FOREIGN LENDING

Hawke's Bay Tribune, Volume XXVI, Issue 101, 9 April 1936, Page 6

FOREIGN LENDING

Advisory Committee in Britain NO RADICAL CHANGE (British Official Wireless Service) RUGBY, April 8. The Hon. Neville Chamberlain, Chancellor of the Exchequer, made a statement on the restriction of foreign issues in answer to a House of Commons question to-day. He announced the appointment of a committee, whose functions would be purely advisory and with which he would consult from time to time, generally, upon the scope of the restrictions, and upon particular applications. The chairman would be Lord Rennet, Minister of Health from 1931 to 1935, who, as Sir Hilton Young, formerly undertook several important financial missions for the Government. The six other members include the deputy-Governoh of the Bank of England and other leading personalities in the City of London. The Chancellor said he was sensible of the loyalty with which those concerned had followed the general wishes which he expressed regarding restriction of foreign issues. He had not at present in mind any radical alteration of the present policy.

In a memorandum issued in connection with the appointment of the committee, it is pointed out that the primary object of the present restrictions on foreign lending has been to protect sterling exchange against sudden and dislocating strains. In considering what foreign long-term financing the country should undertake the committee will have regard not only to the general economic situation but to the volume of capital likely to be available, to the state of exchanges, and to the different kinds of pressure to which sterling might be exposed. The latter considerations would not generally apply to loans the proceeds of which would concurrently be used to finance additional exports from the United Kingdom. The committee will bear in mind the desirability that foreign lending should turn to British-owned enterprises abroad rather than to foreign Government or municipal loans and, in this connection, account should be taken of the treatment accorded British-owned enterprises by the foreign country concerned. The committee will be expected to give due weight to the important consideration that capital required for development at Home should not be restricted by excessive lending abroad. In accordance with the announcement made some time ago by the Chancellor, the committee should give favourable consideration to sterling issues by any country within the sterling area where the loan is required to increase that country’s sterling assets, and so minimise fluctuations in exchange. In reply to supplementary questions, Mr Chamberlain gave an unqualified assurance that the ultimate responsibility and control of advice in connection with the restrictions would remain with himself.