SHARES & MINING

Observer, Volume XL, Issue 7, 18 October 1919, Page 8

SHARES & MINING

THE balance sheet of the South British Insurance Company, Ltd., for the year ended -August 31, 1919, shows that the premium income totalled £635,953; the losses amounted to £328,738, or 51.70 per cent., and the expenses to £223,089, or 35.08 per cent., leaving an underwriting profit at 13.22 per cent., or a sum of £84,126. To this must be added interest and rents, £59,422, and £57,602 brought forward from the previous year, making a total of £201,150. Out of this £50,000 has been added to the reserve fund, which now stands at £350,000; the sum of £15,000 has. been transferred to the Investment Fluctuation Fund and a similar amount is written off company's office premises; the sum of £4,989 lls. lid. is contributed to the Officers' Provident Fund, and £425 applied to the Leasehold Sinking Fund, these amounts absorbing £85,414. The dividend for the year at the rate of ss. 9d. per share absorbs. £57,500, and when these amounts are deducted the amount to be carried forward is £58,236. * * *

The South British has done exceedingly'well during the past year, and its finances show that it is in an exceptionally strong financial position. The assets show loans on mortgage £114,103; fixed deposits and deposits at call, £110,000; stocks and debentures, £69,700; Municipal and Harbour Board debentures, £75,962; Government stocks, £71,396; Imperial and Dominion War Loans, £720,971; cash in bank, £88,234; balances at branches, £152,417; and sundry debtors for open accounts, £33,288. The surplus available for distribution Was £143,548, as compared with £134,275 in 1918, and the increase has been partly returned to the shareholders by way of an increased dividend of ninepence per share.

In accordance with the announcement made by the Chairman of the Wellington Woollen Company at the annual meeting of shareholders a few weeks ago, the capital of the company is- to be increased. The scheme, which is now before the shareholders, is to allocate the unissued preference shares, numbering 5,860, on which £2 10s. will be called. With this issue the shares of the company will consist of 20,000 ordinary shares, and 20,000 preference shares. On the former £4 per share is paid-up, and on the latter £2 10s. In addition to the issue of the preference shares, it is proposed to call up £1 per share on all shares, which will mean that the ordinary shares will become fully paid up, £5, and on the preference shares £3 10s., "per ' share will be P aid - '■■■"■ * ;

The effect of this '-will be to provide the company with £54,650 additional capital, and very good and profitable use can be found for the money. The Wellington Woollen Company has done exceedingly well during the past four years. War work has kept the machinery going, at top speed, and the volume of work has been highly remunerative. The company has also done its best to keep in touch with its ordinary trade, and what is more, every effort has been made to keep down costs. Now the company can devote itself almost exclusively to civilian trade, and the business offering is more than it can cope with*.

The outlook for the woollen mills generally, is excellent. The Yorkshire factories will not be able to supply the.local market at low prices for many a long day. The woollen and worsted mills of England must

first supply the. European demand, and that is. likely to be pronounced for a year or more. In-addition to this, reserve stocks must be built up, and, above all, values of the finished product cannot be materially lower than it is now. The local market is thus, available to the mills of New Zealand, and it is to be hoped that they .will be able to meet the demand. Furthermore, the woollen mills should so improve their business, so that when competition from outside is again experienced there will be no difficulty in meeting it. Machinery should be overhauled, and the latest improved machinery installed, and every endeavour made to reduce working costs, so that the prices to the'consumers may be lowered.

A cable message from London, published in the local papers last week, stated that financiers consider there is little prospect for colonial loans unless the Dominions are prepared to pay high terms, as the increase in the rates of Treasury Bills indicate permanently dearer money. It is, of course, merely a figure of speech to say that money will be dearer permanently; it will, however, be dear for some time. The opinion of London financiers is based on the rates for Treasury Bills. The issue of Treasury Bills was suspended for some time, and was resumed on July 14 last, when the rates were 3g per cent, for two months, 3J per cent. for three months, and 4 per cent, for six months. These are high rates, for Treasury Bills are short term investments, and suit many people besides bankers.

It must be obvious to everyone that if investors can get 4 per cent, on six months' Treasury Bills they are not likely to ehaso after colonial loans with a fixed currency of 10, 15, or 20 years at 4-J per cent. The yield must be considerably greater, probably oi to 5£ per cent., and colonial politicians will pay this rate for any money they may require by floating loans at a substantial discount. In any case, public works in the near future must be expensive. It may be that the Treasuries oi the various States will endeavour to borrow locally, but it is quite another matter whether they will svcceed. The volume of Government paper securities already atioat is very large, and it is doubtful whether the- community can absorb more without suffering nausea.

If money is dearer in London it will become dearer here, and the Government will not be able to place loans here at a cheaper rate than in London, even supposing the funds were available for lending to the Government. When the Government has cleaned up the war obligations there will be no excuse for retaining the compulsory clause of the Finance Act —the clause that forces income-tax payers to subscribe to the loan, whether they have previously subscribed or not. When freedom is. restored to investors, the State will find itself face to face with a new set of conditions. The effect of dear money should be to make every State Government very careful. It is not suggested that public works expenditure should be stopped, but what should be urged is that only the most urgent and the most profitable undertakings should be put in hand.

The country will be in the throes of a general election in the course of four or fivfe weeks, and if the honoraria of members is raised to £500, or even £400, per annum, there will be a tremendous rush of candidates, and we shall hear a good deal of the "vigorous public works policy." The politician's "vigorous" means, squandering, and that is just what the people should guard against. Now is the time to look into matters to take such steps as will make for the continuance of our present prosperity. It will be futile throwing mud and casting aspersions when things go wrong, and they are likely to go wrong.if the community is careless or indifferent to its interests. The Victory Loan

for £10,000,000 is said to be a success, and we may accept the assurance of the Government that. it is a success, and apparently the compulsory clause of the Finance Act will not be put into operation. But another loan will have to be floated early next year—that is, the financial year. With the loan now raised, and the accumulated surpluses, the Government can meet extraordinary expenses for some months to come.

The Commonwealth Budget discloses a satisfactory state of affairs. The outstanding features is the public debt, which for the Commonwealth and the States totals £707,----773,525, or about £101 per head, estimating the population at 7,000,----000. The New Zealand net debt is £159 per head, and it will be increased during the current year, and every year for some time to com* 1 . The debt of Australasia is increasing relatively faster than the population, and this is why the burden is so oppressive. How to attract population is a problem that has not been solved, and yet something must be done in that direction. However, the immediate future is bright both, for New Zealand and Australia, and it is while the sunshine lasts that hay shoiild be made, and that is all that most writers urge when they deal with the prospects.