8.—5.

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[j. B. CONDLIFFE.

It does not look as if the registration of companies for the purpose of carrying on business was diminishing ? —lt depiends upon the type of company, of course —upon the size and the rate of taxation to which they are subject —does it not ? But on the face of it it does not seem that the registration of companies is being discouraged ? —I do not like to make a statement from what appears on the face. I think it is a dangerous position to take up. I should like to go into the figures further. Mr. Hunt.] One point arises out of your discussion with Mr. Weston about the banks. The profits of the banks arise chiefly from exchange: and interest, do they not ? —Yes. The profit on interest is not governed by tho rate of interest charged by the banks, is it ? Is it not governed by the margin between the deposit rate and the lending rate ?—Yes, mainly. Of course, one also should bear in mind the fact that the banks are able to swell the advances to a certain extent irrespective of the deposits, and that is where the profit comes from. Mr. Weston.] You moan by note-issue ? —No ; by extra credit based on note-issue, even more than note-issue. Mr. Hunt.] Is it not true that the margin is wider now than it was in pre-war days ?—I believe that is the case, but I am. not absolutely certain of it offhand. With regard to exchange, the chief exchange business the banks get is between here and London ? —Yes. You cannot compare the exchange on a draft from here to London with the pre-war rate ; you have got to take the round trip into account, have you not ?—Yes, both ways. The earnings of the banks on the round trip are much greater now than they were in pre-war days ? -Yes. So they have widened their margin ? —Yes, they have widened their margin. The Committee which, was set up by the Imperial Conference to go into that question reported to that effect. Mr. Weston.] With regard to your graphs, I do not follow this one. You have taken your figures for them up to —when ? 1920-21 ? —Yes. Is not that rather a bad period to take, because that was the height of the boom ?—Yes. Things were absolutely abnormal then, were they not ?—Yes. I may explain that these graphs were not prepared for the Commission, They were prepared by my honours student for his thesis for examination ; therefore they are not part of a " put-up " game. In the second place, I think there is some justice in taking the position in 1920-21 to show what experiences the companies did piass through in the boom period. But I will undertake to have the figures for the last available year put on to the graph to see for my own information what has happened. (Witness explained the graphs to the Commission.) Mr. Weston.] Under the heading of the risks involved in the reduction of taxation you say that you are prepared to submit evidence to support your view that the present economic recovery is likely to be temporary, and may quickly be followed by financial stringency. You rather anticipate an era of slowly falling prices both for primary products and industrial products as well, and I suppose you anticipate very much greater competition from continental and other outside manufacturing interests ? —Mainly with British manufacturing interests. And British competition will bo stimulated by European competition ? —Yes, as economic matters improve competition will be stimulated. I agree with you ? —Thank you. David Bates examined. The Chairman.] You are a solicitor, Mr. Bates ? —Yes, and a farmer as well. And you are a member of the North Canterbury Farmers' Union ?— Yes, and I happened to bo appointed one of a sub-committee to collect evidence to place before you, but our time has been so limited that we have not had an opportunity of meeting. Therefore the evidence I give here; is given on my own notion, and not as a member of the; Farmers' Union. Yes, very well. Will you just read the statement you have prepared ? —Yes, it is as follows :— Taxation is pressing very heavily on the farming community. Owners eif land are subjected to taxes and levies upon their property not borne by other sections of the community : They pay —(1.) Lanel-tax irrespective of their income—often when their income is less than the minimum taxable amount. (2.) Graduated lanel-tax —no allowance is made for registered mortgages. (3.) Rates to local bodies, Road Boards, and County Councils, Rabbit Boards, Power Boards, River Boards, water-race taxes, and hospital and charitable-aid rates. (4.) Stamp duties on transactions on the sale or exchange of land and often on sales of stock, and (a war levy) stamp duty on mortgages. Land-tax at the present time is particularly harsh in its incidence. It taxes a man whether he has any income or not. Some farmers have paid land-tax when their income return showed a debit. Owing to the increase in values since 1913 the land-tax paid has increased by over £900,000. In 1913 38,232 taxpayers paid £728,636 land-tax; in 1922 54,715 taxpayers paid £1,637,816 land-tax —increase, £909,180. This increase has been due, principally to the increased unimproved valuations of the land. In 1913 the unimproved value of the land was (in millions), £152,000,000; in 1921 the unimproved value was (in millions), £317,000,000. The unimproved values in very many instances are too high, more than the saleable values of the properties, and sales have been made and land is now being offered for sale at less than the land-tax value. But in the past, in a measure owing to these high values, sales at unstable prices have been made, inducing the lending of too much money, and mortgagees have now taken possession. Further, owing to high interest charges and taxes a number of owners have left their farms or the farms are in the hands of the mortgagees and practically idle awaiting purchasers. This increase of valuations and taxation has taken place with practically no increase in wealth (as far as their stock is concerned) on the part of farmers. For instance, take the number of sheep) and cattle in 1912 and compare them with sheep and cattle in 1922 : 1912—