SHARES & MINING

Observer, Volume XL, Issue 14, 6 December 1919, Page 23

SHARES & MINING

THE announcement that the retail price of tea lias been advanced, and that prices are likely to go higher, lias caused a lot of people to think that profiteering has been going on with respect to this commodity. The advance in the price of tea can be easily explained, for it is due primarily, though not entirely, to the movements in Eastern Exchange. The latest quotation for silver gives the price at /osd. or 6s. 3£d- pei" ounce standard, which would make the value of the rupee 2s. or perhaps more. Prior to the war, bar silver was quoted at 24d. to 25d. per ounce, and the fixed value of the rupee Is 4d. So that prior to the war the pound sterling exchanged for 16 rupees, while to-day it will exchange for barely 10 rupees.

Now let us suppose that prior to the war an Auckland merchant was able to buy a good grade of tea at one rupee per lb. in Ceylon, so that a 101b box would have cost him 1U rupees. As already stated the rupee then was worth Is 4d, w> that the 101b of tea cost the Auckland merchant 13s 4d. To-day the rupee is worth 2s, so that the same grade or tea would to-day cost the Auckland Merchant 20s, as against 13s 4d the pre-war price. In addition to this there is to be taken into account the fact that tea is dearer in Ceylon than was the case prior to the war, and freight, insurance, and handling charges have all increased. lne wonder is not that tea is being raised in price now, but that it has not been advanced before.

It is quite «n unfair thing U> say that there is profiteering in tea, tor if we can compare the appreciation that has taken place in fc.Z. produced commodities with Indian commodities we would see that Indian products have made very small advances. The position of silver is a very interesting one ,and afreets a <rood many countries. The use ot t»>o precious metals in - artistic industry in India, and the East generally, is hound up with the religious and marital customs of the people and it would be a very difficult matter to overthrow these customs by mere decrees. The demand for purposes of domestic and religious manufacture varies from year to year on accoimt of the character of the seasons the extent of the great pilgrim fairs, and the astrological propitiousness of the times for marriage.

There is also a great absorption of rupees or bar silver across the vast land frontiers of India. The rupee penetrates for into Western China, where it is in request as the only Eastern coin of silver-using countries which has not undergone depreciation or debasement over a long: series of years. These are some of the normal causes of the Indian absorption of silver, but at the present time there is an abnormal demand due to special 'circumstances. During the war there was an enormous demand for Indian produce,and India has enioyed extreme war prosperity. The people of India have "money to burn," but unfortunately they are people who hoard it in gold and silver and now that many thousands more than usual are able to hoard, one can understand why silver has appreciated so enormously in >value.

It would be wrong to attribute the rise in silver wholly to the hoarding characteristics of Eastern peoples, and some of the blame is to be attributed to gambling in the bullion

market. Exchange and bullion brokers must be having a splendid, but never-the-less, a very anxious time. The chief danger to non-silver using countries is that token coin in the white metal will be melted down since the price of bar silver is now so temptingly high. On the other hand' the very high price of silver .should stimulate production and many silver mines that were previously unprofitable should now be worth developing. The search for new silver mines should also be stimulated by the present conditions.

Of course, the various Governments are endeavouring to find ways and means of meeting the present situation. Various suggestions have been offered particularly in India, and no doubt presently a workable scheme will be evolved. The Indian Merchants' Chamber have suggested the introduction of token coin, in order to prevent loss on coinage when silvor is high, but the debasement of the rupee is strongly objected to. There is the practical consideration that the existing rupees would go out of circulation, and an actite famine of rupees would ensue. The question of inconvertibility is also denounced. Under Indian conditions the disadvantages of definite and continuoxis inconvertibility would be very great. Temporary inconvertibility it is claimed would tend to stabilise the rupee at a moderate rate,, and this course will probably be adopted.

The Oamaru Woollen Factory Company Ltd., which is now practically the "property of Messrs. Macky, Lo*an, Caldwoll, Ltd., has had a prosperous year, and this has been the experience of all our Woollen companies. The accounts for the year ended October 81 last, have been issued and these show that the nett profits for the year, after writing off £3 576 17s Bd, expended in removal and making provision for income-tax amounted to £5,718 19b Id, and. th«e was brought forward from the previous year £822 10s 5d making a total of £6541 9s 6d. out of which the directors have declared a dividend of 8 per cenfc. and a bonus of 2-per cent, for the yeTir, absorbing £3198 16s lOd. leaving £3342 12s 8d to be carried'forward. The company could have easily paid another 8 or even 10 per cent, without much risk.

The Taringamutu Totara Timber Company has declared a dividend ot 2s per share Avhich the shareholders will certainly welcome, becaiiso this declaration will have a good ettect on the market value of the shares. There was a time when Taringamutu shares were at a hundred por cent, premium, but latterly it has been difficult to get par for them. Recently there has been some inquiry for the shares and prices haye improved with more business doing. * * * Messrs. J. Wiseman and Sons, Limited are capitalising their undivided profits, and the shareholders are to be asked to authorise the issue of 15,000 new ordinary shares, which wiould .increajse the capital to £50,000. The preference shares are to receive a bonus of 13s 4d, and the ordinary shares 16s 8d each, and the new shares are to be issued in the proportion of 4 to each block of six preference shares, and 5 to each block of six ordinary shares. The bonus is of course to be applied in payment of the new shares. It is anticipated that when the issue of the new shares is completed the dividend on the preference shares would be 7 per cent, and on the ordinary shares 6 per cent, which would he equal to 11 per cent on the present paid-up capital. « • * The balance sheet of the New Zealand Farmers' Co-operative Distributing Company, Ltd., a Wellington concern, for the year ended September 30 last, shows that the total net profit', after making provision for bad debts, writing down premises, etc., and allocating bonuses to share-

holders and staff amounted to £11,218 15s Bd, and there was brought forward from the previous year £2636 Os. 9d, making available £13,854 16s sd. The dividend on capital is 7$ per cent, the sum of £2629 10s is transferred to the reserve fund, and after providing for taxation, the balance is to be carried forward. The sum of £2370 premium on shares is to be transferred to the "Reserve Account making that account £15,000. The total volume of business done during the year amounted to £1,048,797. The subscribed capital of the company has during the financial year increased by £27,509 to which has been added £&'»'2l representing shares allotted since September 30, making a .total incioas of £31,131. The nominal capita) *of the 'i&' to be doubled by the issue of 250,000 ordinary shares of £1 each at a premiv.iri of 2s 6d per share for 50,000 shares until the end of the year. Th > company has £3000 invested in "W-.tr Loan inscribed stock.