MORE SELF-RELIANT

Auckland Star, Volume LXXII, Issue 281, 27 November 1941, Page 3

MORE SELF-RELIANT

DOMINION'S ECONOMY

SHARE MARKET REVIEWED

The opinion that New Zealand had become more self-reliant and had suffered less than any other part of the world since the outbreak of war was advanced by the chairman of the Christchurch Stock Exchange, Mr. F. E. Graham, at the annual meeting of members on Tuesday. Some had suffered considerable loss and even cessation of business, chiefly through import restrictions, said Mr. Graham, but new industries had sprung up and the Dominion's finance and business had probably been less severely affected than other countries.

'On the Stock Exchange there has been a very considerable shrinkage in turnover, and we are confined mainly to dealings in stocks and shares ih New Zealand companies," added Mr. Graham. "We are prohibited from transferring funds overseas thus dealings in Australian shares, which in pre-war times constituted a considerable part of our business, has been restricted to rlealings in shares whic'i were already domiciled in the Dominion, ancl m oon:-ecjuence ih*?re have been comparatively few transactions. Demand for State Loans "Investors felt that the Minister of r inance had committed an error of judgment in making the first war loan compulsory and that he should have fully explored the voluntary market before resorting to compulsion. However, not "J 1 Y. wa . s this loan over-subscribed, but Ho^r, ln JL™ existing Government issues has been very brisk. The reason for this is . vei ]y hard to find, as trading comS!=!)i 'Lon rea son of import restrictions, have been unable to obtain stocks of lines usually imported from overseas, and as their shelves have emplied their bank Da lances have increased and stocks of goods decreased.

As deposit rates have been reduced to a very low mark, companies and others have been forced to find some outlet for surplus cash, and in consequence Government >loans have found ready sale and have been brought down to a return of little over 3 per cent. "The furtherance of the war effort calls for heavy expenditure, and this can be met only by loan or by taxation, and some b y. taxpayers when the already high taxation was not increased this year. Companies are feeling the strain of heavy income tax, social securitv and excess profits tax. and finding difficulty in maintaining dividends. In this connection I would like to stress the injustice of the Company taxation, as when the J 13 * 5 to pay, an army of small investors is assessed for taxation on the shareholding at the highest rate, when individually they would either pay no taxation whatever or at a much lower rate.

Borden of Taxation

The cost of the war should be borne by every Individual in proportion, but I think the class on which the burden falls heaviest are those on fixed incomes and those dependent on income from interest on mortgages or debentures, as in addition to lower interest rates, the cost of living has so increased as to make it difficult for them to carry on. Any further reduction in interest or increase in living costs would bear far too heavily on the class I refer to.

"With reference to markets generally," said Mr. Graham, "the lowering- of interest rates has made investors looking for reasonable return for their capital turn their attention to bank, insurance and sound industrials or preference shares, with the result that prices have risen considerably and there have been far more buyers than sellers. Share vahies have kept up surprisingly well, and a comparison shows that prices generally are higher than they were at the outbreak of war in 1939."