CAPITAL ISSUES CONTROL

Press, Volume XCIV, Issue 28157, 21 December 1956, Page 19

CAPITAL ISSUES CONTROL

MINISTER DEFENDS SYSTEM

(New Zealand Press Association) WELLINGTON, December 20. A modicum of financial control was necessary to channel resources in directions desired by the Government, said the Minister of Finance (Mr J. T. Watts) today, when replying to reported criticism of continuing capital issues control by the chairman of the Auckland Stock Exchange, Mr L. E. R. Wakeman.

What the Government wanted to do as far as possible was to contribute materially towards an increase in exports and a saving in imports or an increase in the supply of essential goods, added the Minister. Mr Wakeman had said that other countries had long since abandoned capital issues control, said Mr Watts. However, in the United Kingdom the Capital Issues Committee was still active, and a stricter policy had been adopted a few months ago. Issues of capital not requiring consent had been reduced from £50,000 to £lO,OOO. When Mr Wakeman protested that decisions of the New Zealand committee were influenced by Treasury policy, Mr Watts said he took it to be advocacy for an increase -in the proportional representation from the business community. This had been done, with the appointment of Mr B. R. Law, a wellknown businessman, to replace Mr F. R. Macken, recently appointed Commissioner of Inland Revenue. It was surprising that Mr Wakeman had not appreciated the significance of this appointment. Premiums on Share Issues Problems relating to premiums on the issue of ordinary shares and the sale of rights, mentioned by Mr Wakeman had been discussed between the Stock Exchange Association of New Zealand and the Capital Issues Committee, said Mr Watts. “Although these two bodies do not quite see eye to eye, I am advised that each understands the other’s problem,”, added the Minister. Auckland was a member of the New Zealand Association, and he thought all representations should be made through the association.

There was extreme pressure on the capital market at present said Mr Watts. This was brought about by the huge development programme upon which the Government, local bodies, and private enterprise had entered to exploit and develop the country’s resources.

Now that the country had been expanding at such a pace a modicum of control seemed necessary. It was interesting that in the past year the applications and approvals had been greater than ever. The committee worked under general directions-and delegated authority. In spite of complaints about credit policy, there was still an abundance of confidence in the business community, concluded the Minister.