BETTER OUTLOOK

Evening Post, Issue 15, 17 July 1936, Page 10

BETTER OUTLOOK

POSITION AT HOME

SIR T. WILFORD'S VIEW

FIXED TRUSTS

FIRMING MONEY VALUES

While every part of the world -is rocking with internal troubles nncl difficulties relating to economic and monetary conditions, Great Britain seems to be on the road to better things. This is the cheerful view held by Sir Thomas Wilford, formerly High Commissioner for New Zealand in London, who arrived, by the Akaroa from London today,. In the course-of a general discussion with an interviewer on monetary matters, Sir Thomas, who is a London director of the National Bank of New Zealand, expressed the belief that there is a tendency at present for money values to harden. j

"In the City, where I have worked since the end of the occupation of my. office as High Commissioner," said Sir' Thomas, "the great adventure in the financial world, namely; the creation: of fixed trusts, has become an accept^ cd fact. Born less than six years agoj this new method of investment has'; taken a firm grip, upon the public mind,1' whether for better or worse only time1 will show. Something like £50,000,000; is now invested in trust companies. Z\ believe that the = immediate result ot\ the creation of these avenues of in-'j vestment has been the raising of in-; dustrial shares beyond what would otherwise have been their normal limit. It stands to reason that, where the shares of certain industrial undertakings appear in the portfolios of more than, one trust .company, there is an unreal; competition which provokes an increased capital value.

"The trust' movement' had as: its slogan or :catchword ''fixity.' ; Today,! the : great opposite pertains .in that 'flexibility is now. the motif.;or the movement: : There is reason for "such a change, for if is now realised that it is not p. good thing to float a fixed trust I after a lengthy rise in markets generally. The joy to the investor on fixed trust is the belief that he is spreading his investment over a large number -of industrial securities, in- I stead of being confined to National Saving Certificates, post office savings •banks, building societies, and so on. It has been suggested that there might be established a National Investment Board to control and safeguard the nation's savings, ana such an adventure has its advocates and its adverse critics." STABILITY OF STERLING. Sir Thomas said that the Equalisation Fund created by the British Government and amounting to £350,000,000 had saved the franc again and again,1 but whether it would be equal to the strain of the future depended largely, in his opinion, on the price of the American dollar. No one was allowed to know how' that .Equalisation Fund operated, or to what extent, but it had been so administered during the past two years that,, in spite of wars and rumours of wars and deflated currencies in various countries, the pound sterling floated on an even keel, notwithstanding the fact that its gold basis had disappeared. The steadiness of sterling was due to the .character, responsibility, and reputation of those whoso successfully administered the financial affairs of Great Britain.

"We must remember that, when considering the sterling position, all .the countries in the sterling bloc—including, of course, the Dominions—have benefited greatly by the stability of sterling when measured by gold currencies—that is, stability in the sense of purchasing power," said Sir Thomas. "Again, we must not forget the great influence which cheap money in London has had on recovery, both at Home and in the Dominions, and also upon the other countries in the sterling area.

"1 often wonder whether it is possible that it has helped too much, because there is a temptation, when you observe the considerable diminution in the cost of financing Government loans in Great Britain, to spend money elsewhere. Great Britain has certainly, as a result of the cheapness of money, spent largely in social service —perhaps long delayed, but having put their hand to thf plough it will be difficult to draw back if money values harden again.

"I»believa there is a tendency in that direction at the present time," said Sir Thomas.