SHARES & MINING

Observer, Volume XXXVIII, Issue 6, 13 October 1917, Page 20

SHARES & MINING

[By Buxlionist.]

THE Banking returns for the.September quarter are decidedly satisfactory as disclosing a continuance of the warPP st + y,™ we have enjoyed tar the past three years. The principal items in the returns show increases as compared with the corresponding quarter ot last year, and to some extent the effects of the War Loan issued in August-September can be traced. Thus in-the matter of deposits there is an increase of £2,266,473 m the Government deposits, an expansion of £1,947,150 in the free deposits or current account balances, and an increase of £1,161,186 in the fixed deposits, the total deposits showing the substantial increase ot £5,d/-V 809.

The last war loan realised approximately £16,000,000 and applicants for inscribed stock and hearer bonds had to lodge 25 per cent, of the. amount applied for, while the million assigned to Death Duties had to be paid in full and the War Certificates also had to be paid in .full, so that on September 3, Avhen applications for the loan closed, the Government must have received no less than £4,000,000, the amount was probably mare. A part of this sum would naturally he transferred to London where the Government has very large amounts to pay in the way of soldiers' pay, their maintenance in the field and camp, and also the cost of munitions, so .that the increase shown in the Government deposits can be accounted for by the loan operations.

The fixed and the free deposits together for the past quarter aggregated £35,707,636, and show an increase of £3,108,366, over the figures for the last year, and an increase of £10,705,972 on the figures for the September quarter of 1914. This represents the war savings of the community but not of those who use the Post Office Savings Bank, because the figures of that institution would be included in the Government deposits. Thus it can be safely -maintained that the commercial classes are r strengthening their financial position, which will enable them to meet the post war conditions whether they be good or bad.

The bank advances aggregated 1 £27,117,991 as compared with £23,----249,136 last year—an increase of £3,868,855. This increase cannot be attributed wholly to providing accommodation for shippers of produce or other importers, because, owing to the difficulties arising from the scarcity of tonnage, there is very little doing in the export and import business. A good deal of this increase is probably due to the support accorded by the banks to those who wished to invest in the war loan. It was stated at the time that the banks weire prepared to render this assistance and the figures go a long way to prove that they have done so to some purpose.

The note circulation: can always be accepted as an index of the economic conditions within the Dominion. The average note circulation for the past quarter was £5,650,881, as compared with £4,329,953 foi* the September quarter of last year, an increase of £1,320,928, while compared with the September quarter of 1914 the increase is £3,638,312, that is to say, it is two and a-half times as much. If we-put it in another "way then we have this fact that in 1914 the community found it

sufficient to have as pocket money slightly more than £2 per head while last quarter it was necessary to have £5 6s 6d pel* head. The increased cost of commodities is mainly responsible for this, perhaps too, being prosperous, the people are spending more freely.

The South British Insurance Company has had another profitable year proving that the drastic war conditions with ruthless submarining does not hinder insurance companies from making handsome profit. The company's underwriting account shows that the net premium income after deducting the amount required for re-insuring current risks amounted to £582,870. The fire, marine and accident losses amounted to £316,670, equal to 54.33 per cent, of the premium revenue; the expenses totalled £189,250, equal t0"32.47 per cent, and the underwriting profit amounted to £76,950 equal to 13.20 per cent.

To th.c underwriting profit of £76,----950 must be added £48,084 income from interest and rents and £51,----629 brought forward from the previous year, making a total of £176,----663, and this has been or is to be distributed as follows :—Auckland leasehold sinking fund, £200; London leasehold sinking fund, £225; officers' provident and superannuation funds, £4829; reserve fund, £50,000; Investment fluctuation fund, £20,000; dividend at the rate of 4s 9d per share, £47,500; making a total of £122,754, and leaving £53,909 to be carried forward.

The assets of the company, mostly of a fluid character, comprise loans on mortgage, £198,731; fixed deposits and deposits at call, £59,----500; stocks and debentures, £69,----090; municipal and harbour board debentures, £87,691; Government stocks, £77,562; Imperial war loan, £139,860; Imperial Exchequer Bonds, £55,000; N.Z. Government debentures, £15,000; N.Z. Govt. War Bonds, £100,000; cash in. banks etc., £138,104; balances at branches, £120,761; bills receivable, £3,----367; sundry debtors for open accounts, £22,191; company's office premises, £235,686. Tbe total of the assets being £1,322,548.

With the object of reducing the uncalled liability of the shares, the directors have decided' to call up £1 per share, and *-ii" shareholders have been notified of this. To meet this call the directors recommend the payment out of reserves of a bonus dividend of £1 per share payable on December 31, 1917. The paid up capital of the Company will then be £500,000.

The excess profits tax was found unworkable in N.Z. and was repealed' during the Session, but in the United Kingdom it is a rich source of revenue. For 'the half-year ended September 30th, this tax yielded the British Treasury £87,334,000 which is said to be an increase of nearly £56,000,000 on the corresponding half of last year. Britain is now manufacturing most of her own munitions and is relying on tihe United States and Canada mainly for food stuffs.

British revenue is apparently quite equal to meeting the enormous war obligations of the country, and recently the pay of soldiers and sailors was raised, involving increased liability of over fifty millions annually. Finance has been a very strong factor with Britain a-nd it has proved a great factor for the cause of the Allies. It is now stated that the Allies are about to pool their financial resources, which, is not an improbable thing, seeing that they have pooled their other resources to such advantage. The Allied nations with the United States in the war are extremely solid financially, and„this solidity ensures victory, for money "talks" in war as in peace.

With ample financial resources the- are able to provide their forces with full equipment, plenty ot munitions, and next spring whethei Russia is in the game or merely a ■joke, the Allies will trounce the Central Powers and it will not be Germany alone that will be hammered—Bulgaria and Turkey have to get their dose of physic and they wilf get it in full measure. lne Turk will be stricken m Mesopotamia and in Palestine very soon, and with the aid of the Creek Army the Bulgars and the Turks will be soundly thrashed. The war should end next year, but demobilisation will take some time, perhaps years.

The financial resources of the Central Powers are very much restricted. Bulgaria and Turkey are without funds and without credit. Austria is very nearly in the same position, while in Germany the economic conditions are becoming serious. The Huns are now busy raising thenseventh war loan, and it is stated that the Kaiserin and all the prmces have subscribed large amounts. But how will the public support the loan P The special- pawn shops established since the war commenced for the express purpose of financing those desirous of subscribing, will, no doubt, be again in operation.

There is, however, no option in Germany, for if a man has any money at all he must subscribe, and if he possesses any security whatever, he must pawn that and take up the war. loan bonds. It has reached the stage of conscription of wealth in Germany, and the Huns will be obliged to go a great deal further in this direction. They have called the tune and must pay the piper.