FOREIGN LENDING

New Zealand Herald, Volume LXXIII, Issue 22390, 9 April 1936, Page 11

FOREIGN LENDING

BRITISH RESTRICTION PROTECTION OF STERLING AN ADVISORY COMMITTEE By Telegraph—Press Association—Copyright (Received April S, G.'o p.m.) British Wireless RUGBY, April 7 The Chancellor of the Exchequer, Mr. Neville Chamberlain, 'made a statement on the restriction of foreign issues to-day in answer to a question in the House of Commons. Mr. Chamberlain announced the appointment of a committee whose functions would be purely advisory, with whiph he would consult from time to time, both generally upon the scope of the restriction and upon particular applications. The Chnncellor said that the chairman of the committee would bo Lord Kennet, who was Minister of Health from 1931 to 1935, and as Sir E. Hilton Young, formerly undertook several important financial missions for the Government. The six other members would include the deputy-governor of the Bank of England and other leading personalities in the City.

Considerations for the Committee Mr. Chamberlain said ho was sensible of the loyalty with which those concerned had followed the general wishes he had expressed regarding the restriction of foreign issues. He had not in mind at present any radical alteration of the present policy. In a memorandum issued in connection with the appointment of the committee, it was pointed out that the primary object of the present restrictions on foreign lending had been to protect sterling exchange against sudden and dislocating strains. In considering what a foreign long-term financing country should undertake the committee would have regard not only to the general economic situation, but to the volume of capital likely to be available, to the state of the exchanges and to tho 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 would bear in mind the. desirability that foreign lending should turn to Britishowned enterprises abroad rather than to a - foreign Government or municipal loans. Minister Retains Respon»ibility

In this connection account should be taken of the treatment accorded to British-owned enterprises by the foreign country concerned. The committee would be expected to give duo 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 he had made some time ago, said the Chancellor, the committee should give favourable consideration to sterling issues by a country within the sterling area where a loan was required to increase that country s sterling assets, and so minimise fluctuations in exchange. In reply to a supplementary question. Mr. Chamberlain gave his unqualified assurance that the ultimate responsibility and control of advice in connection with the restrictions would remain with himself. It is announced that new capital issues in the first quarter of this year totalled £60,611,000, compared with £41,598,000 and £24.942,000 respectively in the corresponding periods of 1935' and 1934.