IMPERIAL FINANCE.

Dominion, Volume 6, Issue 1743, 7 May 1913, Page 7

IMPERIAL FINANCE.

DEVELOPMENT LOANS. MR BEAUCHAMP'S SCHEME SUPPORTED By Telegraph—rress Association—Copyright' (Gee. Mar fi, H.,lft p.m.) Melbourne, May G. Speaking at the Empire Trade Commission Mr. Deakin, ex-Prime Minister of the Commonwealth, said ho regarded the proposal of Mr. Bcauchnnip, Chairman of Directors of the Blink of .New Zealand, for an Imperial Development Board as ouo of great. Imperial inlere.-t. Ho meant to use Hit) Empire credit for Empire development. Mr. Deakin said he thought the Parliaments would agree to .such a body raising loans within prescribed limits for helping the development of the outlying Dominions. If the Board's loans wcro guaranteed as proposed, the.v could bo secured at a lower rate.- The potential value of Empire credit had been mentioned in Australia for many years, but no definite working proposals had previously been submitted. *3lr. Beauchainp's schemo was tile first real Imperial effort.

PRECIS OF ME, BEAUCHAMP'S PROPOSAL. Giving evidence before the Dominions Royal Commission in Wellington, Mr. Harold Beauchamp suggested a method by which he thought British dependencies might bo able to borrow on advantageous terms. "Everyone," ho said, "is agreed, in principle, on the advantages of Imperial co-operation in matters of common interest, but so far no practical Schcmo has been evolved. If, however, it is possible to start a practical scheme by which an existing want could be satisfied, there would very likely follow a great extension of tho principle of Imperial co-operation. The problem is not easy of solution, but there is one aspect of it that has hitherto escaped tho notice of the Dominions' Governments, and also of the Government of the United Kingdom. It is a point that might be developed to great advantagenamely, tho principle of a joint Imperial guarantee in connection with loans for dc-fensive purposes and for improved communications (shipping, harbours, cables) between tho different parts of the Empire, and other matters of Imperial importance. All these have an intimate bearing upon tlio protection and development of the trade and .'commerce of the Empire. . . . Tho funds, for such enterprises could bo procured more cheaply under a joint Imperial guarantee than under the folc guarantco of individual partners in the Imperial concern. From tho point of view of the Bfltish Government, it can hardly be questioned that a guarantee, with little or no fear of recourse, is in all ways preferable to direct and immediate payment in aid. The interest now payable on Dominions loans is, roughly, '15 to -li per cent. Thus, New Zealand's new i per cent, loan has just been placed at about 411 per cent.—a rate more advantageous to the Dominion than that at which foreign nations in tho stage of development can obta.lll funds, owing to tho Imperial feeling of the Eondon money market, but much more costly than tho rato which a joint Imperial guarantee would ensure. ... It is desirable that an Empire Development Board should be created, whose function would bo the examination of schemes brought forward for the purposes stated, such purposes being recognised as of. Imperial value. If approved, the servico of tlio loans issued for the special works, duly specified *iud duly limited, would be guarantecd by tho Mother Country and the Dominion Governments. Loans -under joint guarantee were not without precedent.,. •.. The. borrowing Dominion, working in tlio way suggested'with tho support of the Empire Development Board, would bo able, in ordinary times, to raise tho funds required at, say, three and a quarter per cent,, and the advantage would, of course, bo tho difference between that rate and the four and a quarter per cent., or more, which, it might have to pay if it attempted to raise the money .011 its own security alone. 1 The borrowing Dominion would be primarily responsible for tho interest and principal of the loan, tho guarantee of tho Mother Country and the othor Dominions being called upon only in the event of tho Dominion s default, which, under efficient supervision, would bo most unlikely. Tho share ot each guarantor would be determined, by agreement, the precedent of previous issues of similar character being, as far as may be, followed. The service of the proposed loan would bo a first charge on the revenues of the borrowing colony. "Exception may be taken,"' continued Mr. Beauchamp, " to this idea, as objections havo been through all time raised against new ideas of tho kind. Those of ns who have been engaged in the development of new ideas in this, tho outermost part of tho Empire, know that the strongest objections wero raised to Governmental financial schemes that have been of proved utility and of enormous advantage to tho country from their very incepion. . . . An Empire Development Board of high status would not only add to tho stability of the securities, but would be an adequate and perhaps necessary, check upon 'wild-cat' or unremunerative schemes that are neither in the true interest of an individual country nor of the Empire ns a wholo, while, ot the same time, it would havo a practical and not a purely sentimental binding influence in so far as tho Mother Country and tho outer Empire aro conccrned."