SHARES & MINING

Observer, Volume XL, Issue 11, 15 November 1919, Page 23

SHARES & MINING

LONDON and Manchester, according to press cable messages, are enjoying booms. In London there is a boom in company shares, and £95,000,000 is said to have been subscribed in two months. The it is reported, have acquired the investment habit, as the result of taking up war-saving certificates, thus providing company brokers and others a new source of capital. In Manchester there is a boom in cotton companies, and many small fortunes have been made. It is stretching the matter a great deal to speak of this boom as investment; it is. a gambling craze pure and simple, and is probably one of the effects of the war.

The nation has been pledging its credit to carry on the war, and that credit has been spread among numerous individuals and companies, and as the cable message says, there are "tons of money." The word money does not mean actual currency, but credit, and those with the abounding credit are dissipating it. This is not the first boom that London has experienced, nor will it be the last, nor is it the first time that the wagenearners have been attracted into the share market. Not so very long ago there was a rubber boom, and even the nurse girls were reported to be applying for shares.

A boom is not a thing to be encouraged, because it has a nasty way of bursting, and, like a bursting bomb, it, figuratively speaking, kills a good many. This boom will burst and leave a lot of the gamblers bemoaning their fate. Unquestionably, too, the new companies will be overcapitalised, and it is certain also that many wild-cat ventures will be sold to the confiding public. The study of a crowd during a boom must be very interesting, because the crowd is composed mostly of fools anxious to part with the little money they possess. However, the gamble was bound to come, and the sooner it is. got over the sooner will the people of Britain settle down to the inevitable hard work which is the only cure for the troubles of to-day.

While it is reported that "tons of money" are available in Britain, news comes from • New York that the money markets of America are short of funds, and that money is tight in the leading centres. This is a lightning change for U.S.A., which only a little ago was claiming to be the world's financial centre. America's financial trouble is probably due to the reckoning up after the war. Ever since August, 1914, America lived on the war. First it was in providing foodstuffs and munitions for the belligerents in Europe, then in providing "Uncle Sam" with his war requirements. Inflation has been the order of the day in the United States. • • • Now numerous existing contracts have been cancelled, huge plants are idle, and to cap everything there is the great strike of coal miners paralysing the country. Even the trains axe oeasing to run, which is almost worse than the experience of New Zealand. The position of the United States is a sorry spectacle for the world, because the world is very much dependent upon America just now for urgently required food supplies. The effect of the strikes in America and the sudden scarcity of credit will tend to further enhanco prices and increase the cost of living. It may have one good effect on New

Zealand, and that is by causing som< steamers to be diverted to these waters. We can do with several refrigerated steamers, and Australia can fill a good many vessels witl wheat. . . . * * « Labour unrest has been experienced in almost ail countries, and, like the influenza epidemic, it will run its course. The winter in Europe and North America will be very trying, and that perhaps may help to • sober up the people. The Russian situation must be cleared up before there can be. any real relief in Europe. Russia, with its vast re--1 sources, is practically closed to the world at a time when the world can ill-afford to be deprived of what Russia can produce. In the New Year it is very certain that the unrest of labour will die out. It has nearly done so in Britain, although the moulders are now on strike. * * * It is reported that 250 members of the House of Commons have signed a petition requesting the Government to consider the advisableness of issuing premium bonds. In the present disposition of the people a speculation like this would meet with great success, and would be infinitely better for the wage-earners than gambling in shares, which must inevitably result in great loss. There can be no loss of the capital invested in premium, bonds, and the attraction lies in the fact that prizes of varying amounts are given at the quarterly or half-yearly drawings. These premium bonds would attract the wage-earners, and would provide the Imperial Government with all the money it requires. The labour party is opposed to the issue of premium bonds on moral grounds, and this is quite refreshing. The labour leaders are not averse to the workers engaging in a speculative strike, indeed, they are quite ready to justify that on moral grounds, but an investment of capital where the returns of the capital, plus a small rate of interest, is assured, is immoral, simply because the holders of the premium bonds have a chance of winning a substantial money prize. However, it seems likely that premium bonds will be tried in Britain, and if they are issued there they will be issued in other countries, including Australasia. * * ■» ■ ■ Sharland and Co., Ltd., have done exceedingly well recently ? and the growth of business necessitates an increase in capital, which can be very profitably used in an expanding business. The company will, in consequence, shortly issue 25,0(K) shares of £1 each, which will be offered to the shareholders in the proportion of one new share for every three now held. It is understood that the shares will be issued at par, and that the calls will be spread. It speaks well for the standing of the company in the estimation of investors,' that already there are buyers for the rights to the new issue at a premium of 45., that is to say, that any shareholder of the company can now get 4s. for his privilege of subscribing for each of the total number of new shares that he may have the right to take up. * * • In a statement made by the Prime Minister in the House it came out that the British Government was arranging contracts with River Plate and Australian exporters, and until these contracts were nearer completion no consideration would bo given to entering into contracts with New Zealand. The secondary position in which New Zealand appears to have been thus placed naturally gave rise to some comment, and Sir Joseph Ward professed to see a serious position arise for New Zealand meat-growers. There is not much risk of this, for the simple reason that there will be for some time to come a strong demand from Europe for meat.

What we fail to recognise in New Zealand is that the centre of grayity for the meat trade has shifted from Australasia to the Latin-American Republics. Argentine, Brazil, Colombia, Venezula, and the other Republic will command the meat trade of Europe because they can supply the particular class of meat that Europe requires, and that is beef. Wo can supply plenty of mutton, and our mutton and lamb will be required to furnish the variety in diet for the millions in Britain. It is well to remember that Europe wants beef, and prefers beef to mutton and lamb. During the war preference in shipment was given to beef, and that accounted to some extent for the accumulation of mutton in store. ■