an
May 11, 1908.]
CHINA OVERLAND TRADE REPORT. the rival merit of each has been upheld. | The champion of assets demands, "If a company has a bad year and does not pay over four per cent, but has assets to double the value of the market value of the shares why should the shares drop?" The champion of dividends says that in such circum-tance, shares always do drop -that it is "the fundamental law Therefore "the value of a share is determined by its
293
the same thing. Knowing this, a great many other clever people, who are not necessarily obliged to sell their holdings, take advantage of this knowledre and at once dispose of their floded with shares, and that therefore the sharos, well knowing that the market will be
these reasons, bss regulated the true prios of price must com- dowu. When the market, for the shares, (which is their dividend earning capacity) the clever operator may possibly buy back at their true valus (Tls_150) the very
recently been coming across some very interesting confirmation of the fact that Chinese soldiers are still a long way from the conditions that alone can knit them into
effective army.
To the disorderly I behaviour of the modern troops at various places from the neighbourhood of Shanghai northwards we need not again refer, as such incidents are not uncommon and have been briefly noted in our news columns from time to time. But one illustration is too attract-dividend earning capacity." This gentle-am share held a few months before at Tis
it was
ive not to be added to any record of things; Chinese. Writing to a contemporary an eyewitness tell what he observed during a voyage up the Canton river. Eight soldiers travelled on the launch to protect it from robbers, but they threw aside their equip ment and spent the whole day gambling. Not until they were reaching Canton, when no longer necessary, did these soldiers arm themselves or show any signs of being prepared for emergencies. The foreigner was interested, and got into con versation with the officer commanding the squad. He elicited the admission that this belated show of alertness was necessary now because they were at last liable to be overlooked by someone in authority. The sergeant" appears to have confessed that their behaviour had not been soldierlike, but pleaded that military conscientiousness was difficult to keep up to standard for seven dollars per month, which was all the Emperor allowed each man. "Behold that private's trousers, supplied to him by the Emperor. They are full of holes, and he has been obliged to provide himself at his own cost with an inner pair, to keep his legs warm. What can the Emperor expect, for seven dollars per month? Why even I"-and here we can sympathise with the feeling of injustice that must have shown itself through the words "even I get only twelve dollars per month." Evidently His Imperial Chinese Majesty needs a lot more servants of the YUAN SHIH-KAI breed.
SHARES.
The
:.
220.
tlo
character and habits of the directors, the the ver city of the enticing broker, to allow present state and prospects of the business, for unforeseen coating-ucies, and then, having done all this, it is better to buru the calculations and go to a lawyer to buy a first mortgage. Even then it is the barest prudence to insist on an excessive margin- in the Far East, anyway.
REACTIONARIES AND RAILWAYS.
(Daily Press, 7th May.)
man obviously means the true value to the true investor, secking a certain percentage the company's a-sets alone, for the chance t is manifestly silly to value shares on of income from his capital, and as it is obvious that his future income depends not
is the shres must be cished long before only upon the percentage of torns made
the assets are realized. The same authority by the enterprise chosen, but also on the states the value of four stocks on the security of his capital, he must emador basis of their assets, and gets these startling both sets of data before investing. He willies, truly a reductio ad absurdum : Banks, naturally be willing to paš
Tls. 4213.17; Shaugh i Lands, Tls. 502.10; premium for a sound stock. It is, however, Shanghai Gas, Tls. 311.50 and Municipal
a higher
not so simple as a question of what he is
Debentures, rls. 1365.02. That is to willing to do, but what he is able to do. though it my betray a shortage in our burlesque the argument, however, and Until his capital is invested he has no income, or none more than a bank will give only way to find the real value of shares is seuse of humour, we will repeat that the him in the shape of interest. When he euters the market as an investor, he is in the capacity of the
to reckon the assets, the average dividend, the position of a man embarking in a boat,
management, His notions of seamanship may be sound, his craft seaworthy, but no navigator may shut his eyes to the fortuitous perils of the seas. These, in our loc Rialtos, are represented by the numerous buyers to whom the dividend returns are a secondary concern. It is no use saying that rocks! ought not to be there because the chart¦ shows none, and sailing straight on. breakers must be note-l. This means that even if the percentage of returus is good and promises to be reasonably permanent, given fair play and ordinary conditions, the investor should look also to the char acter and habits of the management, of the directors. Are they sp culators or ga n blers ? Is the stock a favourite with operators? Do its quotations fluctuate con- silerably? If so, let it alone. The amount of the dividend, the existence of a dividend at all, depends largely on the whim of the (Daily Press, May 6th.)
directors, Business may have been good, Owing to local operations into a descrip- but they may go in for enlarging reserves or tion of which we cannot enter, some people extending operations, or for any excuse at Shanghai have been conducting a little to change the usual returus. If they are argument as to the correct method of themselves operators, they will do that, or calculating the real value of company decide to do that, so as to affect the quota- shares. Experience teaches that at Hong- tions in favour of their ow operations kong as well as Shanghai the published and the ordinary sharehollers are practi- Stock Exchange quotations are rarely a safe cally helpless. Says The Godown, guide to market values; they may approxi-curiously interesting Shanghai publication, mate current prices, though very often they Let us assume that a widow with four and a half fail even to attain that measure of accuracy odreu had invested her entire fortuns of Tls as indicators. To a forced seller, the real 30,000 in these shares at a price of Tls 220 three value of his holdings is what they will arg
Sbe depends for the lig of herself and her fracti nal family ou the dividend arn. fetch. The eager buyer cannot as easily ing capacity of these shares, and they have ascertain the current market value, for it given her a steady income for three years of often happens (owing to the extent to which about Tls 20 a month. Then one day this gamblers intervene) that his own bid esteemel widow, who is just as shrewd as most inflates the quotation. It "hardens "
m-n, and who, besides, enjoys the advantage of ** stiffens the market; that is, it excites
pssessing fractional family discovers that, the rapacity of the sellers and or the sellers' although her security" remaius unimpaired her agents. In order that a bona-fide investor, who wants to exclude as much of the element of gambling from the transaction as possible, may know what is a fair price to name in his firm offer, various particulars of the fiuaucial standing of a company are obtainable. The Sbaughai argument, conducted in the correspondence columns of the newspapers, has beeu concerned with the question, which of the statistics offered have the truest bearing on the desired estimate. More explicitly, which should be taken most into calculation, the assets, reserves, &c., of the Company, or the dividends it has been paying Both,
"
44
or
15
A
A Visit t Chinking and Nanking by the. newly opened railway cannot fail to indicate how powerful is the reactionary movement at present sweeping over the Empire, and how helpless in the struggle are m mentarily the causes in king for good. The railway itsel!, constructed to be the main highway of China, and to link up with the great north and south artery from Peking to the South, was in the beginning laid out on an ample scale; the line has been formed to take a double line of rails, the rails are of full weight, the bridges and abutments well designed and solidly built, and ample space provided for future stations and goods stores iu view of future developments. With a similar objet the locomotives and rolling stock are of the best. The engines, with a view to economy in the long run, are heavy, and ample space has been given for access to the machinery; to suit the climate, the carriages have been given greater height than is the custom in Europe; while first and second classes are well upholstered, and well mounted on strong bogie frames. It WV.LX thought wiser at first, in order to prevent future tromble, to increase the height and width of the loading gauges, so and for the next year after that, will gradually! British railways many millions sterling income for the year, and for the year after next,
that the errors which have already cost the undergo a process of pruning in the following should not be repeated in China, and the ratio: 1996 ls 205 per montb, 1907 Tls 195 per month, 1908 T 120 par muth, 199 Tls 100 result is that the Shanghai-Nanking railway Pmonth-all because her shares during 198
starts as one of the best equipped lines in and the following years will not earn enough the world. The capital, it may be remem- mouey. though her "security" is god bered, has been fouut by an English will do? Reember, she is used to an income line in the present, and its capacity for nongh, what do you think this shrewd widow syndicate and in view of the prospects of the of 200 Taels a month, and that is all she has vot. She will promptly seli her shoes(especi- future extension, there is no doubt that it if she can find any one foolish enough to pay
has done the best, not only for its contribu- her 220 tals for them) in spite of any valutbitors, but for China, in thus equipping the assets of the company, and she will invest her line at the start. Unfortunately the view little capital in the shares of the Hongking and taken by the reactionary party, who, next Shanghai Baak or in the Land Investment Co. to having no railway at all, would much or in some other gill-edged stock which will a great many others, similarly situated, will do
6
i
though rather Irish, would seem to be give her a monthly income of 209 Taels. And prefer that it should be in fficient in every
the proper
answer but at Shanghai
way, couflicts with that of the projectors on
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