FINANCIAL NOTES.
In my letter dealing with the Budget I have re- ferred to its favourable effect both on gilt-edged securities and industrial shares, and have also spoken of it as calculated to inspire confidence and stimulate industry. I am conscious, however, that the close student of market movements will detect a flaw in this reasoning. Granted for the moment that there should be a really important revival in industry, is it not probable that the effect would be to occasion a rise in money rates and as an after consequence a setback_ in high- class investment stocks ? The reasoning is sound, and I think that its practical application is that should the effect of the Budget, combined with the continuance of easy money rates for a time, occasion any important further rise in gilt-edged securities holders might well consider whether the movement in that section had not gone far enough for the moment. As the City Editor of the Westminster Gazette very truly observed in a recent issue of that paper, holders of gilt-edged securities in calculating interest yield must take into consideration the question of being able to realize at a subsequent date under satisfactory conditions. It is impossible to forget the painful experience previous to the War of those who, while receiving all due interest on Trustee Securities, nevertheless suffered material loss when compelled to realize at market quotations. * * * * Among minor points in the Budget was the Chancellor's reference to some modification of the methods of assess- ment of Income-tax so far as life insurance offices were concerned. It has been somewhat unfair to those companies that the authorities should have had the power to tax them either upon interest earnings less allowance for management expenses or upon the total profits. This is a method which has practically meant that the authorities could assess on the lines likely to give the best result to the Exchequer. It has now, however, been agreed that in place of the latter option the Inland Revenue authorities shall have the right to assess not the whole of the actuarial profits but only that portion of them belonging to shareholders. It is a much-needed concession and it carries out some part, at all events, of the reforms which Mr. Geoffrey Marks strove for very strenuously at the time when he was a member of the Royal Commission on Income-tax. Mr. Marks and the insurance companies generally are to be congratulated upon this new arrangement.
Although the latest annual report of the Birmingham Small Arms Company still fails to show a profit, the figures are none the less encouraging. The loss for the year was £46,707, but in the previous year it was about £356,000; and in many respects the report is suggestive of an ultimate return to more prosperous conditions. The concern, of course, is very largely in the nature of a " holding " company, and loans and investments in subsidiary companies stand in the balance, sheet at over £4,000,000, while its . own fixed assets stand at £2,259,000. It is always rather difficult in the case of these holding companies to obtain an absolutely complete view of the entire financial position. The balance-sheet, however, shows a reduction in in- debtedness,partly due to the handing over to the Daimler Company of the Coventry Road factory and the wiping out of loans from the Daimler Company, leaving only the amount of £125,000 due to William Jessop and Sons, these two loans having previously stood at £705,000. A. W. K.
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