USING OVERSEAS ASSETS

Evening Post, Volume CXXX, Issue 6, 6 July 1940, Page 10

USING OVERSEAS ASSETS

The suggestion of Mr. Wilkinson that Government use of overseas securities should be by hypothecation, rather than sale, is one that demands full consideration. It is a method for which there is ample precedent in the British Government's policy in the Great War. Then many million pounds' worth of dollar securities were deposited witn the British Government for use in financing American munition purchases. Sale df securities at depressed war quotations would involve loss—national or individual, and perhaps both. New Zealand would lose overseas assets of value to her —particularly if held in countries with which we have an adverse trade balance—and would receive only the present value of the securities. It would not be fair to let this loss fall upon the owners of the securities by paying them only' what the shares realised in a hurried liquidation. At the same time, it would be extremely difficult to fix a price fair to the country and to the security-holder, and taking account of present and prospective returns. Hypothecation, without change of ownership, would avoid most of these problems. If it be objected that there should not be further borrowing, ihe answer is that this is already contemplated, since the Government has taken power to pay for securities by issuing bonds.