EXCHANGE CONTROL

Gisborne Herald, Volume LXVII, Issue 20223, 16 April 1940, Page 8

EXCHANGE CONTROL

EMERGENCY MEASURES POSITION OF INVESTORS Copies of the Finance Emergency Regulations, 1940. the issue of which last week was responsible for a cessa'tion of trading in overseas stocks and shares from Thursday last, were received on Saturday. Under the regulations there is provision for application to the Minister for exemption, the Minister retaining power to refuse any such applications or to grant them wholly or partly, either unconditionally or subject to such conditions as he thinks fit. Presumably, therefore, says the Auckland Herald, dealings in stock and shares of companies domiciled outside of New Zealand will be held up until such time as permits are obtained by investors who wish to liquidate any of their holdings. The penalty for a breach of the regulations in the case of an individual is a fine not exceeding £2OO, or imprisonment for a term not exceeding 12 months, or both. Should a company or other corporation offend there is provision for a fine not exceeding £IOOO. Overseas Investment There appears to be nothing in the regulations to prevent ,a. person who holds, funds abroad from re-investing them overseas. In this direction, of course, the exchange regulations of other countries will become operative and difficulties may be experienced by owners in repatriating their capital.

In August last the Australian Government brought down regulations for the control of all overseas exchange transactions, including the prohibition of the export of money, and the mobilisation of gold resources. In Canada there is also effective control of exchange transactions. It is possible that some intricate problems will arise as a result of conflict between the regulations operative in different countries. For instance, Australia, in order to conserve her overseas exchange, demands payment for her exports in the currency of the country to which the goods are exported. Conditions in Australia The conditions laid down in Australia for the sale of overseas exchange, in addition to provision for the payment of imports, include provision for limited bona-fide travelling expenses, reasonable amounts for sustenance of a person living abroad, not exceeding £lO sterling a week, transmission to non-residents of Australia of interest and dividends earned in Australia, and bona-fide charitable donations and subscriptions, not exceeding £25 in any individual case. Any application for overseas exchange in excess of £SOOO sterling in one month for one person or firm, or for exchange for any abnormal business, must be referred- to the Commonwealth Bank.

In its “Notice to Banks' 1 the Commonwealth Bank emphasised that adequate precautions should be taken to ensure that the transmission of moneys was kept strictly within the terms authorised. The banks were asked to exercise vigilance to prevent abuse and particularly to prevent anything in the nature of a transfer of capital from the Commonwealth.