INVESTMENT YEAR

Timaru Herald, Volume CLIII, Issue 22469, 2 January 1943, Page 3

INVESTMENT YEAR

Government Loans

Australian Restrictions

Dealings in the investment market in New Zealand during the past twelve months were reviewed by Mr Andrew Hamilton, chairman of the Wellington Stock Exchange. Addressing the members, he observed that there had been a keen inquiry during the whole period for Government Loans with increased prices and reduced terms, but there had also been a somewhat spasmodic turnover during the first half-year in the remainder of the market. During recent months, however, the demand for income producing investments had been strong, buyers predominating, with sellers standing off, preferring to hold their investments rather than release them to join the ranks themselves of those anxious to have their capital working. Government Loan prices increased till they showed returns around 3 per cent, with very short margins over that rate; even until after the close of the last Liberty Loan issue, any slight variation in these rates became apparent only during the last two or three weeks. New Zealand had to its credit the successful subscription of its war funds, other than those raised by taxation. The first issue of the Liberty Loan was oversubscribed by about £2,500.000. and the final instalment by some £500,000. “Unfortunately,” Mr Hamilton remarked. “these loans arc filled, in the main, by the same people, who have realised their duty on earlier occasions. Although there has been a steady growth in National Savings deposits there is obviously ample room for subscriptions from many well able, by reason of increased earning power, to afford their tens and fifties on the instalment system of saving offered by the Government.” Investment Market Mr Hamilton also referred to restrictions imposed on the investment market by the Australian Federal Government in fixing prices of Australian shares at which these could be dealt in; with the added regulation—which did not apply to New Zealand holders—that the shares must be held for five months before they could be resold. “The idea seems to have been,” he said, “to debar investors from the usual industrial channels of investments in the hope that they would be driven to apply their money to Government loans as the main source of obtaining income. “Without going into the difficulties and impracticabilities that were apparent when these plans were first made public to those concerned it might well be said that this is One more illustration of the use of power resulting in no great national gam. Whatever call on funds there may be in paying for a purchase on rising prices there must be the compensating release of the same amount equally as capable of being applied to war loans as the invested funds. “With all these restrictions," Mr Hamilton continued, “the recent Australian war loan does not seem to have been any more successful than the New Zealand counterparts, which, incidentally, are raised at 1 per cent, cheaper Regulations find full support when guiding people from evil ways, but when based on some experimental theory or perhaps the pure desire to impose force on some special class the ill effects are often unforeseen in the haste to apply the control. Reduced death duties and lower stamp duty revenue on weaker prices mea—a drop in customary State revenue, apart altogether from the freezing of bank credits and a general stricture on the normal flow of currency tied up with the investment market. “Interference with free trading and the usual financial avenues so far has produced only market stagnation, and no noticeable good effects can to date be placed to its credit.” Mr Hamilton's comments on the recent decisions of the Supreme Court as to actions taken by the Commissioner for Stamp Duties were published yesterday. The following members were reelected to the executive for the coming I year:—Chairman, Mr Andrew Hamilton; vice-chairman, Mr Frank H. Taylor: committee, Messrs. T. Condliffe, A. R. Sclanders, and R. B. Webster. The chairman said that of the total of 31 members on the Exchange, six are overseas, and a further seven are in various branches of his Majesty’s Forces in New Zealand.