FULL CONTROL OF FINANCE

Southland Times, Issue 24163, 27 June 1940, Page 4

FULL CONTROL OF FINANCE

MINISTER EXPLAINS REGULATIONS OVERSEAS CREDITS MUST GO TO RESERVE BANK (United Press Association) WELLINGTON, June 26. A detailed explanation of the Finance Emergency Regulations Gazetted last week was given in a statement issued tonight by the Minister of Finance (the Hon, W. Nash), He said they covered a section of the productive capacity of the Dominion no less important than the supply of raw materials and the manufacture of them into consumable goods. The supply of capital to a very large extent directed the flow of production and unless that supply were controlled and directed into channels required to ensure the maximum effort in essential directions the resources of the Dominion would be dissipated. The demands of defence in time of war must be paramount. It was essential that the Government should carry out its duty to ensure that all resources were utilized to make the utmost contribution.

“It is important that the country should know what the law of the land now is in respect of things pertaining to finance,” said Mr Nash. “For example it is not permitted to send out of New Zealand money or securities. In addition, the regulations ensure that cur-' rency or securities issued overseas must be put at the disposal of the Reserve Bank—this means any money or security other than New Zealand money or securities. Anyone in New Zealand who possesses overseas money at all of whatever amount must go to a post office or trading bank and fill in a form stating the amount of overseas money in his possession. Later the Reserve Bank will advise what is required to be done with the iponey This regulation also covers any person who has in a country outside New Zealand a bank balance or credit of any kind payable in overseas currency. Any person who holds overseas currency or a right to a credit balance abroad on behalf of someone else must also make the return.

SALE OF SECURITIES “’Regulation 7 is very similar but relates to any securities held by New Zealand residents if issued or payable outside New Zealand. The regulation also prohibits, without the consent of the Minister, the sale of any overseas securities or any securities issued or payable outside New Zealand. “It is the duty of every owner of overseas securities to make a return to the Reserve Bank of the securities he holds. When the Reserve Bank purchases overseas currency, credits or securities the price to be paid based on the current rate of exchange will either be in cash or by the issue of Government stock or partly in one and partly in the other as the Minister may direct. In general, investments will be paid for by the delivery of stock, thereby replacing one investment with another.

“Regulation 5 applies to gold coin and bullion but does not come immediately into force. It will do so when notice is published in the Gazette. “No companies may now be formed in New Zealand without permission to do so under Regulation 9. Companies being formed must get permission from the Registrar or Assistant Registrar of Companies in each district before applying for registration. Regulation 11

relates to an increase of the capital of companies. Capital cannot be increased or calls made without application first having been made to the Registrar or Assistant Registrar of Companies. Regulation 12 controls the issue of capital. It follows the English and Austra-

lian provision. Any issue of securities, including the issue of prospectuses, must include a statement that the consent of the Minister has been obtained. Every mortgage or charge given by a company must also receive consent. I want to emphasize that the regulations do not affect mortgages or charges given by private individuals or partnerships in any way.

CONCENTRATING SAVINGS As part of the measure for directing the supply of cash resources, from now on trading companies and others will not be allowed to accept deposits on current account or for short terms unless they have a permit to do so, This means that the flow of savings of the country will be more concentrated into the Post Office Savings Bank, other savings banks and trading banks. These are left free to accept deposits without restriction. In general, consent will not be given to trading companies accepting new deposits but special consideration will be given to genuinely cooperative building societies. “The regulation enables ordinary overdrafts to be continued without restriction. Provision is also made to ensure that the interest rates on bank overdrafts are not increased and interest on new overdrafts is not to exceed the present normal rates. “Another regulation enables the direction of available investment capital from non-essential or uneconomic use to essential purposes. Under Regulation 13 the Minister is given authority to direct the general policy of any person, bank or group in relation to renewing or increasing advances . for works of national importance.

COMPULSORY LOAN “Power was taken during the last war to compel citizens to contribute to war loans in proportion to their means. This power is also conferred by these regulations. “There are Substantial penalties. In the case of the individual, the penalty is imprisonment for 12 months or a fine of £2OO or both. If the offence is continuing the fine is £2OO for each day. For a company the fine is £lOOO. In the event of an offence against the provisions dealing with gold or overseas currency or overseas credit balances or overseas securities to be offered for sale to the Reserve Bank, the penalty is an amount equal to the value of that gold, currency, credit or security. “May I once more affirm that the policy and procedure which these regulations provide for are part and parcel of New Zealand’s *all-in’ determination to ensure that absolutely nothing is left undone which can in any way conceivably further the effective prosecution of the war.”