DISCRETION?

Auckland Star, Volume LXXI, Issue 158, 5 July 1940, Page 9

DISCRETION?

WARNING GIVEN.

OVERSEAS SECURITIES.

PURCHASES FROM TT.S.A.

(By Telegraph.—Parliamentary Reporter.)

WELLINGTON - , this day.

A warning to the Minister of Finance to use the utmoet discretion in the disposal of overseas sccuritiee was given in tho House of Representatives yesterday l>y Mr. Wilkinson (Ind., Egmont), who urged that- holdings should be hypothecated rather than sold outright on the present depressed market.

Mr. Wilkinson pointed out that a large number of oversea* securities held by New Zealanders were purchased a lifetime ago, and they ehould l>e placed in a different category from those purchased during, say, the last five years. "TOiese securities in many cases," he continued, "arc the baekl>one of business undertakings in this country by providing security for overdraft. To take thorn at the present depressed market ratos today would seriously disturb many businessee in this country, many of which

are committed to l>igexi>eiiditiirc because of this backing of the overdraft l>y these securities. Moreover, those overdrafts were probably entered into when prices wore much higher. The Minister should exercise the utmost discretion in dealing with this matter." Mr. Wilkinson suggested that they might be taken by way of hypothecation and returned to their owners after the war. Hβ knew of holder* of Australian stocks who would l>e pleased to hand over their holdings if they were returned later. It would Ik; better than jelling them on the market. Mr. Carr. (Govt., Timaru): How would that affect the overdraft? Overdrafts Affected?

Mr. Wilkinson: We would still get tlie share* liack at the end of the time. The overdraft might be affected, but not eo much as if the holdings were sold.

Mr. Wilkinson proceeded to discuss the Government's gold holdings. Before it dealt drastically with other people's money, it should take stock of the £3,000,000 it had in the Re-serve Bank. That could be applied to the purchase of material from the United Statee of America, which seemed to have an itching hand for the accumulation of gold.

"We should mond to the United States two gentlemen in whom the Government and the country have confidence to purchase our requirements," he suggested. "The position to-day is precarious, ami wo must make the utmost preparation to meet any situation that may ar'se. I do not think there. i'R euftVient defence material in thi* country and we must have the cash to buy it. Rather than have jrokl in the hank where invader* could get their hands on it, we should turn it into bullets and machine puna, and give the invaders those instead , '

Dr. McMillan Replies. The Ministerial reply came from Dr. McMillan. Minister of Marine, who suggested that if securities were already mortgaged for overdraft they could not be mortgaged twice. If the State purchased these securities the overdraft could be redeemed. Although he was not in possession of the official estimate, his view was that there must be at least £10.000.000 worth of overseas securities held by New Zealanders.

Replying to an Opposition interjector, who asked what would be the position if other countries took similar action in respect to securities held by their nationals in New Zealand, Dr. McMillan said if Australians held £5,000,000 worth of New Zealand securities and its Government desired to pay for imports from New Zealand with that money, it would do no harm if it did not have the cash to sell the securities.

Dr. McMillan also added comment on the suggested compulsory loan. He advised the Leader of the Opposition that he need not trouble himself over the compulsory loan upsetting the countrv's economic life because the total sum required to be borrowed internally for the war was £3.500,000. If a compulsory loan were levied of I per cent on the national wealth, with an exemption of £500 for everybody, it would bring in £5,000,000. Mr. Forbes (Opposition, Hurumii) : But more loan money is required.

Dr. McMillan replied not for war purposes to which compulsion alone applied. Hβ believed 5 per cent of the country's capital would not be beyond the capacity of the people to bear. It would bring in £25,000,000.