COMMERCIAL.

Star (Christchurch), Issue 19070, 15 May 1930, Page 3

COMMERCIAL.

SWEDISH FIRM AND WORLD FINANCE. HUGE OPERATIONS IN GOVERNMENT LOANS. The annual report of the Kreuger and Toll, which shows a net increase in consolidated assets of more than ICO per cent in 1929, calls attention once more to the vastly increased power and scope of Kreuger and Toll. Of great interest, too, is the data con tained in the company’s report for 1929, showing the development of the newest phase of its remarkable and revolutionary business operations—the purchase of foreign Government bonds on a scale and by a method not attempted hitherto by a private organisation Kreuger and Toll activities, which are world-wide, are popularly supposed to be concentrated principally in the manufacture of matches and the sale of this product, through monopolies, in various countries. While industrial operations of this nature form the basis, the nineteen-year-old Kreuger and Toll organisation has, principally in the last two years, branched out into an infinitely more widespread and more influential force: the creditor to the extent of hundreds of millions of foreign Governments; owner of 30 per cent of the Swedish pulp industry and of 5 per cent of the total land in Sweden; operating match factories in thirty-six world countries and selling matches, in many cases under monopoly agreements, in virtually every country. LOAN POLICY DESCRIBED. By far the most important of the company’s financial operations, however, is the year-old development of creating a market for Government fixed interest obligations, and in this connection it is necessary to touch on the conditions which led to the adup tion and putting into effect of the new policy. Conditions for international financing in 1928 and 1929 were entirely abnormal. The period was characterised bv a serious contraction of the market

for long-term foreign loans, caused to a great extent by factors of a psychological and technical nature, rather than by the fundamental economic condition. In the United States, and in other countries, buyers of securities turned from fixed interest, Government guranteed investments to common and convertible stocks which promised increased returns through what seemed' to be a continuous increase in market value. Such a condition made it more difficult for foreign Governments to borrow in New York and other leading money centres.

In 1929 the United States Department of Commerce reports the total amount of of foreign bond issues sold in that country was 715,981,000 dollars, compared with 1,157,861,000 dollars in 1928 and 1,592,595.000 dollars in 1927. In Great Britain, foreign Governments financed to the extent of but £26.200.000 in 1929, compared with £42,300,000 in 1928 and £48,500,000 in 1927. Foreign lending of other creditor nations Switzerland and Holland principally —showed a corresponding contraction over the same period. In addition to these circumstances, the French fiscal legislation and Stock Exchange regulations raised obstacles to long-term borrowing in France, with the result that the amount of foreign bonds sold in France during 1929 was negligible. OPPORTUNITY IS SEIZED. The world condition of an investing public non-receptive to bonds provided the opportunity for the Kreuger and Toll experiment in international finance. Briefly described, this system is to contract for huge blocks of Government bonds at a price generally far more favourable than could lie obtain ed through the old channels of finance. Inseparable from such purchase agreement would be an undertaking on the part of the Government concerned to grant Kreuger and Toll match interests a monopoly of the match business in the country affected. To finance the purchase of the bonds, ! Kreuger and Toll holding and financial interests issue debentures secured | by the bonds. Transactions already negotiated of this nature include a £6.000.000 loan to K mania, a £15,000.000 purchase from France, and a £3O 000.000 credit to Germany. The latter involves part payment this June and the baljnnee a year from June. With the exception of the loan to France, these ! c redits were made at n time when the [Governments concerned found it impossible to finance advantageously else-

where. The fact that such large sums have been provided, when considered with Kreuger and Toll investments in other countries, gives room for thought as to the international influence and position of the Kreuger organisation. The Kreuger and Toll annual report, in discussing the international financial situation, blames the depression in commodity prices, existing at the present time—as relating more particularly to cotton, wheat and other products having an international market—to the “insufficiency of lending abroad by the United States.” Kreuger and Toll operations, as at present constituted, are divided into three important classifications: First, the holding and management company, second, the Government loan and monopoly phase; and, third, the trading corporation. The holding company owns for permanent investment large interests in basic industries, matches, iron ore, pulp, timber, banks, real estate and others, the interests being of sufficient size to give the company either control or a voice in the management. The Government bond and monopoly phase has been explained. The trading operations consist of temporary investments for policy or profit in securities or real estate, participation in syndicates, advances on options, and the undertaking of all .kinds of trading business and arbitrage. Kreuger and Toll securities enjoy one of the widest markets of any company, being listed in New York, London, Paris, Berlin, Stockholm, Amsterdam, Vienna, and a dozen or more other of the world’s leading Stock Exchanges. COMPANY REPORTS. W-RIGHT, STEPHENSON, AND CO. In their twenty-fourth annual report and balance-sheet, to be presented to a general meeting of shareholders at Weiljnsaon May I*o, the directors of Messrs \\ right, Stephenson and Co.. Ltd., state that the profit and loss account for the twelve months ended March 31. 1930, including £37,024 3s 3d brought forward 1 V sl r I r-oT a ‘ st 3'ear, showed a credit balance of £<3,058 15s lid. From this had been deducted the interim dividend for the six months end'd September 30. 1929. nanl on October 5, of £1 7,346 5s 2d, leava balance of £65,712 10h !*d available for distribution. Out of this sum the ; recommended that, after makme fixed payment on the preference snares, a dividend of 3> per cent for the nail-year he paid on the ordinary shares, which, with the per cent paid on October 5, made the dividend 7 per cent

for the year, leaving £3S,36ti 5s 7d to be carried forward. Messrs J. A. Johnstone and R. S. Abraham were the retiring- directors, and being eligible, offered themselves for re-election.

GERMAN ZINC OUTPUT THREATENED BY SLUMP (United Press Assn.—By Telegraph—Copyright.) BERLIN'. May 14. Over-production and the slump of world prices threaten to exterminate the German zinc industry, the leaders of which are demanding high tariffs against Mexico, Poland, Italy and Spain.