OVERSEAS SECURITIES

Evening Star, Issue 23620, 5 July 1940, Page 12

OVERSEAS SECURITIES

CARE OVER ACQUIREMENT URGED

MIGHT BADLY PREJUDICE BUSINESS

[From Our Parliamentary Reporter.]

WELLINGTON'JuIy 4. i- A warning was given the Minister of Finance by Mr Wilkinson in the financial debate that he might seriously prejudice business affairs unless the proposal to acquire the overseas securities of New Eealanders was carefully handled. f / Many of these investments were, he said, made a lifetime ago, and were in quite a different category from money sent out within the last five years To take such securities at their present value would seriously disturb many businesses which relied, on them to arrange overdrafts overseas. -Unless the Minister exercised the greatest discretion in -this, respect these firms’ purchases would be hampered.' ■ Instead of selling the securities Mr Wilkinson suggested that the Government take them by hypothecating them for the purpose of raising funds in Australia, returning the, shares at the end of the war. Under this system the holders of. Australian stock would be pleased to offer them to the Minister. .

Mr Carr: How would that affect their overdraft? ' > '

Mr Wilkinson: It might be affected, but not to the same extent as by sale at present prices* i ' , .• . He- suggested, that before the Minister dealt drastically with other people’s money he might utilise the £3,000,000 gold reserve m the Bank of New Zealand and Reserve Bank; using'them for purchases, in the United States, which seemed to have an itch for the’accumulation of gold. ' This appeared. to bo valued at book value, but at the present price was worth over £6,000,000, .good currency in any part of the world. It would he advisable to send to the United States two gentlemen in whom the Government had confidence to'arrange purchases. There was no question the position was precarious. The Empire, ■ was threatened with- a -ring >of enemies, and must make the utmost preparation to meet the situation. We needed to buy defence material, and could only buy for cash. “ Gold is the stuff that talks,’’ concluded Mr Wilkinson. “Rather than have gold in the bank which could be taken by a successful invader, I would turn it into buk - lets.” The Ministerial comment on ' these suggestions came from Dr M’Millan, who contended that if the securities were used for overdraft their sale would enable the overdraft to be paid off. ■ ■ ’ Mr Wilkinson: At torday’s slump prices ? ' Dr M'Mlllan, added that the next Suggestion that the. Government could use the securities for overdraft was not practicable if they were already mortgaged, it being well known that one could not mortgage the same property twice. He had no official estimate, but. his impression was that there were at least 10 millions available in Now Zealanders’ overseas securities. * An Opposition member inquired what would happen if Australia applied the same principle to its citizens’ New Zealand investments, Dr M’Millan replied that if Australians held five millions of New securities and their Government desired to pay for 'that amount by imports from New Zealand it would do no harm. Mr Hamilton: They would have to pay in cash. Dr M’Millan: And if it cannot get cash it will have to sell securities, which limits the quantity of New Zealand goods sold to the quantity of funds available.