INDUSTRIAL FINANCE.

Manawatu Standard, Volume LIII, Issue 25, 27 December 1932, Page 2

INDUSTRIAL FINANCE.

HOW GOVERNMENTS CAN HELP. Sir Robert Horne, chairman of the Imperial Smelting Corporation, made some very pertinent comments on the question of industrial finance at the annual meeting in London. Ho warned his audience that the fact that there were enormous sums of money awaiting investment did not mean that the salvation of industry was at hand. Admittedly there were funds in abundance. but unfortunately they were not at the moment in a form in which industry could use them freely. “Industry does require capital today,” Sir Robert said, “but not as overdrafts, the form in which the joint stock banks are prepared to lend it. Individuals or industries who use such overdrafts to erect new, or make additions to old plant, or for other than self-liquidating operations, stand ft likely chance of ending m the Bankruptcy Court. On the other hand, there are comparatively few industrial conearns which, after three years of severe depression, can provide a sufficiently attractive prospectus for an appeal to the public for loans for a term of years. In the employment of their resources bankers very properly adhere to a formula which has been proved by expericnee to bo sound. Thus while creating credit bv itself may do little immediate good, stimulating its use in sound enterprise, if that can be done, would be of enormous benefit to the nation. Sir Robert said he firmly believed that private spending was better than Government spending, and that the duty of the State to-dav was to take less from the individual and leave him more to spend. By economy and by the savings resulting from the war loan conversion, they might hope for some reduction in taxation when the next Budget was introduced. A reduction in taxation should help trade and reduce unemployment, but the question was: Will next year be soon enough. Before the next Budget they would have to pass through a difficult winter. Action was wanted now far more than six months hence. If the Government could devise some relief from taxation in respect of all money expended within a certain near period in new developments of existing enterprises the effect on.industry as a whole would be stimulating and immediate. It was high taxation that was so stifling to propress. ANOTHER VIEWPOINT.

V somewhat different view of the same state of affairs is expressed in the November issue of the Investors Review. Sir Robert referred to the conversion loan as reflecting credit on the Treasury and the Bank of England as well' as on the investors who so readily accepted the sacrifices involved. The Review points out that during the present year notice has been given of the repayment of six British loans involving a total of £2.532.000,000, and a gross reduction of interest of nearly £40.000,000. It congratulates the Government on the success of these operations but claims that it has merely taken advantage of an abnormal state of affairs to cut down the income of its stockholders by 25 to 30 per cent, without giving them any compensating advantage. The plethora of funds which has driven the value of money down to its present level, the paper claims, is almost entirely artificial.