South Seas Pirates

THE spirit which promoted the South Sea Bubble, 200 years ago, is not dead. Still alive, also, is that simple childlike faith in the funda mental soundness of any enterprise that has its roots in the South Seas.

Is it the “romance” of the Pacific Is lands that upsets the Judgment of otherwise shrewd investors? Or must we turn for explanation to the famous dictum of Mr. Barnum, and agree that one really is born every minute?

We believe that the economic pen dulum is about to swing back, and that presently we shall see a boom. The company-promoting adventurer will appear once more and, because many factors have directed attention to the Pacific Islands’ undeveloped wealth, the South Seas will be his happy hunting ground. There will be another crop of bond-selling enterprises: and peo ple with Pacific Islands interests at heart should be alert to discourage semi-fraudulent flotations, which will only give investors a bad impression of Pacific Islands resources. The oppor tunities presented by the wealth of the Islands, actual and potential, are too good to be destroyed by fools or pre iudiced by knaves. The average inves tor’s simple faith in the South Seas can be completely justified; but he must be protected against the sharks.

These reflections are the outcome of the arrest of Mr. “Mond,” a gentleman who as described elsewhere, planned a huge bond-selling enterprise, based on Papuan sugar-planting, and is now charged with falling foul of the law.

Only a few months ago, an ambitious bond-selling project, with coffee-plant ing in New Britain as its main objec tive, was thrust before Australian in vestors under the title of Islands Plan tations Ltd. It collapsed, and quite a few trusting people lost their money.

There is nothing fundamentally wrong with the idea of growing coffee in New Guinea, or sugar in Papua. Both Ter ritories, in future decades, probably will produce huge quantities of both commodities. But there is a very great deal wrong with the manner in which these enterprises have been planned— with the magnificence of their figures, the flamboyancy of their estimates and the lavishness of their promises.

They are presented in a “get-richquick” atmosphere which makes them immediately suspect.

As a matter of fact all these planting enterprises, based on bond-selling, should be most carefully examined, and ought to be subject to some form of Government control. Usually, they are so designed that the promoting com pany (which rarely, if ever, discloses its subscribed capital) makes a large profit out of the sale of bonds; while the profits of the bondholders are en tirely dependent upon the success of the plantation, which the promoting company manages, for fees paid by the bondholders. Some of these en terprises are simply an ingenious form of piracy—a “heads I win, tails you lose” proposition.

We have two other bond-selling com panies under notice—one interested in sisal hemp in Papua, and the other concerned with coffee-planting in New Guinea. These enterprises appear to have responsible directorates, and very wisely are not offering bonds to the public under existing condi tions. When they commence bond

selling, it will be opportune to very carefully analyse their respective pro positions.

But something more than examina tion by newspapers is needed. The only way to protect the basic interests of the Pacific Territories against unscru pulous company promoters in the boom times that are coming is to make some form of official check necessary before bond prospectuses can be issued.