FINANCIAL NOTES
SKILFUL CONTROL.
IN more than one direction there are signs that financial conditions are being controlled in skilful fashion. As regards the Money Market, for example, it is clear that the effect of undue ease following the distribution on the first of the month of £50,000,000 in Government dividends was very largely counteracted by previous purchases by special quarters of bilis in the market, and consequently the flood of credits for a few days was less pronounced than had been anticipated. Equally, however, is it clear that anything in the nature of undue stringency is prevented as far as possible and- the net result is to keep discount rates 'exceedingly Steady at about 4/ per cent. Those who indulged in apprehensions that the Gold Standard must mean ari immediate rise in the Bank Rate are now finding their predictions premature, the Bank actually having gained a considerable amount of gold on balance, while the easy money rates in New York, tend to keep the American exchange on London fairly ' steady. Nevertheless, the Money Market is well advised to maintain discount rates in spite of the gold influx, for it is quite clear that a good deal of the steadiness of the American exchange must be attributed to the desire of America to place balances here temporarily at current rates of interest, and in view of autumn requirements, later -on,. probably the best guarantee against-a higher-Bank Rate is the maintenance of steady rates during -.the next_ few. months. j. -
* * * * PAUSE IN COLONIAL. LOANS.
Another direction in which a controlling hand is clearly apparent is in the matter of new capital flotations. - A few weeks ago I had to report a certain amount of financial indigestion in the markets for gilt-edged securities, owing to the rapidity with which huge Colonial Loans had been floated. Previous to the Whitsuntide holidays there were rumours of further large flotations coming immediately after the holiday, and that expectation, combined with the fact of underwriters being already loaded up with too much stock, occasioned a good deal of forced liquidation. It is: pretty clear, however, that in high quarters it was decided...to call ,a momentary halt in the matter even of Empire Loans, and, as a result, we have seen a steadier tendency. for gilt-edged securities during the past week, although I should doubt if some of the recent flotations of high class stocks have yet found their home with - the permanent investor.
* * - • * : *
- INDUSTRIAL. ISSUES. - But while there has been a momentary lull in the flotation of Empire Loans, some important industrial flotations have been announced during the Past -week. )potable among these is the offer by the Great Western Railway to its stockholders of £6,000,000 in 5 per cent. Redeemable Preference Stock at 95. At that price the flat yield is just over 5} per cent., or, if allowance is made for redemption, nearly 51 per cent., which is a high yield nowadays for a trustee security. Another important issue of the week, of course, is the offer of £5,000,000 in 51 per cent. First Mortgage-Debenture Stock at 971 in the Dunlop Rubber Company.
• * - * AN IMPORTANT DECISION.
Messrs. Rothschilds and also holders of the Egyptian Tribute Bonds are to be congratulated Upon the decision given during the past week in their fayoup. by the Mixed Courts at Cairo. The matter was concerned with the service of the Tribute Loans: Egypt had. claimed that under the Treaty of Lausanne .:she was- relieved from certain specific and direct obligations as defined in the bonds, the Egyptian Government . having, in fact, given a distinct undertaking to pat.annuallythe sum of about £E665,000 for a period of sixty-one years. • Under the present judgment, however, the views of the band-holders have been upheld and they are to be congratulated both upon the judgment and the skill with which their case has been conducted.
* - * * AN ENCOURAGING REPORT.
At .a moment when there is depression in so many of the Colliery and Iron and Steel companies, it is encouraging to note that the Report of Guest, Keen and Nettlefolds actually shows a somewhat higher profit for the past year than in the preceding twelve months. The company, of course, is largely a shareholding concern, while it is generally understood that it has been successful in -some of its foreign enterprises. The actual net profit for the -year was no less than £938,000 as against £875,000. DiVidends are maintained on the Ordinary of -10 Per - cent.,:free of• 'rico-me Tax, but a larger distribution of money involved owing to the slight increase in the Ordinary capital, while the balance forward is somewhat larger and the balance Sheet shows a strong position.
. * * * . * . RUBBER RESTRICTION. During the past week there has been just a -slight reaction in the price for raw rubber, the London stocks having, for the first time for a good while past, shown a slight increase. At the recent meeting. of the. Dunlop Rubber Company Sir Eric Geddes made some protest against the policy of-restricted output, but, of course, he spoke from the standpoint of a company in the .position of a big consumer. It- may be pointed out that within the next two months a further 10 per cent. of standard output is to be permitted -under the present scheme of restriction, while, if the occasion called for it, any modifications which might seem to be desirable iri the interests of the industry as a whole could stilt be made by the Stevenson Rubber Committee. In fact, apart from the American consumer who seems to have -been 'caught by the rise in rubber, it may be doubted whether, on .balance, the scheme of restriction has- hot proved advantageous to the interests of the industry as a whole, and that -without inflicting any hardship upon the consumer. The Atherican speculator, however,- is not a very good loser, and it is not
'surprising, therefore, that there should have been some loud protests against the programme of restriction.
* * * * • Tan FORESTAL LAND MEKTING.
One of the favourable features of many of our • company .meetings to-day is the tendency for the Chairman of our -leading industrial concerns to be at some pains to take share- -holders into their confidence with regard to the details of the undertaking. In the case of banks conducting operations -abroad, for example, we get admirable statements as to the economic conditions in the countries where the bank? opera- tions are carried on, and the same is true with regard to-foreign industrial undertakings. From the very abbreviated report • of the Forestal Land meeting, which appears on -another :page, it is not possible, however, to do justice to the admirable exposition which was given at the annual meeting by the Chairman, Baron Emile d'Erlanger, of the whole, subject of the manufacture of quebracho Varna and elsewhere. 'In the course of his remarks Baron ile, speaking' of the :quebracho forests as a wasting asset, suggested the advis- ability of the: Argentine Government opening up...further forests. The industry was, he said, of national and of vital Importance to a large section of the population.
• - A. ViT. K.
Previous page
