STATE ADVANCES BONDS

Press, Volume LXXII, Issue 21826, 4 July 1936, Page 16

STATE ADVANCES BONDS

* GOVERNMENT GUARANTEE FINANCE MINISTER REPLIES TO CRITICISM (PRESS ASSOCIATION TELEGRAM.) WELLINGTON, July 3. A view from lother angle of the Government guarantee behind the bonds of the State Advances Corporation was taken by the Minister for Finance (the Hon. W, Nash) in a letter to the executive of the Associated Chambers of Commerce of New Zealand to-day. The Minister acknowledged the representations of the Associated Chambers, which had put forward some suggestions and also some criticism on proposals contained in the State Advances Corporation Bill. He said the association had stated that the repeal of the restriction on the borrowing powers of the corporation wax a serious breach of the letter of the contract which the corporation had entered with those persons who had already advanced money to it. “I cannot agree with this, said the Minister. “In fact, it would seem that criticism might more legitim itely have been raised from the other angle—that by placing a Government guarantee behind those bonds, which were issued without it, the Government has enhanced the value of the securities without obtaining any quid pro quo.” In general, said the Minister, the bill was a policy measure of the Government to give effect to a definite promise made before the election. As there were advantages to be obtained from doing so, the corporate form of the institution had been retained; but provision had been made in the bill to give the Government definite control of the corporation. The extended lending powers given to the corporation were necessary to implement the policy of the Government in respect of housing and the development of industries.