BUSINESS & INVESTMENTS

ANSWER TO FINANCIAL QUERIES

February 1 1926
BUSINESS & INVESTMENTS

ANSWER TO FINANCIAL QUERIES

February 1 1926

ANSWER TO FINANCIAL QUERIES

Question-—Is stock in the Mortgage Discount and Finance Company a safe investment for a woman? I only have a small amount of savings.—Miss J., St. Catharines, Ont.

Answer—The Mortgage Discount and Finance Company is well managed and continues to make progress. According to the president, Sir John Willison, the company’s subscribed funds are fully invested in profit-earning mortgage securities, but owing to the fact that it is a second mortgage company and subject to conditions in the real estate market, we are disposed to regard the company’s securities as speculative. They are by no means a conservative investment for a woman of small means.

Question—I have bought C.P.R. 4J^ per cent, bonds. The manager of the bank, got them for me. I presume they were bought through a broker. I was charged $5.901,73. Do you think this is a correct charge? Do you consider this a safe investment for a woman who has no other money? —Mrs. Sixty-Five, Alberta.

Answer—C.P.R. 4^*j per cent, bonds are a conservative type of investment. You do not state the amount of money which you had for investment, and it is, therefore, impossible to figure out the exact amount which the banker, who acted for you in the purchase, charged as commission. He would, of course, have to secure these through a broker, and then his broker would have his commission deducted from the investment. You can be fully assured as to the security you have in your C.P.R. bonds, although we do not know that they are definitely guaranteed by the Dominion of Canada.

Question—Some months ago I took a chattel mortgage on a complete cigarettemaking plant; this has since been sold by the sheriff and I have it on my hands. Can you give me the names of any persons likely to be interested in the purchase of this outfit?—A ten-year Subscriber, Vancouver, B.C.

Answer—-We suggest that you communicate with the secretary of the Board of Trade at Vancouver.

Question—Can you give me any information regarding Southern Okanagan Collieries?—Miss M. P.¡Vancouver, British Columbia.

Answer—We are informed by the Deputy Minister of Mines for the Province of British Columbia that no active development is being carried on by this company at the present time.

Question—Kindly advise regarding Pan Extension Gold Mines. What is the value of the shares and how could I dispose of them?—Miss A. C., Toronto.

Answer—As far as we are aware Pan Extension Gold Mines has not been doing anything for some time and the shares are valueless. A geologist and engineer who operated in this district gives the opinion that the company never had a chance.

Question-—I would be glad if you would give me your opinion of the following bonds: Dominion Iron and Steel, Canada Steamships, Cosgroves’ Export Brewery, Wayagamack Pulp and Paper. I have some bonds and certificates in these. Are they financially good? I have about S1,000 to invest now and would like your suggestion as to some real safe investment.—Mrs. J.R.M., Alberta.

Answer—We do not happen to have any specific information regarding the financial standing of Cosgroves’ Export Brewery Company, but have no reason to doubt the security behind the bonds of this enterprise or of the three other enterprises which you mention.

It is difficult to advise regarding the investment of $1,000 unless we know more definitely regarding your circumstances. You inform us that you have bonds in the four companies, Dominion Iron and Steel, Canada Steamships, Cosgroves’ Export Brewery Company, and Wayagamack Pulp and Paper. This represents a well-diversified list. On the other hand you do not state the amount of your holdings and we have no knowledge of your further investments. If

this list of four concerns represents the extent of your security holdings, we would suggest that you adhere to more conservative types of investments for the $1,000 you now have on hand. These funds should be invested in government or municipal securities. The interest return may not work out quite so attractively, but, on the other hand, you will be subject to no worry. Our invariable counsel to a woman is that she build up a firm foundation of government or municipal bonds, before embarking upon the industrial and public utility securities.

Question — Kindly give me your opinion regarding Bell Telephone and Ottawa Traction. I have $5,000 to invest and would like to get the largest returns consistent with security.-—A.A.W., Ottawa.

Answer—From the investors’ standpoint the most interesting thing in connection with the Bell Telephone Company of Canada is the fact that the dividend has been paid regularly on an eight per cent, basis since 1886.

As well as having this investment merit, the stock is attractive, due to the fact that it has been the policy of the company to issue, from time to time, to its shareholders, at prices well below market levels, further amounts of capital stock. When these offerings are made, the shareholder has the right to subscribe for the stock or to sell his rights to the new shares. Since its inception the company have made thirteen such distributions. The distributions made in 1902, 1904, 1905 and 1906 allowed the stockholder to purchase new stock at 125. The stock issued since then has been sold at par. Regardless of the speculative value in the stock, present prices give a good yield to the investor—hence the attractiveness of this security.

Ottawa Traction Company is the holding company for Ottawa’s street railway enterprise. The company’s securities are well regarded.

We would suggest a diversity of interest for an investment of $5,000. First of all we believe that a small investor should build up a financial foundation with giltedged government and municipal bonds. When he has done this he may more safely embark upon the public utility and industrial corporations. In your instance you would do well to buy preferred stock in the well-established companies. At the start of one’s investment it is much better to sacrifice a little in yield for the fullest possible security.

Question—I have been persuaded to invest my all in the following: $500, Drummond Apartment bonds; $500, Howard Smith Paper Mills bonds; $500, Northern Ontario Builaing bonds; $1,000, Argentine Government bonds; $1,900, Matthews Steamship bonds; $1,000, McKinnon Industries seven per cent, cumulative preferred stock; $1,000, National Grocers, seven per cent, preferred stock. I should like your opinion about these, as I am absolutely dependent upon them.— -—Anxious One, Toronto.

Answer—You appear to have a well diversified list of bonds in Canadian enterprises. None of these should give you any immediate worry.

It is our invariable advice, however, for a person of small means, to suggest that strict adherence to more conservative types of bonds is advisable. In other words, we consider that a person of small means should strictly adhere to government and municipal bonds, at least until he has built up a strong financial foundation. After that, it is all very well to take on industrial bonds or public utility bonds for the higher yields that they return. You will realize, of course, that those bonds which you have which return the highest yield are of a more speculative nature, because the enterprises which they back are subject to fluctuations of trade.

Question—Would the bonds of the Northern Canada Power, Ltd., be a sound investment?— H.C., Saskatchewan.

Answer—The recent $6,000.000 issue Northern Canada Power, Ltd., first mortgage six per cent. 20-year sinking fund bonds, series A, will be secured by a first mortgage on the company’s fixed assets and properties of the company, and on all bonds and debentures and shares now owned or hereafter acquired by it, and will he a floating charge on all other assets of the company as provided in the trust deed securing the bonds.

The company took advantage of the

money market to redeem an issue of six and a half per cent, first mortgage bonds. The balance of the proceeds of this issue will be used to retire floating debts and to finance the construction of extensions necessary to take care of the additional business contracted for, which includes construction of two transmission lines, one to the Gowganda area and the other to the Rouyn gold fields in the Province of Quebec.

Northern Canada Power, Ltd., has been in successful operation since 1912 and out of earnings has re-invested in additions and extensions to properties and plants over $2,500,000.

It has been estimated by engineers closely associated with this company since its inception, that from the company’s present plants, when sold to their capacity, the earnings available for bond interest and depreciation should amount -to over $1,000,000 per annum. The annual interest charge on the $6,000,000 of bonds now being issued is $360,000.

These bonds are well sponsored.

Question—Is Canadian Canners preferred stock a sound investment for savings? —W.V., Manitoba.

Answer—Although Canadian Canners preferred stock has behind it the properties of a big Canadian industrial enterprise, we do not see how the stock at the present juncture can be considered as other than speculative, for the reason that Canadian Canners has undergone so many reorganizations since its inception.

Question—What dividends have been paid on common and preferred stocks of Canadian Woollens Ltd., since 1919? I •would also be glad of your opinion as to the company’s prospects.—B., Vancouver, B.C.

Answer—Dividends at thé rate of seven per cent, per annum were paid quarterly on preferred stock of Canadian Woollens Limited up until July 1, 1922. Payment due October 1, 1922, was deferred. A dividend of one and a quarter per cent, was paid on the common stock, October 1, 1920, and on January 1,1921 ; none since.

Canadian Woollens is one of the companies in this country whose future depends very largely upon the restoration of greater tariff protection.

Question — Do you consider the National Trust Company a safe and reliable company to name as executors in a will?—J.B., Winnipeg.

Answer—The record of Canadian trust companies for safety is an admirable one. There have been one or two instances of failures in Canada of so-called trust companies, which from the nature of their business, should not have been permitted to assume such designation.

In the Province of Ontario there is inspection of trust companies by the Government, which is a great protection to the public, and as all the large trust companies in Canada do business in the Province of Ontario, either as Ontario companies or as branches of other companies, they all come under the Government inspection provision.

The National Trust Company is one of the outstanding companies. It is a thoroughly reputable concern to act as trustee or executor for an estate.

Question—Please give me an opinion on the common shares of Canadian Cottons, as to management and prospects.—G.S.C., Brockville, Ontario.

Answer—Canadian Cottons is one of the foremost of our Canadian industrial enterprises. This company is well managed and in an excellent position.

Subscribers to MACLEAN’S MAGAZINE desiring advice in regard to Canadian industrial investments, or life insurance problems, will be answered freely. Inquiries should be addressed to the Financial Editor of MACLEAN’S MAGAZINE and a stamped, addressed envelope enclosed.

If you are asking in regard to insurance, please give full details of your own financial and family position, so that definite and individual suggestions can be given.