BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

December 1 1923
BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

December 1 1923

ANSWERS TO FINANCIAL QUERIES

Question—Can you give me any information as to the Dominion Combing Mills? Do you think this woyld be a good investment?—Subscriber, Selkirk, Man.

Answer :— The Dominion Combing Mills, which are located at Trenton, Ont. have been running about seven months or so. Officers of the Dominion Development Co., Toronto, who financed the proposition, state that the buildings cost $300,000 and the machinery and equipment $600,000.; It is stated that orders are booked ahead for a year. The wool now used is being imported from Australia and New Zealand. The proposal is to use all Canadian wool when it is available. The company’s product is wool tops, and the demand for this product is coming from Canada and the United States. It is rather difficult to get a line on profits as yet. Stock in this company at the present stage of development can only be considered as a speculation. Before venturing into industrial stocks of'any kind you should first of all have a substantial amount of government, provincial, or municipal bonds of a large city.

Question—I have been interested in stock quotations of the Brooks Steam Motors. Can you tell me if an investment in this company would be safe?—C. E. B., Vankleek Hill, Ont.

Answer—Steam cars have been on the market for some years, and owners claim to get good satisfaction from them. The Brooks car, mechanically, seems to be a good car. The company claims to have a number of orders for spring delivery. Whether the Brooks car can be manufactured at a price to create public demand, and show a reasonable profit, is a question to which there is no satisfactory answer at the present stage. It must be taken into consideration that the company is entering a very highly developed and keenly competitive industrial field, which as the result of consolidations and mergers, is now commanded by great corporations to a very large degree. These corporations have national selling machines, backed by big capital. Under the circumstances the project of a new company entering the field with this type of car would appear at this stage to be a speculative one.

Question—I am the owner of some five year bonds of the Great West Permanent Loan Co. of Winnipeg. Do you consider this a safe investment? I 7vould be pleased to have your advice.— N.G. P., Cannington, Ont.

Answer—As a result of an inspection of the assets of the Great West Permanent Loan Co. by Superintendent Finlayson of the Department of Insurance and Loan Companies, Ottawa, the assets of this company have been materially marked down. This has, of course, affected the position of the shareholders of the company materially. However, it is assumed that the condition of the debenture holders has not been impaired. The superintendent is watching thé situation closely, and it may be taken for granted that some action will be taken if the condition of the debenture holders is affected. The company has naturally suffered

during the depression in Western Canada. Its future is largely involved in the success of the Marlborough Hotel, in which it has an investment totaling about $1,750,000. If this property can be made a success and can be financed as an independent company, there would seem to be no reason why the company’s future should not be successfully worked out in the interest of the shareholders as well as in the interests of the holders of debentures, and depositors. The directors of the Great West Permanent Loan Co., we may point out, dispute the writing down of assets by Superintendent Finlayson, and declare that the company, having weathered conditions so far, is in a good position to work out its own problems.

Question—I have a friend ivho has $1,000 in the Home Bank which has recently gone bankrupt. She is a woman of sixty or more and it is her whole capital. It comprises the savings of years. She understands the bank will likely be able to pay twenty-five per cent, of her deposits. Would she require to take any special steps to get this, or will they pay it automatically? Also can anything be done to secure for her the full amount?—Mrs. W. II., Mather, Man.

Answer—There is nothing your friend can do but wait until she is notified. When the time comes when those in charge of the bank’s affairs are ready to pay something on the deposits they will notify the depositors. Nothing can be done to secure the full amount of the deposit.

Question—Will you please tell me what you think of the Purity Dairy Products Co.? This is a St.John, N.B., concern making Purity Ice Cream. They also do quite a milk business. I have been holding shares in this concern since last December, and they have paid two dividends on both preferred and common stock. It looks rather good to me, but perhaps you can advise if it is considered a good, safe investment. —J.V. D., St. John, N. B.

Answer—The Purity Dairy Products Co. of St. John, N.B., appears to have been successful in its field of operation, and is in a good financial position. A report issued January, 1923, showed assets as at August, 1922, of $134,405, of which $92,472 was in buildings, real estate, and equipment; $29,685 in materials, and the accounts receivable, and $10,000 in rights and good will. Current liabilities were put at $42,000, capital stock at $38,700, with a surplus of $53,679. The company appears to be well managed. Its success will largely depend on continued good management. The company has a very good market for its products.

Question—I wish to invest $1,000 in the Province of Ontario Loan. I have $900 in the Bank of Nova Scotia at Cochrane, Ontario, and would like to know what exchange there would be on that amount. Should I stale the amount or just add “and exchange” on cheque? What amount in stamps would be necessary?—Miss C. S., PortBurwell, Ont.

Answer—We don’t know what the exchange would amount to on your $900 in the Bank of NoVa Scotia at Cochrane, but it would be quite satisfactory for you to make out your cheque for $900, “and exchange,” providing you have sufficient money to cover this. The exchange would probably amount to about $1.25 or thereabouts. Whoever you buy your Province of Ontario bonds from will be able to advise you regarding this. The amount of stamps required is four cents on $100, or thirty-six cents on $900.

Question—Can you. give me any information regarding the British Woollens Ltd.?

I have been asked to buy shares in this compariy, but would like to know something about it before purchasing. Any information you can give would be greatly appreciated.—Mrs.L. K., London, Ontario.

Answer—British Woollens Ltd. was incorporated last June and will confine its energies mainly to the weaving or turning of yarn into cloth. The company informs us that the location of the factory will be Toronto and that a site is being sought at the present time. The company is entering a hazardous field, as trade in woollens has been at a low ebb for some time. Some of the well established companies manufacturing this line of goods have experienced hard times and while there is some indication that the corner is being turned, the general situation does not appear very hopeful for a new concern. The older companies have been unable to meet

foreign competition in their products, owing to the absence of sufficient tariff protection. Recent reductions in the preferential tariff have had the effect of reducing the protection the woollen companies formerly enjoyed. Stock in this company can only be considered as speculative. It is certainly not an investment for a woman to consider. We would advise you to confine your investments to government, provincial and municipal bonds.

Question—Will you kindly give me information concerning the Greater Canada Security Corporation? Is it. reliable? Has the stock any value at. the present, time? Is it worth while holding on to it, and do you know of any company handling the stock? —S.S.E., Hanover, Ont.

Answer—The Greater Canada Security Corporation was organized for the purpose of buying up mortgages and particularly assisting second mortgages on approved real estate. The authorized capital is divided into 50,000 eight per cent, cumulative preference shares of $100 each, and 75,000 ordinary shares at par value. The expected profits of this company are to be made by the discount on the mortgage. It is a business that is attended with many risks, especially in a period of declining property values. We can only class the stock as speculative. According to the company’s annual statement for 1922, total assets of the company were $214,419.66 of which $156,626.71 are in mortgages and real estate. Stock subscribed is $181,370, of which $134,570 is paid up. Net profits for the year after payment of expenses and providing investment resource funds, were $12,847.44. There is no market for this stock at present. The stock of this company is being handled by the Investors’ Service Corporation of Canada, Toronto.

Question—I have been thinking of investing some money in Southern Canada Power. The returns seem better than Government bonds„ Do you consider this a good investment? ■—Subscriber, Victoria, B.C.

Answer—Southern Canada Power started to pay dividends on the preferred stock in April, 1919, and has continued regularly since that date. No dividends have been paid on the common stock. The prospects are that the company will be able to continue the dividend of six per cent, on the preferred stock, and in a short time reach the position where a dividend on the common can be paid as well. Southern Canada Power earnings in 1922 available for preferred stock dividends were $170,000, and based on actual results for the first seven months for their present fiscal year, 1923 earnings are estimated at $240,000. The amount required for the full dividend on the amount of preferred stock now outstanding is $150,000 per annum. The company is enlarging its capacity and estimates its earnings for the next four years available for dividends on the stock at $339,000 for 1924, $422,000 for 1925, $629,000 for 1926, and $724,000 for 1927. The earning record of the company has been very satisfactory and the net profits are growing with the passing months. Southern Canada power is an attractive investment.