COLONIAL STOCK ACT.

Auckland Star, Volume LV, Issue 307, 27 December 1924, Page 13

COLONIAL STOCK ACT.

A MISAPPREHENSION. STATEMENT AS TO NEW ZEALAND.| i (From Oar Own Correspondent.) IiOXDON, November 8. Following our recent notice with regard to the shortcomings of the BrilUli Colonial Stock and Trustee Acta and calling attention to the fact that lin.incial authorities here were viewing will some alarm the. extensive borrowing Sy various dominions, to-day's "Times" published a let'u>r from Sir .lames Allen, High Commissioned for New Zealand, on the subject: "In the finance and commerce columns of the Times' during the past few days some important references have ap- 1 peared concerning a misapprehension which is said to exist among investors and trustees regarding the operation of the Colonial Stock Act. It is suggested there is a widespread belief that colonial trustee stocks carry some kind of implied guarantee by the Imperial Government. "It is so difficult to see why this should be so, as, so far as New Zealand is concerned (and, 1 believe, it applies equally to the other British Dominions and states), the loan prospectuses issued contain a clause reading as follows:— "By the Act 40 arid 21 Vict, oh. 59, the revenues of the Dominion of New Zealand alone will be liable in respect of this stock and the dividends thereon, and the Consolidated Fund of the United Kingdom and the Commissioners of His Majesty's Treasury will not be directly or indirectly liable or responsible for the pnyment of the stock or of the dividends thereon, or for any matter relating thereto." This should be effectual in disposing of any belief that colonial trustee i.-sues are guaranteed by the Imperial Government. It would not, of course, be so apparent in the cases of purchases of such stocks on the markets, but it is a point upon which any trustee or investor could quickly satisfy himself by reference either "to his brokers or the bank of domicile, or to the Government representative in London of the Dominion or State in question. "With regard to the suggestion that the Colonial Stock Act should be amended by making it obligatory upon all -borrowers under the Acts to furnish information as to their financial position, or failing that, any proposed loan issue should be first examined and approved by the Home authorities before it is allowed to be offered as a trustee security, I desire to point out that it has been the practice of the New Zealand Government, acting through their loan agents in Ixmdon, to furnish in the loan prospectuses the fullest possible information concerning the objects of the loan and the financial position and prospects of the Dominion. "It is believed that this procedure has produced among investors and trustees, and in the stock and money markets a strong feeling of confidence in the stability of the Dominion and its resources and in the prudent management of its finances. This has had. from the Dominion point of view, very satisfactory results by creating a strong demand for Xew Zealand securities, thus enabling my Government to obtain the best possible terms whenever sales are effected."'