PARLIAMENT

Dominion, Volume 10, Issue 3165, 17 August 1917, Page 6

PARLIAMENT

THE FINANCIAL DEBATE SOME'HARD-HITTING NATIONAL GOVERNMENT UNDER FIRE VIGOROUS SPEECH BY DR. NEWMAN i■■ The Legislative Council met at 2.50 p.m. yesterday. The Wanganui Church Acre Bill was read a third time and passed. INSCRIBED STOCK BILL. CONCERNING TRANSFERS. The New Zealand Inscribed Stock Bill ivas received from tho House cf Representatives. The second reading was moved by the Leader of the Council, the Hon. Sir Francis Bell, who said that he' proposed ...to refer it to the Statutes Keyision Committee. " Some Objections Raised. The Hon. O. SAMUEL said that the substitution of, registered securities for .bonds and coupons was a very important improvement in the now "War Loan is compared with the old loan.' Bonds and coupons payable to bearer were subject !to the disabilities of bank notes. They •were subject bo loss or destruction, and so did not offer a form of security that was entirely; satisfactory to trustees and others. ■ This - point had been raised in the Council on other occasions. Tho banks would not accept responsibility for tho safety rf bonds and coupons payable to bearer. He had told the Minister of Finance that he could not recommend people to invest large sunn in such securities, and he was-, very glad that the matter had now received attention. The inscribed stock, proposed' :n the Bill would be registered by the Treasury in the name of the owner, and the security, therefore, would be unimpeachable. If stock was lost or destroyed it could be replaced. He did not regard the' provisions of the Bill as entirely satisfactory- Investors would lequlre to keep their asset liquid, and pro. vision must be made for the issue cf certificates which could bo used us security against loans or for other r/urposes by the owners of the stock. • lho Bill authorised the Seme of certined copies. of the register, but these copies might be duplicated, and in any case ■would not constitute a r.cgotiaale security. It was very important that the securities .'ssued in connection with the War Loan should be capable of cheap and convenient transfer and hypothecaSii- Francis Bell: There is no oifficuUy about transfers. . , Mr. Samuel: The transfers unless we legislate to the contrary, will be subMoot to stamp duty. Transfer of in--Fcribed stock in the Tjnited Kingdom we specially exempted from stamp duty. and there should be similar exemptions in New Zealand. •■ Sir Francis Bell: The Council could aot do that. '. Mr. Pa-muel said that the point ho ■wished to emphasise was that subscribers to the War Loan, under the ■ proposals ■contained in the Bill, would find it difficult to hypothecate their securities. He had consulted bank managers, and had oeen assured that they would be unwillinß to accept the certificates proposed in this Bill as securites for advances for money unless some alterations of the Wnd suggested wero made. The alterations would make tho loan thoroughly successful.

The Example of Consols. SHI WILLIAM HALL-JONES said that the New Zealand, stock quoted in the financial reports from London was all inscribed stock, and it -was transferable without difficulty or fee. The Treasurer appeared to haTe intended to introduce a similar system in tho Dominion, but ho nod ■boI completed the details. The security proposed bv the Bill was a cross between the inscribed stack of the United Kingdom and the consolidated stock commonly known as Consols. He thought that Consols offered ft good example of ■what should be done in Now Zealand. He understood that under the proposals made in the Bill there would be no coupons, no bonds, and no debentures. Sir Francis Bell: That is so. •■ Sir William Hall-Jonjs said that coupons were attached to the inscribed stock in the Old, Country. These coupons could be cashed as thev became due through any bank. He felt that no banker would be justified in dealing .with the certificates proposed bv the Bill. They were not an adequate security from the point of'-riew of the banks. The certificates •were to be transferable by delivery, and that system did not give complete security. The system connected with British Consols was perfectly simple. If a man invested XtflOfl in Console he received from the Bank of England merelv a slip of paner certifying that he owned the. stock. , The bank took his signature and «ent him his interest quarterly. The bank undertook all tho work of registration, and transfer. Consols, moreover, bad not a fixed period. If the State ■wished fr> redeem any part of them it ■bought the-requiredquantitv in tH onen market and cancelled the stock. Failing that, Consols would continue indonfiniWv. He suggested that it would be in the pnhlic interest to have the Wt Loan fitoclc inscribed in the Bank of N»w Zealand instead of the Treasury. This arrangement would facilitate transfers, advances, and interest payments.

Minister's Reply. SIR FRANCIS BELL said he appreciated the force of ■ what had been said. Ho said ,the suggestions made would not have had so much force if the transfers had not been cumbered with stamp duty. He understood that the banks ■would hold stock which was purchased with money advanced by them to clients. That would simplify the position to some extent. There was no true analogy between Consols and the New Zealand War Loan stock. The Dominion Government was providing for the repayment of the War Loan by a more speedy process than was adopted for ordinary loans. "We intend, and I hope that any Government that follows us. will equally intend, to bring to an early close the burden of debt imposed on this country by the war," said Sir Francis Bell. "Wo and our immediate successors havo got to pay for. the course wo have taken in joining in this war." He agreed that bank methods would bo simpler than* Treasury methods .in connection with the register, but tho Bank of New Zealand did not occupy a .position corresponding to that of the Bank of England. The Bank of England was the banker for all the other banks in the , United Kingdom. The other banks, kept their monev in the Bank of England, and retained in their own hands merely enough for their daily dealings. The Bank of New Zealand did not occupy a corresponding position in this country, and the Government, which was asking for the assistance of all tho hanks in connection with the War Loan, could not give special prominence or special duties to one bank. Sir William Hall-Jones: Canada uses the Bank of Montreal. Some of the Australian States use the' Westminster Bank. Sir Francis Bell: "Theßank of New Zealand is the bank of (his ciiuutiry in ■London, but there is very good reason for keeping the register in tho Treasury here. This is a matter of detail which the Government would not agree to have altered by. this Council." He added that he hoped to be able to jatisfy members of the Council. The Committee would moot Treasury officers. The Bill in any rase must he passed on tho following day. The Bill was read a second time, and referred to the Statutes Revision Committee. '"'Tho Council rose at .1.20 p.m.