SHARES AND MINING

Observer, Volume XL, Issue 24, 14 February 1920, Page 26

SHARES AND MINING

HPHE balance sheet of the New -*- Zealand Insurance Company for the year ending November 30, 1919, is quite satisfactory, and shows that the earning capacity of this great underwriting corporation is excellent and well maintained. For the year under review the premium income amounted to £1,081,288. The losses for the year totalled £644,954, equal to 59.65 per cent, of the premium income, and the expenses amounted to £29,25 per cent, of the income, leaving the underwriting profit at £120,090, or 11.10 per cent, of the underwriting profit. « • ■ To the underwriting profit of £120,090, must be added the income from interest and rent £80,168, and £63,814, the amount brought forward, making available for distribution a total of £264,072. Out of this £75,000 has been added to the reserve fund, and £25 to the Staft Provident Fund, and the shareholders receive a dividend of 14d. per share, or 11 2-3 per cent, on the paid up capital, which absorbs £87,500, leaving £76,572 to be carried forward. The premium income is less than in the previous year, and there is a decrease also in the expenses. The underwriting losses were practically the same as in 1918. Ine Trustee Branch of the company also appears to have done well, for the amount at credit of Estates and Trusts is shown at £664,420. * * • The New Zealand Insurance Company has developed, into a powerful corporation, thanks to continuous careful management. It has opened branches and agencies in various parts of the world, and isr thus m some measure helping to advertise the Dominion. As regards its stability and financial resources one has merely to glance at the balance sheet to be promptly convinced ot that. The reduction of the face value of the shares to £1 each with 10s. paid up has helped to give a wider interest in the company, and the shares command a good price, and are readily saleablo on practically all the Stock Exchanges throughout Australasia. * * * - Owing to the shortage of coal, which has become almost chronic, the gas companies in New Zealand have experienced a very hard time, and most companies have been compelled to greatly increaso their prices for gas and "residuals. The Wellington Gas Oomapny's balance sheet for 1919 shows that the gross revenue amounted to £188,893 155., as compared with £161,366 9s. in 1918, an increase of £27,527 6s. This expansion has been due mainly to the fact that the company during the. past year raised the price of gas by lOd. per thousand feet. During the past year the company's expenses totalled £145,127 3s. 9d., or £22,164 18s. lid. more than in 1918, so that practically the whole of the increase in revenue was absorbed by ■fclie increased expenditure. \ .• • ■ • The net profit for the year was £43,766 11s. 3d., and there was brought forward from the previous year £16,198 12s. 9d., making a total of £59,965 4s. - This has been allocated as follows: —Written off property and plant, £4,000; transferred to residual plant account, £2,500; to depreciation reserve, £13,000; retort settings reserve, £2,000; to war.loan suspense account, £1,000; and to bad debt reserve, £500, a total of £23,000, and the dividend for the year absorbs £15,747 2s. 3d., leaving £21,218 Is. 9d. to be carried forward.

A big drapery deal has taken place in Wellington recently, the D.tfC. having bought out George and Kersley, Ltd., the price paid being, it is believed, somewhere near £150,000. The premises of tho two firms adjoin, and the purchase will make the D.1.C., in respect to.premises, one of the largest concerns in Wellington, being second only to Kirkcaldie and Stains, Ltd. There is a corner establishment occupied by the Bristol Piano Company which if the D.I.C. could acquiro, would place that concern on a level with their rivals, Kirkcaldie and Stains, It is be|ievcd that the D.I.C. element is in some measure interested in the Bristol Piano Company, and if this be true it is not unlikely that the Piano Company will vacate its quarters for the benefit of the D.I.C. and find a home elsewhere in tho city. * * * There has been considerable activity in the shares of the Huddard Parker Company, and under this influence the shares have appreciated in value. The heavy buying that has been going on is said, to be due to the probability of the company amalgamating with two other Australian shipping interests, the Adelaide Steamship Company and the Howard Smith Company. Shipping shares have been very good buying, as many in\;estors know, but freights and fares must fall, and in the very nature of things competition must increase. * * * The Exchange crisis has taken an acute turn and the sterling exchange ok New York dropped to the unprecedented low lovel of 3 dollars 19i cents. Tho effect of this is to enhance the value of all American goods, and a situation such as at present exists cannot be allowed to continue. Remedial measures must be applied or there will be bankmptcy and distress and anarchy. * * * It is no gain to the United States to have the sterling exchange at sq low a point, for it means that the world's business with America must be very greatly curtailed." Importing countries cannot afford to pay the prices for American goods which the present exchange rate makes imperative, because the goods could not be retailed profitably. The same applies to raw materials, and the cable messages state that cotton has been resold to America, and an embargo placed on the import of American cotton. There has been something in the nature of a financial crisis in New York, and on the Stock Exchange there has been a sharp reaction with heavy losses. ■■* * • This exchange problem is in a large measure to the inflated currency in Europe. All the European countries, including Britain, during the war period, and since, have been spawning notes, or paper money, and there has thus been created a fictitious prosperity. The paper currency in relation to the metals and commodities has depreciated. All the world has had to turn to the United States for commodities, and many countries, with their huge war profits. New Zealand among them, have squandered money in luxuries, such, for instance, as mo-t->r cars. London is the world's financial clearing house, and all these hepvy purchases have had ,to be settled in London or through London. * • • Of course, remedies will be applied, but the best remedy is to let markets take their natural course. The high rate of exchange will or should curtail business with America and force buyers to look to other markets and help to develop other markets. The United States is a great creditor nation at the moment and in that capacity is in a position to buy freely in the world's markets. If imports from America are curtailed exports to 'America increased the exchange problem would soon settle itself. America has been selling and must now be forced to take a turn at buying.

The British Treasury is to begin to recall the notes, and it is stated that an immediate reduction of £20,----000,000 is contemplated. One London paper has appealed to the public to surrender gold ornaments > plate, and jewellery, in order to liquidate the debt to America and restore the exchange situation. Bankers will restrict advances "which means that they will not finance imports, and it would be an excellent thing if the Banks in Australasia helped in the movement. In the end it is America that is going to suffer most by the difficulties of the exchange.