FINANCING INDUSTRY

Evening Post, Volume CIX, Issue 116, 20 May 1925, Page 14

FINANCING INDUSTRY

. i ~ -n —, ,m ■■-■ IMPOETANT BANKING MOVE- ■ -i -y': -WENT.. ; :-:-:

Mr.- W." D. Acting-British ; !Trads'> Commissioner in New, Zealand, has been advised by the Overseas Trade Department .of a new .moverso far as Britain is concerned in financial industry. The Industrial Finance and Investment Corporation, Ltd., has been registered as a private company with a nominal capital ■of £1,000,000. Of this -amount £750.000 is paid' up; the whole amount having been placed privately. It •is ■understood that the- principal shareholders of the company are as follow :— Barclays Bank, Ltd., N. M. Bothschild and Sons, Kleinwort, Sons' and Co., S. Japhet and Co., Ltd., Robert Fleming and Co., Sir Alfred Mond-, Prudential Assurance Co., Ltd., Guardian Ass'iranca Co., -Ltd., American and • Continental Corporation, New York, Hope and Co., Amsterdam, Bank, Berlin, M. 11.' Warburg and po., Hamburg, Simon Hirschland,. Essen, Ai Levy, Cologne. There are also a number of firm* which have acquired shareholdings of minor importance-. • Tt /is understood' that Sir Alfred \Xl6nd," who is"also on tha board of the company, is in the combine in his individual capacity, not on behalf of his companies. The -main object pursued' by • the Industrial. Finance and .Investment Corporation,'is the, acquisition of industrial, securities-. Itj, will combine the activities ot a-holding company with those-of a bank. 's.There-is no territorial restriction of its. sphere of-activity. ■, A „ ... The main significance of'the new 'company lies in the fact that it will woifc on similar lines to those adopted before the war by "German banks. -The. German banking system is fundamentally different from the British; While the main; task of British joint-stock batiks is to place deposits in short-term loans; the German joint-stock banks undertake extensive participation in industrial enterprises, with the aid of their own resources, and with funds borrowed for long terms...,,, The marvellous development of 'German -'industries during the period 18714914: was-largely due to the support theytSeceiyed from this banks, and it was frequently askedj not without reason, whether-something similar could be organised in tliis country. ■ The principal objection to the suggestion of introducing "industrial banking" in Great Britain was the fear-that bunks which undertake participations in industrial enterprises may be inclined to finance them out of funds which should bo kept liquid to meet possible current, liabilities. , This objection has benn met by establishing an independent institution -which will- have no short-term liabilities, so that it can immobilise its assets-withput (running any..risk., ■ -■-.-■•