the oil and tar sand deposits of northern Canada are promising as a factor in the country’s industrial future.” And yet, Mr Shaw says: “Canada is not booming. Prosperity is based on something sounder and more lasting than a boom. In fact, a boom is the last thing that Canadians want.” Mr C. E. Neill, late President of the Canadian Bankers’ Association has issued a warning against overspeculation, and is reported as saying.” As yet there is no boom in Canada. The future has not been overdiscounted, but let us keep a true perspective and endeavour to direct the development of our country along sound lines, thus paving the way for permanent stability and good times.” Returning to predictions or Canada’s coming financial independence, we find the New York “Herald Tribune” noticing the announcement of the Canadian Finance Minister that “instead of refunding some 53,000.000 dollars in maturing loans through borrowing in the American market, the Dominion will pay off these obligations out of the surplus in its treasury; he intimates further that from now on. for the next five years at least, the Dominion will be in a position to take up all of its loans in the same way.” On which “The Herald Tribune” comments:— “Canada has had its financial difficulties in the years since the war, but today, from a financial standpoint as well as from an economic standpoint, it stands on the threshold of the greatest prosperity that it has known. The present step in its debt-facing, is a definite recognition of this fact, signifying as it does, that the Dominion has not only been able to balance its budget without borrowing, but to pay off, as well, a substantial volume of maturing indebtedness. To those who have watched the progress of Canada I economically in recent years it will come as little surprise that the Minister of Finance is able to report that, while taxation is being steadily reduced on the one hand, the Government is thus able to discharge its outstanding indebtedness as it matures, on the other” The conclusion that Canada has reached the capital-exporting stage is based on the recent statement of Ray Hall of the United States Department of Commerce that, Canada’s present I position “is very similar to that of the ! United States during the last years 1 prior to the World War”; it is "the

position of a so-called debtor nation which is reducing its old debts to foreign investors or is making new foreign investments of its own in an aggregate volume exceeding that of its new borrowings from abroad.” As “The Herald Tribune” remarks, “no clearer indication could be asked of the Dominion's approaching financial independence.”

The directors of Sydney Ferries, Ltd., have decided to pay an interim halfyearly dividend of 3£. per cent.. They have made every available economy, they state, but the net receipts, in spite of these measures, reflect the times; as a consquence it has been deemed wise to rectuce the dividend from 4 percent. to 3i per cent, for the halfyear. They have also decided to reduce their remuneration by 10 per cent, for the time being.

i Following upon the announcement in Melbourne by the chairman of directors of G. G. Goode, Limited, Mr E. C Dyason, of the merging of interests of the company with Carreras, Limited London, the secretary of G. G. Good. Limited, stated that a provisiona agreement has been signed in London under which Carreras, Limited, will ac quire a controlling interest in his com pany. The agreement provides for th. allotment to Carreras, Limited, of th; , 75,098 unissued ordinary shares in G G. Goode, Limited, at 10/- a share. Mr ’ E. C. Dyason will remain the chairman . of the company, and Mr N. S. Cozens ■ will retain his prerent position of general manager. Pending the return of 1 Mr Cozens, who will be accompanied by Mr Louden, a London director of Carreras, Limited, there vill be no ■ change in the policies of the merging ' interests.

N.Z. Government Debentures — 4£ p.c. Inscr., 1938 and 1939 . . . 99 10 0 — 4£ p.c. Bonds, 1938 99 10 0 99 12 6 5£ p.c. Inscr., 1941 96 2 6 96 15 0 Banks— Adelaide — 6 16 0 Aust. of Comm. . . 1 1 10 1 Comm. of Aust. (cum div.) . . 1 1 2 1 1 3 Comm, of Sidney 19 16 0 19 19 0 National ofA/asia. (£10 paid) . . . 14 3 0 14 6 0 Do (£5 paid) .... — 6 19 9 National of N.Z. . 5 13 6 5 16 0 New South Wales (cum div.) . . . 36 12 6 36 15 0 New Zealand . . . 2 15 6 2 16 0 Union of Aust. ... 10 14 0 10 15 0 Insurance— National 0 13 11 0 14 2 Queensland .... — 2 10 0 Standard 3 0 0 Loan and Agency _ Goldsbrough Mort 1 7 4 i 7 10 N.Z. Guarantee Corporation . . 0 7 9 0 8 0 Permanent Investment 10 0 0 10 5 0 United Building . 0 15 2 0 15 10 Wright, Stephenson and Co Do. (pref.) — 0 15 0 Shipping— Huddart, Parker (prel.) 1 0 2 — P. and O. Deferred Stock 2 1 0 2 10 •J Union (pref.) 1 0 3 1 1 0 Frozen Meat— Gear — 1 18 0 N.Z. Refrigerating (10s paid) . . . 0 4 8 0 5 0 North Canterbury Freezing .... — 0 2 0 Woollens — Kaiapoi (7s paid) 0 4 2 — Mosgiel 6 5 0 — Wellington (ord.) 5 0 0 5 18 0 Gas — Christchurch (cum div.) 1 5 5 i 5 8 Do. (10s pd„ cum div.) 0 12 6 Timaru 1 1 3 — Breweries— Monteith — 1 0 0 New Zealand 2 9 10 2 10 0 Staples 2 5 6 2 6 Timaru — 0 14 0 Do. (.5/- paid) . . 0 6 4 0 7 0 Tooths 1 8 8 1 8 9 Ward — 0 12 0 Miscellaneous — Allied Motors . . . 0 0 3 0 1 3 Amalgamated Wireless (con.) — 1 0 6 Aust. Distillery ... — 1 0 0 Australian Iron and Steel (pref.) . . — 0 17 0 Beath and Co. ... — 1 9 9 Beath and Co. (1/paid) 0 6 3 0 7 0 British Tobacco . . 1 17 6 1 17 Burns, Philp : . . . 1 14 6 1 15 0 Canterbury Farmers’ Co-op. (limaru, “A” and “B” (pref.; — 2 5 0 Canty Saleyards 1 12 6 2 2 6 Colonial Sugar . .3 7 5 0 37 15 Dunlop Perdriau Rubber 0 13 5 0 13 9 Eclipse Petrol (£1 paid) 0 10 0 0 15 3 Electro Zinc (ord, cum div.) 1 0 2 1 0 6 Electro Zinc (pref., cum div.) . . . 1 3 9 1 4 0 Howard Smith . . — 0 17 0 Kauri Timber . . . — 0 13 4 Mason, Struthers (£1 paid) .... — 0 11 0 Do. (10s paid) . . . — 0 5 Mount Lyell . . . 1 3 5 1 3 7 Do. (rights) 0 1 6 0 1 11 N.Z. Drug Co. . . 3 2 0 — N.Z. F a r m e r s’ Co-op. (B pref.) — 2 10 0 N.Z. Far m e r s’ Co-op. (65 p.c. stock, 1939) . . 74 0 0 83 0 0 North Canterbury Co-od. Flour . . 0 12 6 0 15 0 Taranaki Oil . . . 0 2 4 0 5 0 United Pictures . . 1 0 2 1 2 0 Victoria Nyanza Sugar (cum d.) — 1 17 6 Weeks 7 10 0 — Wbitcombe and Tombs 3 5 0 3 11 0 Wilson’s Cement . — 2 1 8 Wunderlich — 0 19 9 Mining— Alexander .... — 0 11 0 Kawarau .... 0 0 4 — Mahakipawa . . . 0 0 2 0 0 25 Okarito 0 6 10 0 7 C Stoney Creek (6d paid) — 0 0 4^ Winding Creek (1/paid) 0 0 n 0 0 5 Do. (6d paid) . . 0 0 jj 0 0 2 Cornish Point (.1/paid) 0 0 6 0 0 8 h