75

A.—6a

You will remember that in the early stages we tabled this as a subject for discussion. We sent to you last July a telegram which was in these terms : " Following is general indication of lines on which His Majesty's Government, subject to results of discussion at Economic Conference, would be prepared to consider schemes of financial co-operation which may be proposed with view to assisting early development of public-utility undertakings in Dominions and India which without such assistance would be delayed or not proceeded with. Undertakings assisted should be of a nature which if put in hand rapidly would confer direct benefit both on Dominion and India and on employment by placing of orders in United Kingdom. Conditions and limits of financial assistance and shares of co-operating Governments in such assistance would be settled in each case by special agreement. Without excluding from consideration any form of assistance His Majesty's Government consider guarantee of interest or advance of part of interest for limited period is likely to prove the most generally useful method. Specific proposals under an agreed general scheme would naturally be examined carefully by competent, authorities both in Dominion and India anel United Kingdom before; approval." I need not elaborate here the question of guarantee. It is present to all your minds that in the first place there will be cases where a mere guarantee; would not afford adequate financial inducement. In the seconel place the addition of a direct British Government guarantee might not give a material financial advantage; ; it might make little or no difference in the rate at which the money can be borrowed. I know there is also the question in considering guarantees which certainly you will have to take into account, whether the acceptance—and upon this I think opinions will differ—whether the acceptance of a guarantee to an issue would tend to depreciate the value of past or future unguaranteed issues. Grant of Interest during Initial Stages. I think, therefore-, the most helpful system is that of a grant of part interest over a period in respect of anticipated schemes which are; put in hand before; their normal time and which are reflected in orders placed here. Now, let me take one; or two concrete examples of what I mean arising out of the kinel of statements which have been made here. New Zealand's Hydro-electric Schemes. Let me take New Zealand. Mr. Massey spoke to us of programmes of hydro-electric development. Normally I take it those programmes arc going to be spread over a period of years, and the orders will come here. Well, we want orders as quickly as we can get them. This is our black time. You would be glad enough, I presume, to get the development quicker if you were satisfied with the financial conditions. Normally that development woulel spread eiver a period of years. Would you put it in hand more rapidly anel place the orders here if we he;lped the accelerated part of it with interest during the initial stages ? Mr. Massey : Most certainly. Australian Railway Schemes. The Chairman : Now, le-.t me take again the kind of subject I think that came out in Mr. Bruce's speech and which have been constantly discussed here by Australian representatives. There are big tentative schemes of railway development in Australia. Some are going forward in any case, but there are schemes of one kind or another which are postponed or not taken in hand yet because the immediate financial outlay would not be justified. If it can be arranged that there should bo a grant of interest for some part of the initial period, part of the interest for an initial period in respect, say, of that proportion of the capital of these anticipateel schemes which was represented by orders here and by freight, would you undertake those in the immediate future ? India's Development Programme. Take India. Mr. Innes gave; us a picture eif a big programme. There was, if I remember right, £70,000,000 worth of orders which would be placed over five years. Now, what I would put to you is : Supposing assistance were given in the matter of interest, would it be possible for India to increase the programme above tho figure at present in their minds and/or alternatively —I put it for preference "and "--while increasing the aggregate of the programme to take some of the orelors of the later years and put them in earlier years ? For instance, you have this programme spread over five years ; that is, say, £15,000,000 a year. Now, can you take all or any part of the last two years' programme and put it in hand in the first two years if some assistance were given in the matter of interest ? Those are the kind of things which T wish to see if we can accelerate to our mutual advantage. Four Conditions of Proposed Scheme. I think that in proposals of this kind there are four conditions which ought to be fulfilled. First Condition. In the first place we should have to be agreed as to the character of the schemes. I think they should be —and I use the word in its broadest sense —schemes of a public-utility character. I think it is plain that we could not be giving direct financial assistance in order to establish a competing industry with something that exists in this country. Personally, I hold the view that the broader the development, generally the hotter it is in the long-run for the good of the whole Empire. But it is one thing to take that view and it is another thing in a time when you have very serious unemployment to give direct financial assistance to establish an industrial concern ; therefore I put it that the type of scheme should be public-utility unelertakings ; and those are the kind of undertakings which are the initial prerequisites of development. But, granted that tho undertaking was of a public-utility kind, I think we should hold equally open to assistance such an undertaking whether it is directly conducted by tho State or by a local authority or by a municipality or by a company.