Ashburton Guardian Magna est Veritas et Prævalebit. FRIDAY, AUGUST 10, 1934. COMPANY PROMOTION.

Ashburton Guardian, Volume 54, Issue 256, 10 August 1934, Page 4

Ashburton Guardian Magna est Veritas et Prævalebit. FRIDAY, AUGUST 10, 1934. COMPANY PROMOTION.

The action taken by the Government in respect to the disclosures made in the interim report of the Companies Promotion Commission will be endorsed throughout the country, not only by those who are directly concerned with the maintenance of high financial standards; but also by all who realise the paramount vital importance of such standards to the prosecution of every-day affairs. The fact that the Commonwealth Government, with the State Governments of New South Wales, Victoria and South Australia, have seen fit to take complementary and contemporaneous action emphases the gravity of the allegations contained in the Commission's report. It should also facilitate the task of investigating the affairs of those companies enumerated in the schedule of the Act passed on Wednesday night, for having acted in concert, the five Governments will undoubtedly pass on to each other any information vital to thorough examination. In framing its report the Commission has performed a duty for which it deserves the country's thanks. In the first place, the members realised that they were called upon to act beyond the narrow scope of the order of reference. The interim report thus phrases it: "Furthermore, we submit that the matters properly within the scope of our order of reference tend, as to moral gravity and urgency, to be overshadowed by the issues raised by the facts herein set out. These issues, in our opinion, call for immediate further inquiry and action in the interests of the debenture-holders in particular, and of the community in general." Then, having decided upon that point, the Commission, instead of dealing with the subject in a series of generalities that might mean anything or nothing, detailed the system of interlocking and subsidiary companies in which, in its opinion, certain essential canons of investment policy were being violated. Such was the seriousness of the position disclosed that it was deemed essential in the public interest that investigation into the affairs of the companies concerned should be made forthwith, and that provision should be made for adding to the list if necessary. It is to the credit 'if the Government that it took up the matter with such promptitude and that it acted also with thoroughness in enlisting the co-operation of Australian Governments interested in the matter. Abuses have not been proved, but investment trust practice has been shown to be so far removed from the accepted English standard as to leave the door wide open for abuses that could make a hollow mockery of what can be—and presumably is with pru-dently-managed New Zealand companies—a thoroughly safe and profitable form of investment for smaU capitalists.' Legal restraint is as much in the interests of soundly - managed companies as in those of the investing public.